WWW Q2 Deep Dive: Saucony and Merrell Drive Growth Amid Tariff Uncertainty

August 12, 2025 at 03:16 AM EDT

WWW Cover Image

Footwear conglomerate Wolverine Worldwide (NYSE: WWW) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 11.5% year on year to $474.2 million. On the other hand, next quarter’s revenue guidance of $455 million was less impressive, coming in 1% below analysts’ estimates. Its non-GAAP profit of $0.35 per share was 44.4% above analysts’ consensus estimates.

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Wolverine Worldwide (WWW) Q2 CY2025 Highlights:

Revenue: $474.2 million vs analyst estimates of $451.4 million (11.5% year-on-year growth, 5.1% beat)
Adjusted EPS: $0.35 vs analyst estimates of $0.24 (44.4% beat)
Adjusted EBITDA: $50.01 million vs analyst estimates of $38.88 million (10.5% margin, 28.6% beat)
Revenue Guidance for Q3 CY2025 is $455 million at the midpoint, below analyst estimates of $459.5 million
Adjusted EPS guidance for Q3 CY2025 is $0.30 at the midpoint, above analyst estimates of $0.29
Operating Margin: 8.6%, up from 6.8% in the same quarter last year
Market Capitalization: $2.17 billion

StockStory’s Take

Wolverine Worldwide's second quarter results were met with a notably positive market response, reflecting strong momentum across its largest brands, particularly Saucony and Merrell. Management highlighted broad-based revenue growth, with Saucony achieving 42% year-over-year growth and Merrell posting its fourth consecutive quarter of gains. CEO Christopher Hufnagel credited these outcomes to new product launches, successful category expansion, and improvements in gross margin, supported by higher full-price sales and disciplined inventory management. Hufnagel remarked, "Our teams are intently focused on driving growth, building stronger brands, better managing the marketplace and fueling consumer demand and doing so in a healthy, profitable way."

Looking ahead, management signaled that revenue growth will moderate in the coming quarters as the company laps initial distribution gains and navigates ongoing global trade uncertainty. The evolving tariff landscape is expected to impact costs, though CFO Taryn Miller indicated that mitigation efforts, such as supply chain diversification and selective price increases, should help offset much of the pressure. Hufnagel emphasized a cautious approach, noting, "A new reality, however, is uncertainty in the global marketplace due to the ever-shifting global trade policies, coupled with a downstream effect on the economy and consumers." The company will prioritize sustainable, profitable growth while monitoring consumer sentiment and adjusting strategy as needed.

Key Insights from Management’s Remarks

Management attributed the quarter's outperformance to successful brand resets, disciplined distribution, and renewed investment in product innovation and marketing, particularly at Saucony and Merrell.

Saucony brand resurgence: Saucony's turnaround was driven by a revitalized product pipeline, with record growth in both performance and lifestyle segments. The launch of the Endorphin Speed 5 and expansion into new retail doors, especially in key international cities like London and Tokyo, contributed to broad-based gains.
Merrell's trail modernization: Merrell continued to outpace the broader hike category by focusing on lighter, more athletic footwear. The Moab Speed 2 and Agility Peak 5 franchises saw strong adoption, and international performance—particularly in Asia-Pacific and Europe—was a highlight.
Direct-to-consumer channel improvement: While direct-to-consumer sales declined slightly, the channel saw sequential improvement and gross margin expansion, thanks to reduced promotions and a focus on premium product and digital engagement.
Sweaty Betty and Work Group stabilization: Both segments showed sequential improvement, with Sweaty Betty benefitting from repositioning efforts and higher full-price sales. The Work Group posted modest growth, aided by new product launches and tighter inventory discipline.
Gross margin expansion: Gross margin improvement was attributed to a higher mix of full-price sales, ongoing supply chain savings, and strategic pricing decisions, laying a foundation for further profitability despite near-term tariff headwinds.

Drivers of Future Performance

Wolverine Worldwide expects moderation in growth as it cycles past recent distribution expansions, with future performance hinging on successful tariff mitigation, brand momentum, and disciplined investment.

Tariff mitigation efforts: Management expects most incremental tariff costs to be offset by supply chain diversification, dual-sourcing strategies, and targeted price increases. These actions are designed to preserve gross margins while minimizing disruption to the consumer experience, though some cost pressure is anticipated in the fourth quarter.
Brand momentum and innovation: The company plans sustained investment in product innovation and marketing, especially for Saucony and Merrell, to maintain consumer demand. Management believes that a steady flow of new products and global brand activations will support sell-through and market share gains, but cautions that growth rates will normalize as initial distribution gains are lapped.
Disciplined channel and inventory management: Efforts to reduce promotions and optimize inventory, particularly in direct-to-consumer and wholesale channels, are expected to support margin stability. Management is closely monitoring consumer sentiment and macroeconomic shifts, maintaining flexibility to adjust strategy as needed.

Catalysts in Upcoming Quarters

The StockStory team will be watching (1) the pace and effectiveness of tariff mitigation strategies and their impact on gross margins, (2) continued sell-through and market share gains for Saucony and Merrell as new product pipelines mature, and (3) execution on digital and direct-to-consumer channel improvements. We will also monitor stabilization efforts in Sweaty Betty and the Work Group, as well as evolving consumer sentiment in response to pricing actions and macroeconomic uncertainty.

Wolverine Worldwide currently trades at $26.75, up from $23.51 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).

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