Wolverine World Wide Inc.: Analysis

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This report will evaluate certain financial instruments for Wolverine World Wide Inc. that take into account factors such as time and risk. The report is presented firstly by a general company overview, followed by its risk factors analyzed. Additionally the report will have series of analyses of the discount rate, share analysis and a capital budget created for the years to come.

Company Overview

As the company providing innovative footwear, apparel and accessories to consumers all over the world, the company’s main goal is to contribute not only to their own performance, but also to the betterment of the community. Wolverine World Wide (WWW) supports a united management scheme where the owner (Blake W. Krueger) controls the company’s operations personally. Wolverine World Wide Inc. a Delaware corporation, is the successor of a Michigan corporation of the same name, originally organized in 1906, which in turn was the successor of a footwear business established in Grand Rapids, Michigan in 1883. Wolverine World Wide, Inc. engages in manufacturing, sourcing, marketing, licensing, and distributing footwear, apparel, and accessories to the retail sector primarily in the United States, Europe, and Canada. Its footwear product lines include casual shoes, dress shoes, boots, uniform shoes, and rugged outdoor and work footwear. It also produces casual, outdoor, and work clothing products. WWW produces its products under the brand names of, Bates, Cat Footwear, Chaco, Cushe, Harley-Davidson Footwear, Hush Puppies, HyTest, Merrell, Patagonia Footwear, Sebago, Soft Style, and Wolverine. The company wholesales its products to a range of retail customers, including department stores, national chains, catalogs, specialty retailers, mass merchants, and Internet retailers, as well as to governments and municipalities in the United States. Its products are also worldwide in approximately 180 countries and territories through company-owned wholesale operations, licensees, and distributors.

In 2008 the company celebrated its 125th birthday and has achieved impressive revenue of 1.22 billion USD, which was a 1.8% growth from their previous years and a 11.8% growth in its earning per share, which summed to $1.90. That was their 8th consecutive year of revenue and EPS growth. Currently they hold a market cap of 1.53 billion dollars. During the economic crisis, the company has fared much better than most other having only a 14.2% share price decline, while the averages of the market presented by Dow Jones Industrial Average and S&P 500 were 30 and 35% respectively.

Risk Analysis
Risk Factors

The company has a multitude of risks that could affect company earnings or costs which in their turn affect company profitability. The list is as follows (but not limited to):

The Company’s sales, operating results and financial condition are dependant on general economic conditions and other factors affecting consumer spending.

The Company’s success of its operation significantly depends on a number of factors that affect disposable consumer income and consumer spending patterns nationally or internationally, including generic economic conditions such as employment, interest rates, taxation and business conditions. Uncertainty about current and future global economic conditions may cause the Company’s customers to defer or cancel purchases of the Company’s products. If demand for the Company’s products declines, the Company’s sales and profit margins may also decline. General economic conditions factors as those listed above, and other as increased costs of fuel, labor, commodities and healthcare, may increase the Company’s cost of sales and operating expenses, which may seriously affect the Company’s financial condition and results of operations.

The Company’s business will be unfavorably affected if the Company is not able to maintain its competitive position in the footwear industry, or compete effectively in retail and...
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