Wolverine World Wide has reported that its revenues grew by 11.6 percent to $284.9 million in the first quarter of 2010, including a 3.6 percent gain from foreign exchange. Adjusted for restructuring and related charges in both years, gross margin in the quarter grew by 0.4 percentage points to 41.6 percent. The reported gross margin in the quarter was up by 1.0 percentage point to 41.3 percent.
Net earnings almost tripled, rising to $27.5 million from $10.5 million in the same quarter of 2009. The operating profit more than doubled, up by 7.4 percentage points to 13.5 percent. Operating expenses as a percentage of revenues went up by 0.1 percentage point to 27.7 percent. Orders were up by 30 percent, and average sales prices grew in the mid single digits.
Wolverine said the increases in wholesale orders for footwear and apparel for 11 of the 12 weeks were attributable to a shift in the timing of orders and some increase trade confidence. Many retailers have been trimming their inventories for the last 18 months, and now they’re scrambling to refill their shelves. They are also placing orders earlier in anticipation of possible supply chain issues in Asia in the second half, which could hurt smaller brands. Also in the second half, Wolverine anticipates price increases related to leather and oil. Nonetheless, it expects margins to grow for the full year.
During the quarter, all four of the Company’s branded operating groups posted mid-single to double-digit revenue increases, balanced across all market segments and geographies. The Outdoor Group, led by Merrell, was the biggest contributor to the profit, though Heritage Brands, Wolverine Footwear and Hush Puppies all did well.
Revenues from the Outdoor Group rose by 15.7 percent to $113.5 million. Wolverine Footwear was up by 6.0 percent to $56.7 million. Heritage Brands, which includes Sebago and licenses for Caterpillar and Harley-Davidson, rose by 6.9 percent to $49.4 million. This included a single-digit increase at CAT, led by Europe, but a single-digit revenue drop at Harley-Davidson – though sales outside the U.S. grew in the double digits. Sebago sales grew in the double digits from strength in Europe and elsewhere outside the U.S. The Hush Puppies Group increased by 13.0 percent to $39.3 million.
All the brands in the Outdoor Group had double-digit increases. Merrell got a boost from its Outventure segment, and management is looking for good results from men’s and women’s fusion footwear. New Merrell lifestyle stores opened in Korea, Italy, Mexico and New York, with 110 branded Merrell stores at the end of the year, along with 950 shop-in-shops. The brand had a double-digit increase in comparable store sales. Patagonia footwear had a strong sell-through on key styles, and Chaco revenues were up in the double digits.
The company has continued its geographic expansion. In the first quarter, sales outside the U.S. accounted for 41.5 percent of the company’s consolidated revenue versus 38.0 percent in the prior year.
Based on the strong first quarter and encouraging order trends, Wolverine is increasing its revenue guidance for the full fiscal year. For fiscal 2010, the company is increasing its revenue estimate to a range of $1.160 billion to $1.190 billion, representing growth of 5.4 percent to 8.1 percent versus the prior year. The second quarter should show more modest growth, but then pick up again in the second half of the year.
