Wolverine Posts Record Earnings

April 20, 2007
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ROCKFORD —Wolverine World Wide reported record earnings and revenue for the first quarter of 2007, marking its 19th consecutive quarter of record revenue and earnings per share.

Growth was achieved in all global markets. Revenue for the quarter was $281.1 million, up 6.9 percent over the prior year's first quarter. Earnings per share were 39 cents, up 5 cents over the first quarter of 2006. Three of the company's four major branded operating groups contributed to the revenue increase. The Outdoor Footwear Group remained the leading profit generator, with revenue gains of 12.1 percent during the quarter and solid gains in the Merrell, Sebago and Patagonia businesses, said Chairman Timothy O'Donovan.

Merrell contributed about half of the increase and ended the quarter with a backlog increase of more than 20 percent. The Heritage Outdoor group, which includes the Caterpillar and Harley Davidson footwear, posted revenue gains of 11.8 percent over the first quarter of 2006, said President and CEO Blake Krueger. Krueger succeeded O'Donovan as CEO on Thursday. He most recently served as president and COO of the company.

Hush Puppies had a 1.6 percent revenue gain, while the Wolverine Footwear Group declined due to the planned decrease in the company's Department of Defense and private label contract business. Blake said that as expected, reduced demand from the DOD resulted in a decrease in base revenues of $2.8 million during the quarter. He said Wolverine expects continued weakness in demand from the DOD, and expects fiscal 2007 revenue will be reduced $13 million to $14 million as a result.

O'Donovan said Wolverine made good progress during the quarter in building its long-term global brand franchising, with solid results in the U.S., Canadian and European wholesale businesses, as well as in its international licensing and distribution businesses.

Revenue and earnings from the company's licensing and distribution operations around the world grew at a double-digit pace in the quarter.

CFO Stephen Gulis Jr. said first quarter earnings were strong as a result of the gross margin expanding to an all-time record. The first quarter gross margin of 40.6 percent was 30 basis points over the first quarter of 2006.

"The consumer continues to embrace our global lifestyle brands, and we ended the first quarter of 2007 with our order backlog up over 8 percent," O'Donovan said.

The company said it continues to expect revenue to range from $1.20 billion to $1.23 billion this year.    

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