Wolverine World Wide, Inc. reported revenue for the first quarter was $284.9 million, an increase
of 11.6% versus the prior year.  Foreign exchange had a positive impact
of 3.6% on revenue growth in the quarter.  During the quarter, all four
of the company’s branded operating groups posted mid-single to
double-digit revenue increases, balanced across all market segments and
geographies. 

Excluding $1.5 million of charges in the quarter related to the company’s nearly-completed strategic restructuring plan, fully diluted earnings were a record 56 cents per share, compared to 2009 adjusted fully diluted earnings of 41 cents per share, an increase of 36.6%.  Reported fully diluted earnings in the quarter were 54 cents per share compared to 21 cents per share in the first quarter of 2009.

“Wolverine World Wide had an exceptional start to the fiscal year, as clearly demonstrated by our excellent revenue growth and record earnings per share,” stated Blake W. Krueger, the company’s chairman and chief executive officer.  “Rigorous and consistent execution of our global business model has the company well positioned to take advantage of improving global economic conditions.

“Our strong performance in the quarter was broad-based, with all of our branded wholesale footwear groups delivering excellent results and continued outstanding performance from our consumer direct business.  While the Outdoor Group, led by the Merrell brand, remains the company’s leading profit contributor, our Heritage Brands Group, Wolverine Footwear Group and Hush Puppies Group all contributed to our robust performance, posting strong double-digit earnings increases during the quarter.”

Don Grimes, the company’s chief financial officer, commented, “Trading conditions and consumer confidence in most of our major markets have significantly improved, but we believe our performance in the quarter and our outlook for the balance of the year are driven not just by macroeconomic trends, but also by our brand portfolio’s differentiated product offerings and increasingly deep consumer connections.”

Highlights for the quarter:

  • The company’s geographic diversification remains a key competitive advantage.   During the quarter, international revenue accounted for 41.5% of the company’s consolidated revenue versus 38.0% in the prior year.
  • Adjusted for restructuring and related charges in both years, gross margin in the quarter was 41.6%, compared to prior-year gross margin of 41.2%.  Reported gross margin in the quarter was 41.3% versus 40.3% for the first quarter 2009.
  • Adjusted for restructuring and related charges in both years, operating expenses in the quarter were $78.5 million, or 27.6% of revenue, compared to $75.3 million, or 29.5% of revenue in the prior year.  Reported operating expenses in the quarter were $79.1 million versus $87.5 million for the first quarter 2009.
  • Inventory at the end of the quarter was down $45.8 million, or 21.0%, compared to the prior year.  Accounts receivable at the end of the quarter were up only 4.7%, substantially below the quarter’s revenue increase, driving significantly lower days sales outstanding.
  • The company repurchased approximately 884,000 of its own shares in the quarter for an aggregate cost of $24.6 million.  Wolverine continues to have an exceptionally strong balance sheet, with virtually no debt and $84.9 million of cash and cash equivalents at the end of the first quarter.

Based upon the strength of the first quarter’s results and very encouraging order trends throughout the quarter, the company is increasing both its revenue and earnings per share guidance for the full fiscal year.  For fiscal 2010, the company is increasing its revenue estimate to a range of $1.160 billion to $1.190 billion, representing growth of 5.4% to 8.1% versus the prior year.   Adjusting for restructuring charges in the range of 3 cents to 5 cents per share, the Company is also increasing its fully diluted earnings per share guidance to a range of $1.92 to $2.00, representing growth of 8.5% to 13.0% versus the prior year adjusted earnings per share.  Reported earnings per share are anticipated in the range of $1.88 to $1.96.

Krueger concluded, “We are extremely pleased with the company’s performance in the first quarter of 2010 and the momentum in the business.  We believe that the actions taken in 2009 to streamline our infrastructure, redouble our focus on product and brand innovation, and maintain the full price nature of our brands, combined with our ongoing financial discipline, have positioned the company for an outstanding 2010.” 

The company’s portfolio of brands includes: Bates, Chaco, Cushe, Hush Puppies, HYTEST, Merrell, Sebago Soft Style and Wolverine.  The company also is the exclusive footwear licensee of popular brands including CAT, Harley-Davidson and Patagonia.

WOLVERINE
WORLD WIDE, INC.

CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

($000s, except
per share data)




12 Weeks Ended




March 27,


March 28,




2010


2009








Revenue


$ 284,897


$
255,324


Cost of
products sold


166,327


150,061


Restructuring
and related costs


981


2,320


Gross
profit


117,589


102,943


Gross
margin


41.3%


40.3%








Selling, general and administrative expenses


78,540


75,320


Restructuring
and related costs


517


12,138


Operating
expenses


79,057


87,458








Operating profit


38,532


15,485


Operating
margin


13.5%


6.1%








Interest expense, net


89


89


Other
(income), net


(230)


(108)




(141)


(19)


Earnings
before income taxes


38,673


15,504








Income taxes


11,214

About The Author

Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

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