Wolverine Worldwide may soon no longer be champions of the Keds brand. Forgive the pun, but the conglomerate has started a formal process to divest or license the 106-year-old brand (famous for its Champion tennie introduced in 1916), as well as Wolverine Leathers business, both of which the company states are low-profit contributors. The moves build upon the Rockford, MII-based company’s strategy to reduce complexity and prioritize growth brands in an effort to increase long-term shareholder value. Its current portfolio consists of 13 owned and licensed brands, including Merrell, Sperry, Wolverine, Saucony and Harley-Davidson.
“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,” states Brendan Hoffman, president and CEO. “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, the company initiated a workforce reduction earlier this week—an initiative expected to result in approximately $30 million in savings in 2023.
“These decisions, particularly those related to our impacted team members, were not taken lightly,” Hoffman adds. “We greatly value the contributions of our talented colleagues and are committed to supporting impacted team members in their transitions.”
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. In addition Wolverine continues to focus on optimizing working capital as a meaningful source of cash over the coming months. Yesterday, it 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.