Retail Credit Research: Wolverine Worldwide 1Q26: Saucony & Merrell Carry the Baton

Research evidence excerpt

Retail Credit Research: Wolverine Worldwide 1Q26: Saucony & Merrell Carry the Baton

Idea

May 14, 2026 09:28 PM GMT

Morgan Stanley & Co. LLCMRetail Credit Research | North America Jenna L Giannelli

Credit analyst

Wolverine Worldwide 1Q26: Jenna.Giannelli@morganstanley.comRoopi Bhangu +1 212 761-4340

Credit Analyst

Roopi.Bhangu@morganstanley.com +1 212 761-1912

Saucony & Merrell Carry the

Baton ExhibitFundamental1 : Wolverine& ValuationWorldwideView (WWW)

HY Retail

Credit Fundamental View Valuation View Action / Trade Sector

WWW Cautious Rich Sell '29s Apparel & FootwearWWW delivered a 1Q beat and raised FY26 margin guidance, but

Source: Morgan Stanley Researchmanagement maintained the FY26 sales guide and struck a

measured tone around consumer demand, tougher upcoming

comps, tariff pressure, and rising freight costs into 2H. We

continue to recommend selling WWW '29 bonds, with spreads

on the ’29s trading tight versus indices and what will be tough

compares in a pressured category. The stock was down 2% as of

market close.

Key Takeaways

WWW reported a 1Q beat, with sales up 11% YoY to $458mn and adj. EBIT of

$35mn, while raising FY26 gross / EBIT margin guidance on lower expected tariff

costs and improved execution.

Management's tone remained measured despite the strong start, and it kept the

sales guide unchanged, which we view as a reflection of ongoing consumer

uncertainty and tougher comps.

While management now expects an unmitigated FY26 tariff headwind of ~250bp

/ ~$50mn (vs. $60mn prior), pressure is rising to ~310bp in 2Q, and we expect

higher oil prices to pressure freight / shipping costs into 2H.

Brand portfolio health remains challenged, with growth concentrated in Saucony

and Merrell, which will begin to lap materially tougher comps into 2Q/2H. Sweaty