Saucony is lacing up for a strong year ahead. On its earnings call Thursday, parent company Wolverine World Wide Inc. said it expects to see the running shoe brand pick up momentum for a “breakout year” going into 2020.
For the third quarter, it delivered sales growth in the mid-teens, driving up the average growth for the company’s top brands — comprising itself, Merrell and Sperry — to more than 11%. Still, it is going to have its work cut out for it: Saucony has lost market share this year to Deckers’ rising star Hoka One One — even slipping out of third place within the run specialty channel, according a September report from The NPD Group. The company is hoping some of its recent moves will help it gain ground again soon.
According to Wolverine president, chairman and CEO Blake Krueger, Saucony saw its e-commerce sales grow 30% during the third quarter, bringing year-to-date growth for the segment to 40%. In May, Wolverine acquired the brand’s longtime Italian footwear distributor, Sportlab, giving it deeper access to the European market, where, despite macroeconomic headwinds, it continues to deliver strong results. In the U.S. wholesale channel, said Krueger, the brand is seeing “growing demand for key performance styles,” a trend it expects will be one of “the fundamental drivers [for Saucony] as we shift into next year” along with its lifestyle and originals business.
Already, he said, customers are responding well to new styles, including the Triumph 17, which launched last month and which features what the brand says is its lightest and softest PWRRUN+ cushioning yet.
Looking at the bigger picture, Saucony is preparing to expand into China in the coming months through a joint venture Wolverine entered into this spring with Chinese sportswear retailer XTep International Holdings.
Of the partnership, Saucony President Anne Cavassa told FN, “Xtep has deep infrastructure, knowledge and connection with the runner — and they are going to position us as premium. Since the agreement, we have identified our opportunities over the next three years and very quickly we will have a retail presence in Tier 1, Tier 2 cities across all of China. By Q1 , you’ll see mono-branded Saucony brick-and-mortar stores, and digital before then.” Cavassa, who joined the company in 2018 from rival Brooks, also pointed out that, in China, Nike and Adidas dominate 80% of the market — which, the brand hopes, means there’s opportunity for other players to grow.
While macro uncertainties like tariffs and Brexit are still a concern for the brand, Krueger said the brand is well-positioned to weather the current climate. “I think the Saucony business has kind of moved beyond stability and onto a growth trajectory as we pivot to next year, and I think it’s in all the right categories and based on a much healthier baseline business as well,” he said.
For the quarter ended Sept. 28, Rockford, Mich.-based Wolverine reported adjusted diluted earnings of 68 cents per share, growing 9.7% over the same period last year and beating Wall Street estimates by 6 cents. Revenues rose 2.8% to $574.3 million, roughly in line with consensus bets of $574.5 million.