2001 Record Year For Wolverine

March 21, 2002
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ROCKFORD — Despite a challenging economic environment and slightly lower fourth quarter sales, Wolverine World Wide reported record sales and earnings for fiscal 2001.

Full year net sales and other operating income for fiscal 2001 totaled $720 million, up from $701 million reported for 2000.

Last year's net earnings were $45 million, or $1.07 per share, versus $45 million, or 97 cents per share the year before.

Net sales and other operating income for 2001's fourth quarter were $224 million, in comparison with nearly $238 million for the year-ago period

Net earnings for the quarter were $16 million, or 38 cents per share, compared to $16.5 million, or 39 cents per share, for the same period in 2000.

President and CEO Timothy O'Donovan attributed the sales shortfall to lower boot shipments, particularly in the industrial boots category most sensitive to declines in manufacturing employment, and to lower leather sales as Wolverine and other footwear manufacturers cut back on new production.

While sales for the year were up a modest 2.7 percent, strong growth margins and lower interest expenses combined to produce the record bottom line results, O'Donovan noted.

Operating activities produced some $53 million in cash, reflected, in part, in the company's nearly $36 million year-end cash balance and debt levels that are at their lowest since 1997.

All of the company's major footwear businesses saw earnings increases, with the exception of the Caterpillar business, which experienced soft sales both domestically and in certain international markets, O'Donovan said.

He said Wolverine ended the year with relatively high inventories because the company probably didn't move fast enough to push back inventory commitments in response to the slowdown in retail sales after Sept. 11.

Year-end inventories increased from nearly $33 million to $177 million as a result of fourth quarter sales levels and inventory purchased to support growth and servicing of the Merrell and Wolverine brands, both of which had record years of strong demand, O'Donovan said.

The company will work to reduce inventory levels in the first half of fiscal 2002, he added.

Retailers were very cautious in reordering product in the fourth quarter in the face of declining sales trends. Reorders in the quarter were down 9 percent from the same period the year before.

As O'Donovan pointed out, Wolverine entered the fourth quarter with higher levels of unshipped orders, which offset a portion of the fall off in reorders.

The company ended the year with a 4 percent increase in order backlog, which included a 10 percent increase in orders scheduled for shipment in the first half of this year.

Because the soft retail environment is expected to carry over to the first half

of the year, Wolverine anticipates the rate of reorder in the first half will fall below historic levels.

The company expects full-year sales to range between $820 million and $830 million this year and anticipate earnings for the year will reach the $1.12 to $1.15 range.    

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