Wolverine World Wide Inc. is leaning into e-commerce as the COVID-19 crisis drives more consumer purchases online.
Executives at the Rockford-based footwear manufacturer reported first-quarter revenue of $439.3 million, down 16.1 percent versus the prior year.
“These results reflect the downturn in our business during March, which was driven by the pandemic,” Blake Krueger, president and CEO of Wolverine, told investors on an earnings call this week.
However, the company’s owned e-commerce business grew by more than 17 percent in the first quarter of 2020 and has steadily accelerated with Wolverine’s global e-commerce business and demand, which is up over 100 percent in the last two weeks.
“We have successfully remained open for business despite the unique restrictions and limitations imposed in many countries,” Krueger said. “Our supply chain is fully operational, including our distribution centers around the world and we continue to service consumer demand in those channels that remain open.”
Wolverine now expects U.S. online business will grow to represent between 50 and 60 percent of the company’s domestic revenue in 2020.
A focus on strengthening e-commerce and online marketing over the past several years has positioned Wolverine to take advantage of the “opportunities that will exist in the new normal,” according to Krueger.
“While the current global retail environment will improve as consumers return to work and stores reopen, we anticipate that there will be a measure of lasting impact,” he said. “I would not, however, bet against the U.S. consumer as things stabilize. We expect consumer behavior and shopping preferences will shift and that distribution models will need to change in line with this new landscape.”
Last month, Wolverine furloughed its retail employees and implemented salary reductions of 25 to 35 percent for the company’s management team in response to the global pandemic and ensuing stay-at-home orders. Krueger is taking a 50 percent pay cut through the remainder of 2020, he said.
Furloughs coupled with organizational and compensation changes will reduce Wolverine’s planned operating expenses by an estimated $100 million for the remainder of 2020. The moves are part of an effort to prioritize liquidity, cash preservation and asset management in the wake of COVID-19. More than $500 million in cash preservation initiatives have been implemented across the company, which are now expected to enable Wolverine to generate $150 million to $200 million of operating cash flow in 2020.
“At the moment, I expect the U.S. recovery will be gradual with various states and regions reopening on somewhat different timetables and with certain industries and businesses returning to work before others,” said Krueger, who sits on a council of business executives, health leaders and medical experts advising Gov. Gretchen Whitmer on the timing and protocols for opening the state’s economy.
Wolverine has also drawn down the remainder of its revolving credit line totaling $367 million, reduced planned inventory receipts by approximately $300 million, and postponed $25 million of capital expenditures scheduled for 2020 until business conditions stabilize.
“There will be plenty of market share in other opportunities as the pandemic subsides and we expect to emerge from these events an even stronger company poised to take advantage of these opportunities,” Krueger said.