Wolverine World Wide Inc., a global footwear and apparel company based in Rockford, today announced it has started a formal process to divest or license its Keds brand and Wolverine Leathers business, both of which are low-profit contributors.
The company says the move builds upon its strategy to reduce complexity and prioritize growth brands in an effort to increase long-term shareholder value.
“We believe the recent changes to our group reporting structure and the announcement of strategic alternatives for Keds and Wolverine Leathers, as part of our regular assessment of the portfolio, will put the business on an accelerated path to improved profitability and restore Wolverine as a best-in-class brand house,” says Brendan Hoffman, president and CEO of Wolverine Worldwide.
“In this rapidly evolving retail environment, agility is more important than ever. As such, I firmly believe that portfolio simplification and prioritization are essential to achieving our goals.”
In connection with these brand and organizational changes, Wolverine initiated a workforce reduction earlier this week. The company expects this initiative to result in approximately $30 million in savings in 2023.
“These decisions, particularly those related to our impacted team members, were not taken lightly. We greatly value the contributions of our talented colleagues and are committed to supporting impacted team members in their transitions,” says Hoffman.
Including the impact from the workforce reduction noted above, the company expects to realize total savings of approximately $45 million in 2023 from organizational synergies and other indirect cost areas. In addition, it plans to build on the supply chain cost initiatives started earlier this year and expects to realize approximately $20 million of savings in 2023.
Wolverine says it continues to focus on optimizing working capital as a meaningful source of cash over the coming months. On Dec. 7, the company finalized a new accounts receivable securitization program that is expected to generate $175 million in accelerated cash flow at favorable pricing.
Inventory reduction remains a top priority with meaningful progress made thus far in the fourth quarter. Future cash flow generated from these efforts will be used to pay down outstanding debt.
Through two months of the fourth quarter, the company reports revenue is in line with expectations. Wolverine will provide additional details on its strategy and update its fourth quarter and fiscal year 2022 performance when it presents at the 25th Annual ICR Conference taking place at the Grande Lakes Orlando Resort on Tuesday, Jan. 10, 2023, at 2:30 p.m.
