Wolverine Worldwide Announces Record Financial Results for Fourth Quarter and Full Year 2011

ROCKFORD, Mich., Jan. 30, 2012 /PRNewswire/ -- Wolverine Worldwide (NYSE: WWW) today reported record revenue for both the fourth quarter and fiscal year ended December 31, 2011, as well as record earnings per share for the full year.

Highlights for the year:

• Revenue rose 12.9% to a record $1,409.1 million, driven by double-digit growth from each of the Company's branded operating groups: the Outdoor Group, Lifestyle Group and Heritage Group. Foreign exchange contributed $17.3 million, or 1.4%, to reported revenue growth.  This year's revenue represents the second consecutive year of double-digit growth, reflecting strong momentum for the Company's brand portfolio in almost all major geographies.
• Gross margin of 39.5% was equal to the prior year's reported gross margin, representing outstanding performance in a challenging sourcing and product cost environment.
• Operating margin expanded to a record 12.1%, compared to prior year reported operating margin of 11.4%.
• Diluted earnings per share increased 14.3%, to $2.48, compared to prior year adjusted earnings per share of $2.17.  Reported full-year earnings per share in 2010 were $2.11.
• The excellent free cash flow generated in 2011 was used to invest for future growth, fund benefit plans for employees and return value to shareholders through the payout of $22.7 million in dividends and the repurchase of 1.8 million shares for $65.3 million.

"Our portfolio of strong, global lifestyle brands combined to deliver another year of record performance," said Blake W. Krueger, the Company's Chairman and Chief Executive Officer.  "Each of our three branded operating groups and our direct-to-consumer business contributed to the year's outstanding results.  Additionally, all major international regions reported double-digit revenue growth, as our newly created International Group focused on the significant opportunities outside of North America.  Our distributor and licensee business, which markets our brands in nearly 190 countries, also had an exceptional year, with revenue up nearly 40%.  We are very proud of the record performance in 2011 and are excited about the global momentum of our brands, our continued geographic expansion and the impressive product innovations we have planned for 2012."

Highlights for the fourth quarter 2011:

• On top of the prior year's 23.2% fourth quarter revenue growth, revenue in this year's fourth quarter rose 5.6% to $406.5 million, representing the sixth consecutive quarter of record revenue, driven by growth from all branded operating groups.
• Gross margin in the quarter decreased 20 basis points to 36.9%, with incremental non-cash LIFO expense lowering gross margin by 80 basis points.
• The Company continued to invest behind its most important growth initiatives, with a double-digit increase in marketing investments in the quarter.
• Diluted earnings per share during the quarter of $0.47 compares to $0.52 in the prior year, a decrease of 9.6%.  Organic growth across the portfolio of brands was offset by i) $0.06 per diluted share in incremental investments to drive accelerated growth; ii) $0.04 per diluted share in incremental non-cash LIFO expense; iii) $0.02 per diluted share in higher tax expense as a result of a lower effective tax rate in the prior year; and iv) a one-time gain on the sale of a non-core business that added $0.02 per diluted share to fourth quarter fiscal 2010 results.

Don Grimes, the Company's Senior Vice President and Chief Financial Officer, commented, "We are extremely pleased with the Company's double-digit increases in both revenue and earnings per share, another record year by both measurements.  This exceptional financial performance in 2011 is indicative of the strength of our business model, the drive and focus of our seasoned management team and the discipline with which we manage the business.  We remain focused on our goal of delivering superior financial results while increasing brand investments to drive future growth."

The Company's outlook for 2012 reflects the following:

• The recent strengthening of the U.S. dollar vs. the British pound, the Canadian dollar and the Euro;  
• Revenue in the range of $1.485 billion to $1.525 billion, representing growth of 5.4% to 8.2% versus the prior year;
• Moderate gross margin expansion;
• Modest SG&A deleverage reflecting i) approximately $11.1 million, or $0.15 per diluted share, of incremental non-cash pension expense; ii) an estimated $2.5 million, or $0.03 per diluted share, of incremental expenses associated with a significant expansion of the Company's distribution infrastructure in support of future growth; and iii) incremental investments associated with retail store openings;
• A full-year effective tax rate of approximately 28%;
• Fully diluted weighted average shares outstanding of approximately 49 million; and
• Fully diluted earnings per share in the range of $2.60 to $2.70, representing growth of approximately 4.8% to 8.9% versus the prior year.  Adjusted for the estimated incremental non-cash pension expense, earnings per share are expected to grow in the range of 10.9% to 14.9%.

Krueger concluded, "We are in a strong position heading into the new year, with several global consumer trends and macro lifestyle trends working in our favor.  The expanding footprint of our lifestyle brands and our ability to target many different consumer groups through a variety of distribution channels enables us to outperform in many different economic environments.  We are certainly excited about the Company's prospects for 2012."  

The Company will host a conference call at 8:30 a.m. EST 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 "Investor Relations" in the navigation bar, and then click on "Webcasts & Presentations" from the side navigation bar of the "Investor Relations" page.  To listen to the webcast, your computer must have a streaming 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 April 16, 2012.

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 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 more than 190 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," "believes," "forecasts," "plans," "predicts," "projects," "is likely," "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.  Risk Factors include, among others:  the Company's ability to successfully develop its brands and businesses; changes in duty structures in countries of import and export including anti-dumping measures and trade defense actions; changes in consumer preferences or spending patterns; cancellation of orders for future delivery, or the failure of the Department of Defense to exercise future purchase options, award new contracts or the cancellation of existing contracts by the Department of Defense or other military purchasers; changes in planned customer demand, re-orders or at-once orders; the availability and pricing of footwear manufacturing capacity; reliance on foreign sourcing; failure of international licensees and distributors to meet sales goals or to make timely payments on amounts owed; disruption of technology systems; regulatory or other changes affecting the supply or price 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; the development of new initiatives; the risks of doing business in developing countries, and politically or economically volatile areas; 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.

SOURCE Wolverine Worldwide

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