Wolverine Posting Record Earnings

July 16, 2004
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ROCKFORD — Wolverine World Wide reported record revenue and earnings for the second quarter, marking its tenth consecutive quarter of record revenue and net earnings.

Revenues for the quarter were $198.8 million, compared with $184 million for the year-ago quarter. Earnings per share were 27 cents, compared with 23 cents reported for the second quarter of 2003.

For the first six months of the year revenue was $423.6 million, up from $375.5 million in the first half of 2003. Net earnings for the first half of the year were $23.3 million, or 57 cents a share, up from $16.7 million, or 41 cents per share, for the same period of 2003.

President and CEO Timothy O’Donovan said the Outdoor Group, which consists of the Merrell and Sebago businesses, had a strong quarter and remains the company’s main growth driver.

Merrell remained the top performer in the company’s portfolio of brands, with sales up more than 10 percent.

“The real news at Merrell is a continuing project — the most ambitious, most comprehensive product introduction in the history of the brand,” he said. “The wide sweeping changes to the line are the result of management’s intent to assure that the momentum built in the last two years is not only maintained but intensified as Merrell continues to outpace the competition.”

With the exception of the Caterpillar business, all Wolverine’s operations showed improvement in the quarter, O’Donovan said. He said the response to the new Caterpillar line was not as strong as the company had hoped for.

Wolverine’s Hush Puppy brand achieved a low double-digit sales gain in the quarter, with “very strong” results from the company’s United Kingdom business, while the brand achieved low single-digit increases in the United States, Canada and other international markets, he noted.

The company is upgrading and growing its Hush Puppy distribution network in the United States. The number of stores selling the brand will be up to 188 this fall.

The Wolverine footwear group realized a mid-single-digit sales increase for the quarter, with increases in Bates uniform and Harley Davidson footwear businesses, which O’Donovan said more than offset a decrease in the Wolverine boot business. He attributed the decrease to the company’s inability to meet demand for some top-selling new products.

The company will introduce its new Wolverine MultiShocks work boot at the August World Shoe Association trade show.

“Retailers have voted Wolverine the No. 1 work boot brand for design excellence for five consecutive years, and we’re going to give them a reason to make that stick,” O’Donovan remarked.

Bates had a strong quarter based on the strength of military uniform footwear sales to the U.S. Department of Defense, as well as through military post exchange stores. Sales also increased in the civilian uniform footwear category where distribution in the big box store channel is steadily growing, he said.

Harley Davidson footwear opened 100 new points of sales during the quarter, including a number of upper-tier fashion footwear stores.

Wolverine ended the quarter with an order backlog up 17 percent.

O’Donovan expects the backlog will assist the company in reaching its previously stated 2004 annual estimates of revenue ranging from $960 million to $980 million and earnings per share ranging from $1.44 to $1.52 per share.

“We believe the company is uniquely positioned for continued growth and is making progress toward its goal of becoming the world’s premier non-athletic footwear company.”    

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