WWW Sales Earnings Are Tops

July 23, 2002
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ROCKFORD — Wolverine World Wide Inc. reported record net sales of $169 million and record net earnings of $9 million for the second quarter.

Net sales were $151.7 million and net earnings were $8.9 million for the same quarter a year ago.

For the first six months, net sales and other operating income reached a record $346.6 million, compared with $309.9 million for the first half of 2001.

Timothy O’Donovan, president and CEO, said earnings per share of 21 cents were even with last year’s second quarter and equal to consensus estimate.

He attributed the 11.6 percent growth in net sales to Wolverine’s recently acquired CAT and Merrell European operations, which added approximately 8.3 percent to second quarter sales volume.

The company’s ongoing businesses accounted for the remaining 3.3 percent increase, he said.

O’Donovan said the company continues to expect that its CAT and Merrell European acquisitions will add about 10 percent to 2002 sales.

In the first six months Wolverine generated some $39 million in cash flow from operations, allowing it to exit the second quarter with cash balances of nearly $27 million and no outstanding balance on its revolving credit.

“Our historical pattern has been to use cash and build working capital in the first half,” O’Donavan said.

“However, this year we generated significant amounts of cash from operations and kept our combined investment in inventory and receivables flat during the first half in spite of the European acquisitions.”

Merrell had a strong sales quarter, exceeding Wolverine’s planned 20 percent sales goal, he noted. Increases were strongest in the United States but also were above expectations in the United Kingdom and Canada.

Merrell’s women’s and children’s footwear businesses are growing faster than the men’s business.

While sales in the after-sport and sandal categories were excellent, he said, Merrell’s core multi-sport product continues to be a top performer.

“A recent industry survey in the hiking category indicated that Merrell multi-sport products were not only the No. 1 selling item in the category, but accounted for four of the top 10 best selling styles in retail.

“Merrell’s multi-category success in retail is opening up opportunities for deploying Merrell shops in some of the very best retail space in the U.S.”

Several new shops will be placed this fall with key retailers, with a more significant rollout planned for 2003, he said.

Bates, Harley-Davidson Footwear and the company’s leather operations also posted double-digit sales gains. Sears has committed to doubling the distribution of Harley from 200 to 400 stores.

Overall, sales for its Wolverine footwear group were down slightly. However, O’Donavan noted that Wolverine is now the fourth largest selling brand of hiking and rugged casual footwear in the United States.

Hush Puppies global business was down during the quarter but its order and backlog trend improved over the period. The company also is experiencing a rise in ordering activity from a number of mid-tier accounts, such as JC Penney.

“The combination of these two trends is encouraging as we enter the fall season,” he remarked.

O’Donavan said the company expects full year sales to range between $820 million to $830 million, with earnings in the $1.12 to $1.51 per share range.

Wolverine World Wide directors declared a quarterly cash dividend of 4.5 cents per share of common stock. The dividend is payable Nov. 1, 2002, to stockholders of record Oct. 1, 2002, and is equal to the amount paid in the previous quarter. It represents an 18 cents per share annual dividend.

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