Wolverine World Wide, Inc. reported that strong consumer demand and accelerated revenue growth across its brand portfolio generated record performance in the first quarter of 2011.  Revenues rose 16.1 percent to $330.9 million, prompting the company to raise its guidance for full year results.

The rise in revenues was broad-based, as all three branded operating groups contributed to the consolidated record result. 
Fully diluted earnings were a record 72 cents per share, compared to 2010 adjusted fully diluted earnings of 56 cents per share, an increase of 28.6 percent. The prior year's adjusted earnings exclude the impact of restructuring charges and other expenses related to the Company's strategic restructuring plan that was completed in the second quarter of 2010. Reported fully diluted earnings for the first quarter 2010 were 54 cents per share.
“Wolverine World Wide is off to an outstanding start in 2011,” stated Blake W. Krueger, the company's Chairman and chief executive officer.  “We experienced strong consumer demand for our products across all geographic regions.  Our Outdoor Group, especially the Merrell brand, and the Heritage Group both delivered impressive results during the quarter.
He said the brands' authentic heritage was resonating globally and called out Merrell Barefoot Collection as an example of how the company commitment to innovation and product development were paying dividends. Introduced at retail in February, the collection has exceeded our expectations and is already one of the most successful product launches in the history of the company. 
“Our disciplined management of the business during the challenging macroeconomic conditions of the past few years has laid the groundwork for accelerated growth across the brand portfolio,” said Don Grimes, the company's CFO. “We are balancing continued financial discipline with investments behind our brands that we believe will drive growth and provide excellent returns for our shareholders.” 
Highlights for the quarter:
  • Gross margin was 41.6 percent, slightly above the prior year's gross margin, adjusted for restructuring and related charges.  Benefits from strategic price increases were offset by negative mix and increased product costs during the quarter.  Reported gross margin for the first quarter 2010 was 41.3 percent. 
  • First quarter 2011 operating expenses as a percentage of revenue were 26.7 percent, compared to 27.6 percent in 2010, adjusted for restructuring and related charges.  Operating expenses in the quarter of $88.3 million increased 12.5 percent, driven by variable costs associated with strong revenue growth and a planned increase in advertising and marketing investments.  Reported operating expenses for the first quarter 2010 were $79.1 million.
  • Inventory at the end of the quarter increased $78.2 million, or 45.5 percent, compared to the prior year and reflects the continued strength of our order backlog, strategic purchases of core product in advance of price increases and the excellent outlook for the balance of the fiscal year.

Guidance
Based upon the record first quarter results and continued strong order trends throughout the quarter, the company is increasing both its revenue and earnings per share guidance for the full fiscal year. 

For fiscal 2011, the company is increasing its revenue estimate to a range of $1.380 billion to $1.420 billion, representing growth of 10.5 percent to 13.7 percent versus the prior year.   The company is also increasing its fully diluted earnings per share guidance to a range of $2.40 to $2.50, representing growth of 10.6 percent to 15.2 percent versus the prior-year adjusted earnings per share (growth of approximately 13.7 percent to 18.5 percent versus reported earnings per share).
“2011 is off to a fantastic start for the company and our outlook has never been better,” said Kreuger. “The strength of our leadership team, our steadfast focus on execution and our continued drive to deliver innovative products have positioned the Company for another excellent year.”  

WOLVERINE WORLD WIDE, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

($000s, except per share data)

1st Quarter Ended

March 26,

March 27,

2011

2010

Revenue

$ 330,872

$ 284,897

Cost of products sold

193,075

166,327

Restructuring and related costs

–

981

Gross profit

137,797

117,589

Gross margin

41.6%

41.3%

Selling, general and administrative expenses

88,342

78,540

Restructuring and related costs

–

517

Operating expenses

88,342

79,057

Operating profit

49,455

38,532

Operating margin

14.9%

13.5%

Interest expense, net

226

89

Other income, net

(580)

(230)

(354)

(141)

Earnings before income taxes

49,809

38,673

Income taxes

13,946

11,214

Net earnings

$   35,863

$   27,459

Diluted earnings per share

$       0.72

$       0.54