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October 12, 2023
Will Wolverine Worldwide Do Better After Selling Hush Puppies?
Wolverine Worldwide, the Michigan-based footwear manufacturer, is transforming its brand portfolio with two additional divestitures, according to Apparel Resources.
The company is known for its contemporary aesthetics, broad array of products, and unique technologies that emphasize both relaxation and efficiency. It upholds a commitment to superior material quality and artisanship in the crafting of its shoes, leveraging both internal resources and third-party partners.
Currently, Wolverine Worldwide runs the following brands:
- Bates
- Cat Footwear
- Chaco
- Harley-Davidson Footwear
- Hush Puppies
- HYTEST
- Merrell
- Saucony
- Sperry
- Stride Rite
- Sweaty Betty
- Wolverine
Recently, Wolverine finalized a deal to transfer the rights to the Hush Puppies brand — including trademarks, patents, copyrights, and online domains — in China, Hong Kong, and Macau to Beijing Jiaman Dress Co., Ltd., the existing sublicensee in the region. A joint collaboration agreement valued at $58.8 million has been established between the two entities, emphasizing a shared responsibility and commitment to nurturing the Hush Puppies presence in these territories.
For the time being, Hush Puppies will continue to be owned and operated by Wolverine in the rest of the world. This means that the company can ease its role in Asia and collect royalties instead of spending more money in that market.
Wolverine Worldwide has also officially sold its American Wolverine Leathers division “to its long-time customer, New Balance, for approximately $6 million in total proceeds. The company assigned Wolverine’s U.S. tannery contracts to New Balance, and continues to explore alternatives for the non-U.S. Wolverine Leathers business.”
Seeking Alpha, a community of investors and analysts, released data pointing out that Wolverine Worldwide’s “share price has significantly declined in the last 18 months, losing 56% of its value. The wider market has struggled during this time but not remotely to the same degree.”
Overall, during the last five years, the company has seen inconsistent ups and downs, varying sporadically year over year.
The data shows evidence that Wolverine has constantly struggled to maintain constant growth, currently facing a Y/Y decline of 2.5% in the first quarter of 2023. Only two brands, Saucony and Merrell, show potential but remain inconsistent. Meanwhile, most competitors have shown growth and innovation in many areas. Many, like Crocs with its new cowboy boots, have shown new products to excite their customers.
Seeking Alpha believes that Wolverine Worldwide’s current offerings aren’t enough in today’s market, stating that “the industry has become significantly more competitive, primarily due to two main factors. Firstly, the rise of e-commerce has given consumers significantly more choices, and through a convenient channel, allowing for products and prices to be compared easily. Secondly, with supply chains increasingly centered in the far east, we have seen the rise of low-cost options for consumers, diluting [Wolverine Worldwide’s] value proposition.”
Critics are losing hope in the company, so it remains to be seen if these recent divestitures are a sign of more positive change to come. Wolverine Worldwide might need to find new ways to disrupt the industry and reinvigorate its brands and products.
Discussion Questions
What impact do you anticipate these divestitures will have on Wolverine Worldwide’s market share and competitive positioning? In light of the divestitures and the evolving industry landscape, what strategies might Wolverine Worldwide consider to disrupt the industry and drive innovation?
Poll
Loading …BrainTrust
Mohammad Ahsen
Co-Founder, Customer Maps
Liza Amlani
Principal and Founder, Retail Strategy Group
Nicola Kinsella
SVP Global Marketing, Fluent Commerce
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The divestitures are a move to help the financials of Wolverine. They will also probably help drive some sales activity in Asia as the new owners, who have more local expertise, will inject more enthusiasm and energy. However, none of this changes the wider challenges at Wolverine, which includes reinvigorating many of it core brands, improving distribution, and driving some excitement with customers. The blunt truth is that Wolverine’s portfolio consists of a bunch of relatively weak brands which are not competing successfully in a tough market.
Divestitures are only going to solve part of the problem. But it’s a step in the direction.
Wolverine has the potential to be a leader in the market when it comes to material and product innovation. They need cash, time and resources to drive this innovation.
Investing in brands that are driving growth and leaning out the brand portfolio will help Wolverine to get more focussed on what will delight the customer.
Seriously hoping that these divestitures will enable Wolverine to focus on its core brands and deliver a better overall customer experience. I’m a Merrell customer. But with stores carrying smaller ranges, shoe brands need to up their game in guiding customers to a great purchase. Otherwise it’s hard to know if you’ll be happy. And if you’re not sure, you often don’t buy. It impacts conversions.
Some of their styles fit me really well. Like a glove. LOVE them. Others don’t. Developing some standards that enable customers to easily understand key features, particularly footbed/last shape, arch suppport, and toe box width, would be great.
It would also be super helpful to be able to see something like ‘other customers who gave this shoe a 5 star review also liked’. And prompt customers to provide other details in reviews, like how they used the shoe, how often, for how long, and under what conditions – especially for waterproof shoes.
These divestitures may initially pressure Wolverine Worldwide’s market share, as evidenced by a 56% stock value decline in the past 18 months. The move to focus on core brands is a strategic reset, but finally the success depends on effectively addressing brand challenges, understanding consumer trends, and focusing on core strengths.
Asian ownership is expected to inject enthusiasm and energy into Wolverine’s brands, leveraging local expertise to drive sales activity and enhance market presence in the region. Wolverine Worldwide must prioritize digital transformation, enhance e-commerce experiences, and invest in sustainable practices.
In my opinion, Wolverine Worldwide’s recent divestitures may have mixed consequences for its market share and competitive standing. On one hand, selling certain brands and narrowing their focus could streamline their operations and reduce costs. However, it also means they’ll have fewer brands to generate income from. To stay competitive in the evolving retail landscape, I think Wolverine Worldwide should prioritize product innovation and adapt to changing customer preferences. They could even explore new product categories or enhance the existing ones to attract more customers.
Additionally, strengthening its online presence and implementing competitive pricing strategies will be crucial for Wolverine Worldwide to remain appealing to customers, especially in a market where e-commerce and cost-effective options are on the rise.