Wolverine posts double-digit sales growth in Q2

14 Jul '11

4 min read

Wolverine Worldwide reported double-digit growth in both revenue and earnings per share for the second quarter ended June 18, 2011, driven by the ongoing successful execution of the Company's growth strategies and elevated demand for its lifestyle brands.

Second Quarter Highlights:

• Revenue of $310.1 million, growth of 20.1% vs. the prior year, representing the fourth consecutive quarter of record revenue
• Diluted earnings per share of $0.48, growth of 23.1% vs. adjusted fully diluted earnings per share for the prior year and representing the sixth consecutive quarter of record earnings
• Double-digit revenue growth for all brand groups and the consumer direct business
• Double-digit revenue growth for all major geographic regions
• Operating expenses of 28.6% as a percentage of revenue versus an adjusted 29.7% in the prior year
• Record operating margin of 10.8%
• The Company reaffirms full year revenue and earnings guidance

"Our recent revenue performance clearly demonstrates the broad strength of our portfolio and the benefits of consistent investment in brand-building initiatives," stated Blake W. Krueger, Chairman and Chief Executive Officer. "The outstanding financial results in the second quarter were led by strong double-digit revenue increases in all branded groups, most notably in the Outdoor Group and our Merrell brand.

"2011 is an exciting time for Wolverine Worldwide, with many brands in our portfolio uniquely positioned for success. Our Merrell brand continues to dominate the outdoor space with cutting-edge product and new innovations such as the Merrell Barefoot Collection. In addition, our Hush Puppies, Sebago, Cat Footwear, Wolverine, and Patagonia Footwear brands are all taking advantage of current global lifestyle trends centered on heritage, Americana and authenticity."

Don Grimes, Senior Vice President and Chief Financial Officer, commented, "We remain focused on driving growth across the entire portfolio of brands while continuing to deliver superior returns on invested capital. We believe the quarter's excellent results underscore our efforts to deliver near-term earnings growth while also investing for the future."

Additional details:

• A modestly weaker U.S. dollar contributed $6.3 million to reported revenue in the quarter.
• The Outdoor Group (consisting of Merrell Footwear and Apparel, Chaco and Patagonia Footwear) led the way in the quarter, with revenue of $127.3 million, growth of 30.0% vs. the prior year, followed by 17.5% revenue growth from the Lifestyle Group (Hush Puppies, Sebago, Cushe and SoftStyle) and 15.0% revenue growth from the Heritage Group (Wolverine, Caterpillar Footwear, Bates, HyTest and Harley Davidson Footwear). Strong double-digit growth from the consumer direct business was partially offset by softness in the Company's leather business.
• Gross margin in the quarter was 39.4% compared to prior-year adjusted gross margin of 40.3%. The decline in gross margin versus the prior year was primarily attributable to negative results from the Company's owned manufacturing operations. Reported gross margin for the second quarter 2010 was 40.2%.

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