Wolverine World Wide, Inc. Announces Record Earnings Per Share for Second Quarter 2010, Increases Full-Year Revenue and Earnings Guidance

ROCKFORD, Mich., July 15 /PRNewswire-FirstCall/ -- Wolverine World Wide, Inc. (NYSE: WWW) today reported strong results for the second quarter ended June 19, 2010, including its second consecutive quarter of record earnings per share.

Second quarter reported revenue was $258.2 million, an increase of 4.8% versus the prior year.  Continued impressive organic growth was partially offset by the delay into the subsequent quarter of a significant shipment to a third-party distributor and, as expected, by lower closeout sales – the latter of which had a beneficial impact on gross margin in the quarter.  Foreign exchange had minimal impact on reported revenue in the quarter.  

Excluding $2.7 million of charges in the quarter related to the Company's now fully implemented strategic restructuring plan, diluted earnings were a record $0.39 per share, compared to 2009 adjusted diluted earnings of $0.27 per share, an increase of 44.4%.  Reported diluted earnings in the quarter were $0.35 per share, compared to $0.16 per share in the second quarter of 2009.  

"The momentum in our business this year continued into the second quarter with very solid growth in both revenue and earnings," stated Blake W. Krueger, the Company's Chairman and Chief Executive Officer.  "Our strong financial results were well balanced across our portfolio, with all four major branded operating groups contributing to the outstanding earnings performance. Our retail and eCommerce businesses also delivered impressive results.  The Company's exceptional year-to-date earnings performance is a clear testament to the power of our global business model."

Don Grimes, the Company's Chief Financial Officer, commented, "The Company remains focused on meeting the performance needs and style demands of our consumers, while continually striving to increase market share across the product categories in which our brands compete.  We believe the quarter's excellent results underscore the Company's focus on rewarding our investors with an appropriate balance between near-term earnings growth and long-term investments for the future."

Highlights for the quarter:

• Adjusted for restructuring and related charges in both years, gross margin in the quarter expanded significantly to a record 40.3%, compared to prior year gross margin of 37.8%, driven by a lower percentage of closeout sales, lower product costs and benefits from year-over-year selling price increases.  Reported gross margin in the quarter was 40.2% versus 37.3% for the second quarter 2009.  

• Adjusted for restructuring and related charges in both years, operating expenses in the quarter were $76.7 million, compared to prior year operating expenses of $72.8 million, an increase of 5.4%.  The increase was driven, in part, by double-digit growth in advertising and marketing spend and incremental investments in selling infrastructure designed to fuel future growth.  Reported operating expenses in the quarter were $79.0 million versus $79.7 million for the second quarter 2009.

• Accounts receivable at the end of the quarter were up only 0.2% versus the quarter's mid-single digit revenue increase.  Days sales outstanding at quarter end decreased versus the prior year.  Inventory at the end of the quarter was down $12.9 million, or 7.0%, compared to the prior year.  

• The Company repurchased approximately 753,000 of its own shares in the quarter for an aggregate cost of $22.6 million.  Year to date, the Company has repurchased approximately 1.6 million shares for a total cost of $47.1 million.  The Company has a solid balance sheet, with no significant debt, no borrowings against its recently-announced new $150 million revolving credit facility and $110.1 million of cash and cash equivalents at the end of the second quarter.

Due to the strong year-to-date revenue performance across the portfolio and continued solid order trends, the Company is increasing its full-year revenue estimate to a range of $1.190 billion to $1.220 billion, representing growth of 8.1% to 10.8% versus the prior year.   The Company is also increasing its full-year earnings outlook, excluding restructuring and related charges of $0.06 per share, to a range of $1.98 to $2.04 per share. This range represents growth of 11.9% to 15.3% versus the prior year's adjusted diluted earnings per share of $1.77.  Reported earnings per diluted share are anticipated in the range of $1.92 to $1.98.

Krueger continued, "The Company is off to an excellent start this year.  Our increased 2010 revenue and earnings guidance reflects the strength and momentum of our lifestyle brands in the global marketplace.  Product innovation and compelling marketing across our portfolio are driving success at retail, as consumers have embraced our new product offerings.  We remain committed to meeting, and exceeding, the wants and needs of our consumers while also delivering superior financial returns to our shareholders."

The Company will host a conference call at 8:30 a.m. EDT today to discuss these results and current business trends.  To listen to the call at the Company's website, go to www.wolverineworldwide.com, click on "Investors" in the navigation bar, and then click on "Webcast" from the top navigation bar of the "Investors" page.  To listen to the webcast, your computer must have Windows Media Player, which can be downloaded for free at www.wolverineworldwide.com.  In addition, the conference call can be heard at www.streetevents.com. A replay of the call will be available at the Company's website through July 29, 2010.

With a commitment to service and product excellence, Wolverine World Wide, Inc. is one of the world's leading marketers of branded casual, active lifestyle, work, outdoor sport and uniform footwear and apparel.  The Company's portfolio of highly recognized 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®. The Company's products are carried by leading retailers in the U.S. and globally in 180 countries and territories. For additional information, please visit our website, www.wolverineworldwide.com.

This press release contains forward-looking statements. In addition, words such as "estimates," "anticipates", "expects," "intends," "should," "will," 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. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements.  Current uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters and makes it more likely that the Company's actual results could differ materially from expectations.  Risk Factors include, among others:  the Company's ability to successfully develop brands and businesses; changes in duty structures in countries of import and export including anti-dumping measures in Europe and other countries; trade defense actions by countries; the Company's ability to implement and recognize benefits from tax planning strategies; changes in consumer preferences or spending patterns; cancellation of orders for future delivery; changes in planned customer demand, re-orders or at-once orders; the availability and pricing of foreign footwear factory capacity; reliance on foreign sourcing; regulatory or other changes affecting the supply of materials used in manufacturing; the availability of power, labor and resources in key foreign sourcing countries, including China; the impact of competition and pricing; the impact of changes in the value of foreign currencies and the relative value to the U.S. Dollar; the development of new initiatives; the development of apparel; retail buying patterns; consolidation in the retail sector; changes in economic and market conditions; acts and effects of war and terrorism; weather; and additional factors discussed in the Company's reports filed with the Securities and Exchange Commission and exhibits thereto. Other Risk Factors exist, and new Risk Factors emerge from time to time that 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.

As required by the Securities and Exchange Commission Regulation G, the following tables contain information regarding the non-GAAP adjustments used by the Company in the presentation of its financial results:      

SOURCE Wolverine World Wide, Inc.