Wolverine World Wide Outlook Much Worse Than Expected, Warns Analyst

• Wolverine World Wide, Inc. WWW shares have been treading a downward path in the last three months and are down 30 percent since July 21.
• Sterne Agee CRT’s Sam Poser downgraded the rating on the company to Underperform, while establishing a price target of $16.
• A weak domestic business, forex headwinds, high inventories and lack of compelling products are expected to negatively impact the company’s future performance, Poser stated.

Analyst Sam Poser mentioned that Wolverine World Wide has a track record of missing guidance and the trend is likely to continue. Wolverine World Wide’s future performance is likely to be negatively impacted by weakness in the company’s domestic business and forex headwinds.

Poser added that the absence of a compelling product across the company’s brands and elevated inventories are some of the other areas of concern. The company’s annual free cash flows of nearly $200 million remain a positive factor.

Wolverine World Wide has been unable to efficiently use its cash flows to generate adequate returns. The Sterne Agee CRT report mentioned, “WWW appears to be nowhere close to reaching any of the 2018 targets set forth at the October 2013 Investor Day.”

Poser expressed concern over the effectiveness of Wolverine World Wide’s incremental spending on marketing and brand building during 2015-17, citing “management's lack of execution over the past 3 years, and lack of brand direction.”

The EPS estimates for FY15, FY16 and FY17 have been reduced from $1.46 to $1.42, from $1.67 to $1.47 and from $1.84 to $1.61, respectively.