Wolverine World Wide Inc., which makes Merrell, Patagonia and Sebago footwear, expects average footwear prices to rise in the 2% to 5% range this year due to price pressures coming out of China, said President and CEO Blake Krueger during an investor presentation at the Citigroup Small and Mid Cap Emerging Growth Conference.
“I think the industry as a whole is going to see some price increases this year,” Krueger said. “I think they will see price increases in the 2% to 5% range. Companies like us, how are we dealing with that? We're trying to engineer our product around that and not take the quality out, but engineer our product around it. We're trying to stay flexible on the sourcing side, whether that means Indonesia, a bigger presence in Vietnam, a bigger presence in India. And lastly, I think a lot of companies are just going to have to pass some of those costs on to the consumer. But one thing I've learned over the years, if the footwear is right, people are going to buy the footwear at $100, and if the footwear isn't right, they aren't going to buy it at $50.”
Krueger said WWW expects to deliver its eighth record year of sales and earnings this year. “ROA last year was 14.1%, ROE was 19.1%,” Krueger said. “We expect these, frankly, to hit the 15% and 20% levels at least for 2008. And we're focused on organic growth that is two to three times faster than the overall market.”