Press Release

ROCKFORD, Mich., Aug. 8, 2018 /PRNewswire/ -- Wolverine World Wide, Inc. (NYSE: WWW) today reported financial results including strong earnings for the second quarter ended June 30, 2018, and updated progress on its 2018 GLOBAL GROWTH AGENDA. The Company also raised full-year earnings guidance and updated its full-year outlook.

"We had a strong second quarter highlighted by solid revenue performance, especially from Merrell and Sperry, along with earnings that significantly surpassed expectations" said Blake W. Krueger, Wolverine World Wide's Chairman, Chief Executive Officer and President. "Our underlying revenue growth during the quarter was the highest since the second quarter of 2015, and reflects early progress against our GLOBAL GROWTH AGENDA. The strong operating margin expansion and earnings leverage reflects fundamental improvements in our business model related to our recent transformation initiatives."

SECOND-QUARTER 2018 REVIEW

• Reported revenue of $566.9 million decreased 5.3% during the second quarter. Underlying revenue increased 3.9% and further adjusting for currency, increased 3.3%.
• Reported gross margin was 41.3%, as compared to 37.9% in the prior year. On an adjusted basis, gross margin of 41.3% expanded 250 basis points compared to prior year.
• Reported operating margin was 12.0%, compared to 5.2% in the prior year. Adjusted operating margin was 12.5%, an increase of 140 basis points compared to the prior year.
• Reported diluted earnings per share was $0.57, compared to $0.21 in the prior year. Adjusted diluted earnings per share were $0.54 compared to $0.43 in the prior year, an increase of 26%.
• Inventories declined $39.9 million, or 12.0% compared to the prior year.

"Operating margin in the second quarter benefited from broad-based expansion of gross margins across our brands primarily due to favorable product mix, lower product costs and benefits from a cleaner inventory pipeline," said Mike Stornant, Senior Vice President and Chief Financial Officer. "Importantly, we now expect to exceed our stated 12% adjusted operating margin goal for fiscal 2018."

2018 GLOBAL GROWTH AGENDA UPDATE
"The Company made nearly $20 million in key incremental investments intended to drive growth during the first half of 2018 as part of our GLOBAL GROWTH AGENDA," stated Mr. Krueger. "Investment has focused on several initiatives across the three key elements of the Agenda - a more robust and streamlined product development process, optimizing our social prospecting capabilities, and adding strategic and operational resources to our international teams, especially in China.  We're excited to see the benefits of the new tools and capabilities being put in place to better drive top-line performance."

"We remain committed to our enhanced investment strategy related to the GLOBAL GROWTH AGENDA, and similar levels of incremental investment spending are planned for the second half of 2018," stated Mr. Stornant.

UPDATED 2018 OUTLOOK
Primarily as a result of the strong second quarter earnings results, which were better than expected, the Company is raising its earnings projection for the full year. The full-year outlook is summarized below.

• Revenue is expected to be in the range of $2.24 billion to $2.32 billion.
• Gross margin expansion is now expected to be in the range of 100 to 130 basis points higher compared to the adjusted prior year, despite a full-year negative mix impact of 20 basis points from 2017 store closures.
• Reported operating margin is now expected to be between 11.6% to 11.9% and adjusted operating margin is now expected to be 12.1% to 12.4%, inclusive of up to $45 million of incremental investments to support the Company's GLOBAL GROWTH AGENDA.
• An effective tax rate now expected to be in the range of 18% to 20%.
• Reported diluted earnings per share are expected to be in the range of $2.05 to $2.12 and adjusted diluted earnings per share are expected to be in the range of $2.08 to $2.15.

NON-GAAP FINANCIAL MEASURES
This release contains certain non-GAAP financial measures. References to "underlying" revenue indicate reported revenue adjusted for the impact of retail store closures, the transition of Stride Rite^® to a license business model, the sale of the Sebago^® brand and the sale of the Department of Defense business. Measures referred to as "adjusted" financial results exclude environmental and other related costs, organizational transformation costs which include gains or losses from divestitures, restructuring and other related costs, a foreign currency remeasurement gain recorded in the second quarter that is not expected to reoccur and incremental store inventory mark-downs.

Beginning in Q1 2018, the Company has separately provided the impact of changes in foreign currency exchange rates on revenue, rather than including it as a part of underlying revenue, to better isolate this variable. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. The Company believes providing constant currency information provides valuable supplemental information regarding results of operations, consistent with how the Company evaluates performance. The Company calculates constant currency by converting the current-period local currency financial results using the prior period exchange rates and comparing these adjusted amounts to our current period reported results.

