PLG brands a drag on Wolverine Worldwide profits
It is the best uptick possible. In the first quarter 2013 ended March 23, the Wolverine Worldwide group recorded an increase in revenues of 100% compared to the same period a year earlier: 492 million euros or 646 million dollars.
However, this impressive growth must be put in context. It is related to the acquisition of brands from the Performance Lifestyle Group (Sperry Top-Sider, Saucony, Keds and Stride Rite). On a comparable basis (pro-forma), the band also recorded a growth of over 8%.
“We are exceptionally pleased to be off to such a strong start in 2013, particularly as this represents the first full fiscal quarter that includes our four new lifestyle brands,” said Blake Krueger, CEO of WWW, in a statement. “As we anticipated, the addition of Sperry Top-Sider, Saucony, Stride Rite, and Keds has made our brand offerings even stronger, and we are already seeing very positive reactions to the broader portfolio from key retail and global distributor partners.”
But such optimism needs to be qualified. The integration of the new brands have not yet been finalized, such as in France, where the new brands (except Saucony) are being merged with the offices of the subsidiary in Paris. But while revenues were up significantly, margins suffered major erosion. Operating income rose from 28 to 39 million euros and the operating margin fell from 11.4% to 7.9%. The net result is down from 24 to 23 million euros.
For fiscal 2013, the group expects a turnover of between 2.06 and 2.12 billion euros, an increase between 6 and 9% on a comparable basis.
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