Despite some concerns after the Merrell brand showed a single-digit growth rate in the second quarter, Wolverine still expects Merrell will eventually become the company’s first brand to reach sales of $1 billion.


“We still firmly believe Merrell is gong to be our first billion dollar brand,” said Blake Krueger, president and CEO of Wolverine Worldwide, at the CL King investment conference. “As it’s gone from $26 million in sales to well over $450 million in sales, we are now entering the land of large numbers. We had a single-digit growth rate in Merrell in Q2, but we continue to feel very, very bullish about that brand as it extends across product categories, enters new regions and just seeing the sell-throughs that happened this summer and fall.”


But Krueger said in order for Merrell to become a billion dollar brand, apparel, which was launched three seasons ago, needs to continue to successfully expand. International distributors have long demanded a greater assortment of apparel because the stores need apparel to complement footwear offerings. Although apparel remains a “small business,” its continued expansion is “really gong to be the lever to help us open stand-alone stores around the world.”


Regarding footwear, newer lines seeing strength are women’s water sport, women’s casual sandals and street running shoes. Running specialty stores, many of which already carried some of Merrell’s multi-sport hiking and jungle moc collections, are showing a “good reaction” to the new running line, according to Krueger.


Merrell now has 675 in-store shops worldwide. Those shops, typically in better stores, led to gains between 20% and 200%. The company has about 50 Merrell stand-alone stores around the world, and the opening of its first flagship in San Francisco last week “exceeded our expectations,” said Krueger.


Regarding Patagonia footwear, which Wolverine launched in 2006, Krueger said the key to growing the brand is through Patagonia’s consumer-direct business, noting that about 50% of Patagonia’s apparel is sold through Patagonia’s owned-retail channels. Patagonia sends out about 7 million catalogs annually, has “a great Internet business,” and  operates about 27 stores, according to Krueger.