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NEW YORK — Cost cutting and expense management led to a better-than-expected first quarter for Wolverine World Wide Inc., but analysts cautioned that the company may be pressured as it moves into the second half of the year.
“They put up a very good quarter, and they basically did it by controlling expenses,” said Jeff Mintz, an analyst at Wedbush Morgan Securities. “But with revenues down by 11 percent, they’re obviously still suffering from an economic slowdown.”
Inventory was up 16 percent for the quarter, to $218 million, which the firm attributed to one-time events, including its recent Chaco acquisition. The company’s backlog, meanwhile, was down by double digits, indicating weak preorders for the third quarter.
Blake, the company’s CEO and chairman, pointed to at-once buying as the impetus. “Order flow has been tougher for everybody to predict almost going back a year,” he said during a conference call last week. Krueger expected the third quarter to be better, but added that retailers are being “judicious on how they’re placing orders, and they’re watching their own inventories very, very closely.”
The Rockford, Mich.-based company reported a net income of $10.5 million, or 21 cents a diluted share, versus last year’s first-quarter profit of $23.7 million, or 46 cents a diluted share.
Adjusted for restructuring costs, Wolverine reported earnings of 41 cents a share, beating analyst estimates on Yahoo Finance of 31 cents. Impairment charges related to the firm’s restructuring totaled $14.5 million, which contributed to Wolverine’s 56 percent profit decline.
Revenues for the first quarter were $255.3 million, down 11 percent from $288.3 million during the same period in 2008.