The Company has provided a reconciliation of the above non-GAAP financial measures to the most directly comparable GAAP financial measure. The Company believes these non-GAAP measures provide useful information to both management and investors to increase comparability to the prior period by adjusting for certain items that may not be indicative of core operating measures and to better identify trends in our business. The adjusted financial results are used by management to, and allow investors to, evaluate the operating performance of the Company on a comparable basis.

EARNINGS CALL INFORMATION
The Company will host a conference call today at 8:30 a.m. Eastern Time to discuss these results and current business trends. The conference call will be broadcast live and accessible under the "Investor Relations" tab at www.wolverineworldwide.com. A replay of the conference call will be available at the Company's website for a period of approximately 30 days.

ABOUT WOLVERINE WORLDWIDE
With a commitment to service and product excellence, Wolverine World Wide, Inc. is one of the world's leading marketers and licensors of branded casual, active lifestyle, work, outdoor sport, athletic, children's and uniform footwear and apparel. The Company's portfolio of highly recognized brands includes: Merrell^®, Sperry^®, Hush Puppies^®, Saucony^®, Wolverine^®, Keds^®, Stride Rite^®, Chaco^®, Bates^®, HYTEST^®, and Soft Style^®. The Company also is the global footwear licensee of the popular brands Cat^® and Harley-Davidson^®. The Company's products are carried by leading retailers in the U.S. and globally in approximately 200 countries and territories. For additional information, please visit our website, www.wolverineworldwide.com.

FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements, including statements regarding: the Company's ability to invest in growth, successfully execute key strategic initiatives, elevate brands with consumers, and deliver product innovation, organic and global growth and operational efficiencies; and the Company's fiscal 2018 outlook and guidance. In addition, words such as "guidance," "estimates," "anticipates," "believes," "forecasts," "step," "plans," "predicts," "focused," "projects," "outlook," "is likely," "expects," "intends," "should," "will," "confident," variations of such words, and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions ("Risk Factors") that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Risk Factors include, among others: changes in general economic conditions, employment rates, business conditions, interest rates, tax policies and other factors affecting consumer spending in the markets and regions in which the Company's products are sold; the inability for any reason to effectively compete in global footwear, apparel and consumer-direct markets; the inability to maintain positive brand images and anticipate, understand and respond to changing footwear and apparel trends and consumer preferences; the inability to effectively manage inventory levels; increases or changes in duties, tariffs, quotas or applicable assessments in countries of import and export; foreign currency exchange rate fluctuations; currency restrictions; capacity constraints, production disruptions, quality issues, price increases or other risks associated with foreign sourcing; the cost and availability of raw materials, inventories, services and labor for owned and contract manufacturers; labor disruptions; changes in relationships with, including the loss of, significant wholesale customers; risks related to the significant investment in, and performance of, the Company's consumer-direct operations; risks related to expansion into new markets and complementary product categories as well as consumer-direct operations; the impact of seasonality and unpredictable weather conditions; changes in general economic conditions and/or the credit markets on the Company's distributors, suppliers and customers; increase in the Company's effective tax rates; failure of licensees or distributors to meet planned annual sales goals or to make timely payments to the Company; the risks of doing business in developing countries, and politically or economically volatile areas; the ability to secure and protect owned intellectual property or use licensed intellectual property; the impact of regulation, regulatory and legal proceedings and legal compliance risks, including compliance with federal, state and local laws and regulations relating to the protection of the environment, environmental remediation and other related costs, and litigation or other legal proceedings relating to the protection of the environment or environmental effects on human health; the potential breach of the Company's databases, or those of its vendors, which contain certain personal information or payment card data; problems affecting the Company's distribution system, including service interruptions at shipping and receiving ports; strategic actions, including new initiatives and ventures, acquisitions and dispositions, and the Company's success in integrating acquired businesses, and implementing new initiatives and ventures; the risk of impairment to goodwill and other acquired intangibles; the success of the Company's consumer-direct realignment initiatives; changes in future pension funding requirements and pension expenses; and additional factors discussed in the Company's reports filed with the Securities and Exchange Commission and exhibits thereto. The foregoing Risk Factors, as well as other existing Risk Factors and new Risk Factors that emerge from time to time, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.  Furthermore, the Company undertakes no obligation to update, amend, or clarify forward-looking statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SOURCE Wolverine World Wide, Inc.

Michael D. Stornant, (616) 866-5728