Wolverine Worldwide Reports Record Second-Quarter 2015 Revenue; Reaffirms Full-Year Adjusted Earnings Per Share Guidance

ROCKFORD, Mich., July 21, 2015 /PRNewswire/ -- Wolverine Worldwide (NYSE: WWW) today reported financial results for its second quarter ended June 20, 2015.  Adjusted financial results exclude restructuring and impairment and acquisition-related integration costs.

"The global demand for our family of brands remains strong and I am pleased to report that our top-line growth accelerated in the quarter and exceeded our internal expectations," commented Blake W. Krueger, Wolverine Worldwide's Chairman, Chief Executive Officer and President.  "As we move into the second half of the year, we remain intensely focused on our consumers and further investing in our key strategic initiatives – specifically our global brand-building efforts, omnichannel transformation and the continued expansion of our portfolio's international footprint."

SECOND-QUARTER 2015 REVIEW

• Consolidated revenue increased to a record $630.1 million, representing growth of 2.7% versus the prior year and 4.9% on a constant currency basis.  Adjusting for the impact of foreign exchange, retail store closures and termination of the Patagonia license agreement, adjusted revenue grew 6.9% versus the prior year.  Other highlights include:
  • Growth of 12.2% from the Heritage Group (14.6% in constant currency) and growth of 5.7% from the Performance Group (9.4% in constant currency).
  • U.S. wholesale revenue growth in the mid-single digits.
  • Planned retail store closures and termination of the Patagonia license agreement reduced revenue $11.6 million versus the prior year.
• Gross margin was 39.1%, a decrease of 100 basis points versus the prior year's gross margin, in line with Company expectations.
• Adjusted operating margin decreased 90 basis points versus the prior year to 8.1%, due primarily to higher pension expense and planned incremental brand investment.  Reported operating margin declined 40 basis points versus the prior year to 7.6%.
• Adjusted diluted earnings per share were $0.27, compared to an adjusted $0.31 per share in the prior year, and well ahead of Company expectations for the quarter.  Reported diluted earnings per share were $0.24, compared to $0.27 per share in the prior year.
• Cash and cash equivalents were $220.7 million and net debt was $612.4 million, a reduction of $286.5 million from the same period last year.
• The Company repurchased $5.9 million of its common stock in the quarter at an average price of $29.93 per share.

"The strong performance in the quarter was highlighted by mid-single digit revenue growth in our U.S. wholesale business, double-digit growth in EMEA and growth exceeding 50% in the Asia Pacific region, each on a constant currency basis," commented Mike Stornant, Senior Vice President and Chief Financial Officer.  "Revenue for the quarter also benefited from higher than anticipated international shipments that were initially expected to deliver in Q3 2015. Operating margin was also positive relative to our projections heading into the quarter, aided by strong discipline around discretionary spending to protect our key brand investment initiatives. The Company's global diversity and reliable fiscal discipline helped deliver another very good financial performance in Q2 2015."

UPDATE ON KEY STRATEGIC INITIATIVES
Over the past year, the Company has initiated several key strategic initiatives to accelerate growth and improve profitability.

• In July 2014, the Company announced a Strategic Realignment Plan for its consumer-direct operations.  As part of this effort, the Company announced plans to close approximately 140 stores by the end of fiscal 2015.  Today, the Company is announcing that total closures by year end are expected to number approximately 120, and that approximately 55 additional under-performing stores are expected to be closed over the next five years at their natural lease expiration.
• Also, as part of the Strategic Realignment Plan, the Company is consolidating offices and infrastructure in Canada to streamline operations, further realize synergies and drive growth in this important market.  This initiative was launched this past quarter and is expected to conclude by mid 2016.
• As part of the continuing evaluation of the performance of brands within its portfolio, the Company has decided to wind-down operations for its smallest brand - Cushe - and redeploy talent and resources to other higher-value opportunities.  The Company expects to incur $3.5 million of restructuring and impairment costs in fiscal 2015, of which $2.9 million was recorded in Q2 2015.
• The Company recently amended and extended its senior secured credit facilities.  In addition to increasing the overall size of the Company's borrowing capacity, the amended credit agreement extends the maturity date of the facilities, lowers the cost of the Company's debt, and increases flexibility with respect to stock repurchases and other restricted uses of cash. 

FISCAL 2015 GUIDANCE
The Company is narrowing its full-year revenue guidance and reaffirming its adjusted earnings per share guidance, as follows:

• Consolidated reported revenue is expected in the range of $2.82 billion to $2.85 billion, representing growth in the range of approximately 2% to 3% versus the prior year.  Constant currency revenue growth is expected in the range of approximately 5% to 6%.
• Adjusted diluted earnings per share is expected in the range of $1.53 to $1.60.  Constant currency adjusted diluted earnings per share is expected in the range of $1.68 to $1.75.

The Company now expects to incur total pre-tax charges of approximately $48 million to $51 million related to the previously announced Strategic Realignment Plan, exit of the Cushe business and debt extinguishment costs from the debt refinancing.  Of this amount, $26 million was recorded in fiscal 2014, and $23 million of the charges are expected to be incurred in fiscal 2015 with the balance recorded in fiscal 2016.  As a result, reported diluted earnings per share in fiscal 2015 is expected in the range of $1.39 to $1.46.

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 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 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^®, Sebago^®, Cushe^®, Chaco^®, Bates^®, and HYTEST^®.  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, wolverineworldwide.com.

FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements, including statements regarding future benefits relating to the amended credit agreement, the possibility of future share repurchases or other uses of cash, expected 2015 financial performance, 2015 investment plans and benefits, future growth plans and future benefits resulting from strategic initiatives.  In addition, words such as "guidance," "estimates," "anticipates," "believes," "forecasts," "step," "plans," "predicts," "projects," "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:  the impact of financial and credit markets on the Company, its suppliers and customers; changes in interest rates, tax laws, duties, tariffs, quotas, or applicable assessments in countries of import and export; changes in consumer preferences, spending patterns, buying patterns, price sensitivity or demand for the Company's products; changes in future pension funding requirements and pension expenses; the ability to secure and protect owned intellectual property or use licensed intellectual property; the risk of impairment to goodwill and other intangibles; cancellation of orders for future delivery; the failure of the U.S. Department of Defense to exercise future purchase options or award new contracts, or the cancellation or modification of existing contracts by the Department of Defense or other military purchasers; changes in relationships with, including the loss of, significant customers; the financial strength of the Company's customers, distributors and licensees; risks related to the significant investment in, and performance of, the Company's consumer-direct business; the impact of regulation, regulatory or legal proceedings and legal compliance risks; the cost, availability, and management of raw materials, inventories, services and labor for owned and contract manufacturers; currency fluctuations; currency restrictions; the risks of doing business in developing countries and politically or economically volatile areas; changes in national, regional or global economic and market conditions; the impact of seasonality and unpredictable weather conditions; problems affecting the Company's distribution system, including service interruptions at shipping and receiving ports; the potential breach of the Company's databases, or those of its vendors, which contain certain personal information or payment card data; the inability for any reason to effectively compete in global footwear, apparel and consumer-direct markets; 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 success of the Company's consumer-direct realignment initiatives; 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.

The following tables contain information regarding the non-GAAP adjustments used by the Company in the presentation of its financial results:

SOURCE Wolverine Worldwide

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http://www.wolverineworldwide.com

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