Wolverine World Wide, Inc. reported third quarter 2007 revenue totaled $310.2 million, a 3.8% increase over third quarter 2006 revenue of $298.9 million. Earnings per share for the third quarter of 2007 were 54 cents compared to 46 cents reported for the third quarter of 2006, an increase of 17.4%.
For the first three quarters of 2007, revenue reached $841.5 million, a 5.2% gain over the $800.2 million reported for the first three quarters of 2006. Earnings per share for the first three quarters of 2007 grew to $1.21 per share, up 15.2% from $1.05 per share for the same period of 2006.
“We are pleased to have achieved another record quarter, with strong contributions across our branded footwear groups,” stated Blake W. Krueger, the Company's CEO and President. “Our performance represents our 21st consecutive quarter of both record revenue and earnings per share. The Hush Puppies Company, the Heritage Brands Group, the Outdoor Group and the Wolverine brand all contributed to the record earnings gains in the quarter. The Merrell brand continued its portfolio-leading performance by posting double-digit gains in both revenue and earnings.
“Our decision to focus on our portfolio of highly recognized global brands and transition out of our lower-margin businesses reduced our revenue increase in the quarter, but also contributed to our significant gross margin improvement. This action, combined with anticipated lower leather demand, reduced our third quarter revenue increase by more than $15 million. Revenue gains in our core businesses more than offset these reductions.
“Our business strategy, which is focused on building a strong portfolio of global consumer brands, continues to drive record performance. Our diverse brands are now marketed in nearly 180 countries reaching a variety of consumers through a flexible distribution channel strategy. This diversity helps insulate us from volatility in any particular market or channel, and enables the Company to reward our shareholders with consistent financial performance.”
“Our operating model continues to generate strong results, as evidenced by the strong earnings gain and gross margin expansion in the quarter,” stated the company's CFO, Stephen L. Gulis Jr. “Gross margin expanded 100 basis points, reflecting a better business mix and, combined with a 10 basis point decrease in expenses, drove 110 basis points of improvement in operating margin. Our balance sheet remains strong with inventories being reduced 3.4 percent and a cash balance of approximately $25 million.”
Mr. Krueger continued, “The order backlog for footwear at the end of the third quarter was up more than 11 percent. Due to the Company's strong third quarter results and current backlog position, we are increasing the Company's 2007 earnings per share estimate. We now expect earnings per share to range from $1.63 to $1.65 for the full year, up from our previous estimate of $1.60 to $1.64. We are maintaining our 2007 revenue range at $1.200 to $1.230 billion and still expect revenue to be at the lower end of the range.
“Looking ahead to 2008, our initial estimates are for revenue to range from $1.245 to $1.275 billion and earnings per share to range from $1.78 to $1.84. Our 2008 estimates are in line with our stated long-term financial objectives of growing revenue in the mid to upper single-digit range and generating double-digit earnings per share growth. We will continue to invest in future growth initiatives in 2008 while driving further operating leverage.”
WOLVERINE WORLD WIDE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
($000's, except per share data)
12 Weeks Ended 36 Weeks Ended
September 8, September 9, September 8, September 9,
2007 2006 2007 2006
Revenue $310,168 $298,856 $841,549 $800,150
Cost of products sold 185,216 181,314 507,068 486,329
Gross margin 124,952 117,542 334,481 313,821
administrative expenses 80,548 78,079 233,845 223,063
Operating margin 44,404 39,463 100,636 90,758
expense, net (179) (122) (973) 16
Other expense 252 452 424 917
73 330 (549) 933
income taxes 44,331 39,133 101,185 89,825
Income taxes 14,848 12,993 33,895 29,823
Net earnings $29,483 $26,140 $67,290 $60,002
per share $.54 $.46 $1.21 $1.05