Wolverine Worldwide 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% versusthe prior year, driven by variable costs associated with the excellent revenue growth, continued increases in brand-building investments and the weaker U.S. dollar.
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