Wolverine World Wide, Inc. said that adjusting for the negative impact of changes in foreign exchange rates due to a stronger U.S. dollar, revenues in the second quarter declined only 3.1%. An “excellent performance” in the U.S., driven primarily by the Merrell brand and by the acquisition of the Chaco brand earlier in the year, was offset by challenging trading conditions in many major global markets.

Reported revenue in the second quarter was $246.4 million, a decline of 7.8% versus the prior year.

During the quarter, the company continued to implement its 2009 strategic restructuring plan, which is focused on generating significant efficiencies across the business. Non-recurring restructuring and related charges of $7.9 million, or 11 cents per fully diluted share, were recorded in the quarter, of which $3.1 million were non-cash charges. Adjusting for these charges, fully diluted earnings in the quarter were 27 cents per share, compared to 33 cents per share in the prior year.

After charges, net earnings slid 53% to $7.9 million, or 16 cents a share, from $16.8 million, or 33 cents, in the year-ago period.

“We are pleased with our second quarter results, which were driven by our ability to grow proven brands and extend the global reach of new brands,” stated Blake W. Krueger, the company's CEO and President. “During the quarter, we achieved a double-digit increase in our Merrell business in the U.S. and got off to a strong start with the Chaco brand. company revenue was above our internal plan for the quarter, which helped contribute to solid earnings results. Harley-Davidson and Sebago each posted revenue increases in the quarter, as did Hush Puppies in the important Canadian market. These positive results underscore the strength of our multi-brand, multi-country business model and our ability to execute during challenging economic times.

Krueger continued, “While the timing and trajectory of the recovery from the global recession is uncertain, we remain confident that our 12 lifestyle brands will continue to outperform by providing innovative, fresh and exciting products to our diverse global consumer base. We remain focused on providing products that fit consumers' needs and deliver on their performance and style demands.”

Don Grimes, the company's CFO, commented, “The company delivered another solid financial performance in the second quarter of 2009. Our cash position is strong, we have excellent liquidity, and believe we are very well positioned to emerge from this challenging economic cycle in great shape – from both brand and financial perspectives. Balancing short-term revenue and earnings opportunities with long-term shareholder value creation remains a key focus for the company, and we believe we are delivering on that challenge.”

Highlights for the quarter:

* Adjusting for $1.0 million of non-recurring restructuring and related charges that are included in cost of sales and the impact of foreign exchange, gross margin was 37.7%, compared to prior-year gross margin of 38.3%, as higher product costs and a higher percentage of close-out sales more than offset selective price increases. Reported gross margin was 37.3%.
* Operating expenses decreased 6.0% from the prior year after adjusting for non-recurring restructuring and related charges, the benefit from a stronger U.S. dollar, expenses directly related to the newly acquired Chaco and Cushe brands, and increased pension expense. Reported operating expenses in the quarter were $79.7 million.
* Accounts receivable at quarter end were down 6.5% compared to the prior year's second quarter. The company continues to closely monitor customers' credit standing and improved its days sales outstanding with increased efforts towards timely collections.
* Inventory at the end of the second quarter was up 6.9% compared to the prior year, a substantial improvement versus the two most recent fiscal quarters. Of the $11.9 million inventory increase, approximately half related to newly acquired brands, the strategic pre-buy of inventory referenced last quarter, and a planned increase in the Wolverine Leathers business inventory as it transitioned to an outsource model. The company remains comfortable with its inventory position and is on track to end the year with inventory meaningfully lower than year end 2008.
* As planned, the company significantly reduced its revolver balance, from $93.0 million at the end of the first quarter to $34.8 million at the end of the second quarter. The company ended the quarter with $79.2 million in cash and substantial overall liquidity.

Today, the company is raising its 2009 earnings guidance. Excluding full-year restructuring and related costs in the range of $33 million to $36 million, the company now expects earnings in the range of $1.55 to $1.73 per share, up from previous guidance of $1.50 to $1.70 per share, on reported revenue in the range of $1.070 billion to $1.120 billion. Foreign exchange is expected to negatively impact full-year reported revenue by $40 million to $60 million, resulting in projected constant currency revenue of $1.120 billion to $1.170 billion. Included in this earnings guidance is an estimated full-year negative foreign exchange impact of $0.11 to $0.14 per share and $0.12 per share of increased pension expense. Reported fully diluted earnings per share for the year are now expected to be in the range of $1.07 to $1.25.

Krueger concluded, “We are very pleased that our strong year-to-date performance provides us with the confidence to raise earnings guidance in this challenging environment. We remain encouraged by consumer demand for our lifestyle brands and are pleased with the retail and consumer response to our newest brands, Cushe and Chaco. Our continuing focus on product innovation is helping us outperform in these difficult global economic conditions.”

                                WOLVERINE WORLD WIDE, INC.

($000s, except per share data)

12 Weeks Ended 24 Weeks Ended
—————— ——————
June 20, June 14, June 20, June 14,
2009 2008 2009 2008
——– ——– ——– ——–

Revenue $246,438 $267,362 $501,762 $555,600
Cost of products sold 153,380 164,963 303,441 331,640
Restructuring and related
costs 1,018 – 3,338 –
——– ——– ——– ——–
Gross profit 92,040 102,399 194,983 223,960
Gross margin 37.3% 38.3% 38.9% 40.3%

Selling, general, and
administrative expenses 72,823 76,511 148,143 161,803
Restructuring and
related costs 6,901 – 19,039 –
——– ——– ——– ——–
Operating expenses 79,724 76,511 167,182 161,803
——– ——– ——– ——–

Operating profit 12,316 25,888 27,801 62,157
Operating margin 5.0% 9.7% 5.5% 11.2%

Interest expense, net 119 302 208 365
Other expense, net 520 312 412 879
——– ——– ——– ——–
639 614 620 1,244
——– ——– ——– ——–
Earnings before income taxes 11,677 25,274 27,181 60,913

Income taxes 3,771 8,462 8,780 20,400
——– ——– ——– ——–

Net earnings $7,906 $16,812 $18,401 $40,513
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Diluted earnings per share $0.16 $0.33 $0.38 $0.79
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