Wolverine Worldwide Announces Record Financial Results for Third Quarter 2011 and Raises Full-Year Guidance

ROCKFORD, Mich., Oct. 3, 2011 /PRNewswire/ -- Wolverine Worldwide (NYSE: WWW) today reported record financial results for the third quarter ended September 10, 2011, with double-digit growth in both revenue and earnings per share and record operating margin.

Third Quarter Highlights:

• Revenue rose 12.9% to $361.6 million from the prior year, representing the fifth consecutive quarter of record revenue, driven by exceptional growth from the Outdoor Group, Lifestyle Group and consumer direct businesses;
• Gross margin expanded 44 basis points to a record 40.6%;
• Operating income rose 17.8% and operating margin expanded to a record 15.6%;
• Diluted earnings per share increased 17.1% to $0.82, representing the seventh consecutive quarter of record earnings per share; and
• Trailing 12 months EBITDA (earnings before interest, taxes, depreciation and amortization) increased to $187.3 million.

"Strong global demand for our lifestyle brands, the consistent execution of our growth initiatives and the strength of our operating model drove another outstanding quarter for Wolverine Worldwide," stated Blake W. Krueger, Chairman and Chief Executive Officer.  "Underscoring the global appeal of our brand portfolio, we generated unit volume growth of over 25% in each of the Latin America, Europe/Middle East/Africa and Asia Pacific regions during the quarter.  As we look ahead, we expect our operating model, which serves a variety of consumer groups through multiple distribution channels in more than 190 countries and territories around the world, to provide us with a sustained platform for growth."  

Don Grimes, Senior Vice President and Chief Financial Officer, commented, "The Company's track record of financial excellence continued in the quarter.  The accelerating momentum of our brand portfolio in all major geographic regions keeps the Company mindful of the importance of continuing to invest in key growth initiatives, while still delivering impressive returns to our shareholders."

Additional details:

• The Outdoor Group (consisting of Merrell footwear and apparel, Chaco and Patagonia footwear) delivered another outstanding quarter, with revenue growth of 19.9%.  The Lifestyle Group (Hush Puppies, Sebago, Cushe and Soft Style) also had impressive performance with 21.6% revenue growth, and the Heritage Group (Wolverine footwear and apparel, Caterpillar footwear, Bates, HyTest and Harley-Davidson footwear) posted a 6.8% increase during the quarter.  Foreign exchange contributed $8.3 million to reported revenue in the quarter.

• Gross margin in the quarter expanded 44 basis points to a record 40.6% compared to prior-year gross margin of 40.1%.  The gross margin expansion during the quarter was primarily driven by selling price increases and favorable brand mix.

• Operating expenses in the quarter of $90.2 million were 25.0% of revenue, compared to 25.2% of revenue in the prior year.  Operating expenses increased 11.9% versus the prior year, driven by variable costs associated with the excellent revenue growth, continued increases in brand-building investments and the weaker U.S. dollar.

• The Company repurchased approximately 948,000 of its own shares in the quarter at an average price of $34.45, or an aggregate cost of $32.7 million.  The Company continues to have an exceptionally strong balance sheet, with $97.9 million of cash and cash equivalents at the end of the third quarter.

Today, the Company is raising its estimate for full-year revenue to a range of $1.40 billion to $1.43 billion (representing growth of 12.1% to 14.5%) and is raising its estimate for full-year diluted earnings per share to a range of from $2.46 to $2.52 (representing growth of 13.4% to 16.1% versus the prior year's adjusted earnings per share and 16.6% to 19.4% versus the prior year's reported earnings per share).  Included in the earnings guidance is the expectation for full-year gross margin that is flat to slightly up versus the prior year, modest full-year operating expense leverage and continued double-digit increases in marketing investments behind key growth initiatives.  

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 "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 January 30, 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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