Wolverine World Wide, Inc. reported that revenue for the first quarter ended on March 26 increased 9.0% to $245.2 million, compared to $224.9 million in the 2004 first quarter. Net income increased 23.2% to $16.3 million, or 27 cents per diluted share, compared to $12.3 million, or 20 cents per diluted share, for the same quarter last year.
“This year is off to a record start as we achieved a strong double-digit earnings increase for the first quarter of 2005,” stated Timothy J. O'Donovan, the Company's President and CEO. “Building on the momentum generated by the Company's earnings performance in 2004, our first quarter results were driven by our strong global brands and product innovation resulting in accelerated consumer demand for the Company's products. Operating improvements occurred throughout the business with Europe contributing significantly to the revenue and earnings increase. Merrell, which continued to be our leading sales and profit driver, recorded double-digit revenue and earnings gains with the strongest increases coming from the U.S. business and the success of Merrell Continuum(TM).”
“Other areas of achievement included the global Sebago business which posted double-digit revenue and earnings gains. In the U.S., Wolverine Boots and Shoes experienced significant earnings improvement led by the performance of Wolverine MultiShox(TM). Increased focus on brand development benefited both the global Hush Puppies and CAT Footwear operations as these businesses reported strong revenue and double-digit profit improvements. ”
“Record first quarter earnings were driven by significant gross margin expansion,” reported the Company's CFO, Stephen L. Gulis Jr. “Gross margin during the first quarter of 2005 grew to a record 39.3%, a 130 basis point improvement over first quarter 2004. This improvement resulted primarily from increased sales of higher margin lifestyle products and a positive impact from foreign currency.”
“Our inventory levels were up in the first quarter, with the increase coming exclusively from the Outdoor Group as it supported the Merrell Continuum(TM) initiative and Sebago's growth. During the quarter, we increased our investment in product development and marketing efforts while slightly reducing our expenses as a percent of revenue.”
O'Donovan concluded, “Looking ahead, our order backlog was up over 11% at the close of the first quarter of 2005 compared to the prior year. On the strength of the first quarter's results and continuing consumer demand for our global brands, we are increasing the Company's 2005 estimates. We expect revenue to range from $1.045 billion to $1.065 billion, up from our previous estimate of $1.040 to $1.060 billion, and expect earnings per share to range from $1.22 to $1.27, up from our previous estimate of $1.19 to $1.24. These estimates do not include any impact from the potential repatriation of foreign earnings under the American Jobs Creation Act of 2004.”
WOLVERINE WORLD WIDE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) ($000's, except share and per share data) 12 Weeks Ended March 26, March 27, 2005 2004 Revenue $245,175 $224,871 Cost of products sold 148,747 139,430 Gross profit 96,428 85,441 Selling and administrative expenses 72,154 66,337 Operating profit 24,274 19,104 Other expense 216 1,010 Earnings before income taxes and minority interest 24,058 18,094 Income taxes 7,795 5,778 Earnings before minority interest 16,263 12,316 Minority interest - (17) Net earnings $16,263 $12,299 Diluted earnings per share $ .27 $ .20