WWW Steps It Up Again

July 21, 2006
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GRAND RAPIDS — Making $1 billion in sales for the first time must feel pretty good. Having just done that in 2005, Wolverine World Wide appears to be set on seeing how sweet the second billion will be. The Rockford-based global footwear manufacturer just released its second-quarter financial performance report, the strength of which caused Wolverine to readjust its 2006 full-year earnings and revenue forecasts. CFO Stephen L. Gulis Jr. now expects the company to bring in between $1.12 billion and $1.14 billion in 2006, a $10 million increase from previous estimates.

The second quarter showed strong growth across all of Wolverine's product lines, with the exception of its old-guard Hush Puppies brand. And while that brand saw a decrease in revenue, it managed a "strong earnings increase," according to Chairman and CEO Timothy O'Donovan.

"We are pleased to report another record quarter for the company, achieving our 16th consecutive quarter of both record revenue and earnings per share," O'Donovan said in a written statement.

Added to a strong first quarter, 2006 is off to a solid start.

"Excluding investment spending for new growth initiatives, all four of our major branded footwear groups as well as our leather and retail operations reported double-digit profit improvements in the first half."

Those growth initiatives include launching a line of apparel to complement the company's popular Merrell footwear brand, and creating a new line of footwear in partnership with outdoor apparel manufacturer Patagonia

The second quarter of 2006 saw revenue grow to $238.5 million, a 10.5 percent increase compared to the same period in 2005. Earnings per share rose from 22 cents to 25 cents on profits of $14.2 million. Earnings would have been higher were it not for the aforementioned growth investments and charges related to coming into compliance with a new method of accounting for stock incentives.

The first half of 2006 showed numerous increases over 2005. Revenue broke the half-billion point, reaching $501.3 million, an 8.8 percent increase from 2005's $460.9 million. Earnings per share are up 20.4 percent to 59 cents per share. Net earnings increased to $33.9 million, up by 15.7 percent from last year's $29.3 million.

The company has maintained a healthy balance sheet, although Gulis admitted that inventories were down and that accounts receivable growth was lower than expected.

But those mild disappointments didn't tarnish the company's overall outlook. O'Donovan expressed confidence in the momentum coming off the first half of 2006, making the previously mentioned adjustments to the annual estimates.

"These estimates are consistent with our stated long-term objectives of growing annual revenue in the mid- to upper-single digit range and delivering double-digit earnings per share growth while investing in initiatives for the future."           

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