Wolverine Posts Annual Records

February 14, 2005
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ROCKFORD — Wolverine World Wide Inc. reported record revenue of nearly $992 million for fiscal 2004, which marked an 11.6 percent increase over fiscal 2003 revenue. Earnings per share were $1.64, up 29 percent from the $1.27 per share reported in 2003.

For the fourth quarter ended Jan. 1, 2005, the company posted revenue of $307.4 million, compared with fourth quarter 2003 revenue of $282.8 million. Earnings per share increased 13 percent to 52 cents, compared with earnings per share of 46 cents the year before.

While the Merrell business continues to be the most significant growth driver, the company had solid 2004 revenue increases in each of its four branded footwear groups and double digit earnings increases from all of its operational groups, said President and CEO Timothy J. O’Donovan.

“Geographically, we experienced strong results in our U.S., Canadian and European wholesale businesses, as well as our international licensing and distribution businesses. Europe, in particular, had an excellent 2004, with strong results for Merrell, Caterpillar, Hush Puppies and the Sebago brands,” O’Donovan said. “Globally, we’ve never been stronger …”

Business by business, some of the financial highlights of the fourth quarter and fiscal year were as follows:

  • Hush Puppies global revenues were up 9.7 percent in the quarter and 4.4 percent for the year. The brand’s contribution to profit increased by more than 50 percent for both the quarter and full year.
  • Caterpillar and Harley Davidson revenues were up more that 10 percent for the fourth quarter, producing a full-year revenue increase of nearly 5 percent. The footwear group’s earnings contribution to the company increased by 65 percent for the year.
  • Wolverine Footwear Group saw a 1.2 percent revenue decline in the quarter but achieved a 5.4 percent revenue increase for the full year. The group’s earnings contribution increased by more than 20 percent in the quarter and by more than 15 percent for the year.
  • Bates had a record year in terms of revenues and profit contributions in 2004, with revenue gains achieved in both the military and civilian uniform footwear segments. A significant portion of the brand’s sales gain for the year resulted from increased demand from the Department of Defense.
  • Merrell and Sebago brands had a strong quarter and full year. Merrell continued to lead the way in sales gains and as a top earnings producer, with revenues up more than 11 percent in the quarter and more than 17 percent for the year. Sebago revenues came close to the company’s $30 million annual sales goal during its first year under the Wolverine World Wide umbrella.

O’Donovan said the company made significant progress in fiscal 2004 toward improving profitability of its European operation, where operating margins are “modestly lower” than its North American operating margins, he said, adding that that gap has begun closing.

The company sees continued opportunities for revenue and earnings growth in Europe, he said, and recently took some steps to further extend its reach in that market.

As of the first of this year, for instance, the company transitioned Merrell distributors in Sweden and Finland from the distributor model to an owned-wholesale business model. The Sebago distribution arrangement in the U.K. and Germany also is being converted to owned wholesale operations following a “successful transition” in France last year, O’Donovan noted.

Wolverine has taken similar actions in Canada. It’s presently transitioning its Wolverine Boots and Shoes and CAT Footwear businesses from the distributor model to a wholly owned business model, so now it directly wholesales all its major brands in that country.

According to O’Donovan, those moves will enable Wolverine to better serve its customers and improve its competitive stance in those markets.

CFO Stephen L. Gulis Jr. said the financial strength of Wolverine’s business has “never been better.”

“We generated a record level of cash from operating activities, — approximately $105 million — and our key financial ratios and metrics improved during the year,” Gulis said.

O’Donovan said Wolverine’s 2004 year-end backlog is up more than 13 percent over 2003 year-end levels.

“Looking ahead to 2005, we are one step closer to realizing our vision of becoming the world’s premier non-athletic footwear company as we anticipate crossing the $1 billion mark in revenue for the first time in the company’s history.”

Wolverine increased its previously stated 2005 estimates of revenue by $5 million to a range of $1.04 billion to $1.06 billion and increasing earnings per share to a range of $1.79 to $1.86.    

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