Wolverine World Wide's Debt Refinancing and the Path to Creditworthiness: A Catalyst for Stock Re-Rating?

Strategic Debt Refinancing and Credit Profile Strengthening

Wolverine World Wide, Inc. (WWW) has embarked on a deliberate debt deleveraging strategy, which has recently earned recognition from S&P Global Ratings. As of June 28, 2025, the company's adjusted leverage ratio stands at 5.0x, down from 6.5x in 2021, reflecting a disciplined approach to reducing financial risk. This progress prompted S&P to upgrade Wolverine's revolver credit rating to 'BB-' from 'B+', while maintaining its broader issuer rating at 'B' with a stable outlook. The agency cited the repayment of a $300 million term loan and the reduction of secured debt exposure as key drivers of this improvement.

The refinancing efforts have not only stabilized Wolverine's balance sheet but also positioned it to navigate macroeconomic headwinds, including softness in the wholesale channel. Analysts project a 29.27% year-over-year increase in earnings per share for 2026, underscoring the company's improving profitability, according to MarketBeat. These developments suggest that Wolverine's creditworthiness is on an upward trajectory, even if its current 'B' rating remains unchanged.

ESG Considerations: A Double-Edged Sword

While S&P's credit rating upgrades often correlate with modest stock price gains, the magnitude of the reaction is heavily influenced by a company's ESG performance. Research indicates that firms with high ESG scores see their stock price reactions amplified by 130 basis points compared to those with lower scores, according to an ESG study. However, Wolverine's ESG profile presents a mixed picture. Upright's Net Impact model indicates the company has a net negative sustainability impact of -23.0%, driven by high GHG emissions and resource-intensive product lines such as sneakers made of virgin materials.

Despite these challenges, Wolverine generates positive value in areas like job creation and tax contributions through its protective footwear and hiking boot segments. While S&P Global's specific ESG score for the company remains behind a paywall in the SGBOnline coverage, its "Moderate" controversy rating from Sustainalytics suggests room for improvement. For investors, this duality implies that while ESG factors may temper the stock's re-rating potential, Wolverine's credit-driven narrative could still attract capital, particularly if its sustainability initiatives gain traction.

Credit Rating Upgrades and Stock Price Dynamics

Historical studies reveal that S&P credit rating upgrades typically trigger a 0.5% cumulative stock price return over the announcement period. However, this effect is often anticipated by markets, with much of the move occurring pre-announcement. For Wolverine, the recent revolver rating upgrade to 'BB-'-a notch above its issuer rating-could act as a catalyst for a re-rating, especially if the company continues to reduce leverage and stabilize its operating margins.

The absence of a public ESG score complicates precise predictions, but the general trend suggests that even modest credit upgrades can drive investor confidence. If Wolverine's deleveraging efforts translate into a future upgrade of its 'B' issuer rating, the stock could experience a more pronounced re-rating, particularly if ESG controversies are mitigated. For now, the 1.25% dividend yield and sustainable payout ratio reported by MarketBeat further enhance its appeal to income-focused investors.

Conclusion: A Cautious Bull Case

Wolverine World Wide's strategic debt refinancing has laid a foundation for improved creditworthiness, supported by S&P's stable outlook and upgraded revolver rating. While its ESG profile remains a drag on potential stock price momentum, the company's financial discipline and earnings growth trajectory present a compelling case for cautious optimism. Investors should monitor two key metrics: (1) further reductions in leverage and (2) progress in addressing sustainability challenges, particularly in high-impact product lines. If these trends align, Wolverine could transition from a value play to a broader re-rating story in 2026.