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Revenues down 2.4% at Wolverine Worldwide in Q1 FY'12

23
Apr '12
Wolverine Worldwide reported financial results for the first quarter ended March 24, 2012.

Revenue for the quarter was $322.8 million, a decrease of 2.4% vs. the prior year's first quarter when revenue grew approximately 16%. Foreign exchange negatively impacted revenue by $2.2 million. In addition to the comparison to strong growth in the prior year, current year revenue growth was tempered by macroeconomic and financial uncertainty in Europe, which has contributed to a soft retail environment in that important market.

Diluted earnings per share in the first quarter were $0.64, a decrease of 11.1% vs. the prior year's earnings per share of $0.72, but significantly better than the Company's expectations going into the quarter. The decrease in revenue, a modest decline in gross margin and moderate SG&A deleverage were partially offset by a significantly lower effective tax rate.

"While we expect 2012 to be another record year for the Company, most of our growth is planned for the second half, as retailers remain cautious and are focused on keeping inventories lean," said Blake W. Krueger, the Company's Chairman and Chief Executive Officer.

"The global strength of our brand portfolio remains one of our most significant competitive advantages. Our expectations for growth in many international markets will help balance the current uneven pace in the United States and the recessionary environment in Europe. We have one of the very best collections of premium lifestyle brands in the business, with the advantage of reaching consumers in more than 190 countries around the world."

• Gross margin in the quarter decreased 60 basis points to 41.0% compared to prior-year gross margin of 41.6%. Selling price increases and gains from foreign exchange contracts partially offset product costs increases, higher closeout sales and an unfavorable sales mix shift.
• Operating expenses in the quarter of $95.2 million were lower than planned, at 29.5% of revenue, compared to 26.7% of revenue in the prior year. Overall spending discipline was offset by increased pension expense and non-recurring employee separation costs, the benefit of which will occur over the balance of the fiscal year.
• The quarter benefitted from a favorable ruling related to long-term global tax planning strategies that lowered tax expense by $5.6 million, or $0.12 per share.
• The Company repurchased approximately 65,000 of its own shares in the quarter at an average price of $37.09, or an aggregate cost of $2.4 million. The Company continues to have an exceptionally strong balance sheet, with $123.3 million of cash and cash equivalents at the end of the first quarter.
• While the branded operating groups had revenue declines during the quarter, the Other Business Units (comprised of Wolverine Retail and Wolverine Leathers) delivered revenue growth of 4.8%, driven by solid comp store sales gains, new store locations and continued strong eCommerce growth.


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