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Wolverine delivers another solid financial performance in Q2

Jul '09
Wolverine World Wide Inc reported financial results for its second quarter of 2009 and raised full-year earnings per share guidance.

Adjusting for the negative impact of changes in foreign exchange rates due to a stronger U.S. dollar, revenue declined only 3.1% in the quarter. An excellent performance in the U.S., driven primarily by the Merrell brand and by the acquisition of the Chaco brand earlier in the year, was offset by challenging trading conditions in many major global markets. Reported revenue in the second quarter was $246.4 million, a decline of 7.8% versus the prior year.

During the quarter, the Company continued to implement its 2009 strategic restructuring plan, which is focused on generating significant efficiencies across the business. Non-recurring restructuring and related charges of $7.9 million, or $0.11 per fully diluted share, were recorded in the quarter, of which $3.1 million were non-cash charges. Adjusting for these charges, fully diluted earnings in the quarter were $0.27 per share, compared to $0.33 per share in the prior year. Reported fully diluted earnings were $0.16 per share.

"We are pleased with our second quarter results, which were driven by our ability to grow proven brands and extend the global reach of new brands," stated Blake W. Krueger, the Company's CEO and President. "During the quarter, we achieved a double-digit increase in our Merrell business in the U.S. and got off to a strong start with the Chaco brand. Company revenue was above our internal plan for the quarter, which helped contribute to solid earnings results. Harley-Davidson and Sebago each posted revenue increases in the quarter, as did Hush Puppies in the important Canadian market. These positive results underscore the strength of our multi-brand, multi-country business model and our ability to execute during challenging economic times.

Krueger continued, "While the timing and trajectory of the recovery from the global recession is uncertain, we remain confident that our 12 lifestyle brands will continue to outperform by providing innovative, fresh and exciting products to our diverse global consumer base. We remain focused on providing products that fit consumers' needs and deliver on their performance and style demands."

Don Grimes, the Company's Chief Financial Officer, commented, "The Company delivered another solid financial performance in the second quarter of 2009. Our cash position is strong, we have excellent liquidity, and believe we are very well positioned to emerge from this challenging economic cycle in great shape - from both brand and financial perspectives. Balancing short-term revenue and earnings opportunities with long-term shareholder value creation remains a key focus for the Company, and we believe we are delivering on that challenge."

Highlights for the quarter:
• Adjusting for $1.0 million of non-recurring restructuring and related charges that areincluded in cost of sales and the impact of foreign exchange, gross margin was 37.7%, compared to prior-year gross margin of 38.3%, as higher product costs and a higher percentage of close-out sales more than offset selective price increases. Reported gross margin was 37.3%.

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