Wolverine Worldwide is doubling up on its efforts to revitalize Saucony. After its previously reported agreement with Xtep International for the distribution of Saucony as well as Merrell in China, the group has taken over the distribution of Saucony in Italy from its Italian distributor, Sportlab.

It has set up a new Italian subsidiary in Montebelluna, Wolverine Italia, which will also become the global design center for the Saucony Originals line. There are apparently no plans for the moment to use the new Italian office for the distribution of other brands in Wolverine's large portfolio.

The move follows the sudden death one month ago of Marzio Brombal, the well-known Italian manager who had set up Sportlab in the year 2000 to distribute Saucony and other brands, including most recently EMU Australia, that are no longer in its portfolio. The company reportedly reached annual sales of €60 million at a certain point. It has been particularly successful in the lifestyle segment with its Saucony Originals line, where Italy was claimed to be Saucony's largest market, while remaining one of the three major brands in Italy's performance running market.

In another strategic move, Wolverine has rearranged its brand portfolio, eliminating one of its former business units, the so-called Wolverine Heritage Group. Saucony remains with the so-called Boston Group, which also includes Sperry and Keds and continues to be run by Richie Woodworth. All the other brands, which are still located at the company's head office in Michigan, are now part of a so-called Michigan Group, and they are led by Todd Spaletto, who was in charge of outdoor brands like Merrell and Chaco in the former Outdoor & Lifestyle Group.

For the first quarter of its financial year, which ended on March 30, Wolverine reported a drop of 13 percent in its net income to $40.5 million on a sales decline of 2.0 percent to $523.4 million. On a constant-currency basis, sales were down by 0.9 percent. The management pointed out that four of its brands, including Merrell and Saucony, performed above plan, and it expressed confidence that some initiatives will take hold at certain brands in the second half, allowing the company to meet the previously stated goal of a turnover of $2.28 billion to $2.33 billion for the full financial year.

Saucony has some way to go as its sales declined at a mid-teen rate in the quarter, contributing to a 6.5 percent drop to $204.8 million in the Boston Group's revenues, but Wolverine's management was bullish about the brand because of the planned introduction of new technical running shoes later in the year. Sperry's sales declined by more than 10 percent, while Keds scored a gain of more than 20 percent. In constant currencies, the Boston Group saw a sales decline of 5.7 percent.

The Michigan Group's sales increased by 2.3 percent to $302.7 million in the quarter, with a 3.7 percent gain in local currencies that was largely due to a currency-neutral increase in the low single digits by its largest brand, Merrell. Sales rose by more than 20 percent for CAT footwear and by more than 10 percent for the Wolverine brand. These gains were offset by declines at Chaco, Hush Puppies and Bates.

The management sees Merrell accelerating its growth this year, finishing it up in the high single digits. CAT should go up at a high single-digit rate and Wolverine at a mid-single-digit rate.

The Wolverine group's gross margin declined by 0.6 percentage points to 42.1 percent during the quarter, as compared to a year ago. The adjusted operating margin fell by 1.1 percentage points to 10.9 percent. Nevertheless, the board of directors declared a 25 percent increase in dividends, which follows a 33 percent increase decided in the previous year.

The management still expects to reach a gross margin of between 41.3 and 41.8 percent and an adjusted operating margin of 12.2 to 12.6 percent for the full financial year.

The company plans to open several new factory outlet stores for Merrell and Sperry during the balance of this year. It will also make significant investments in the refurbishment of its head office in Rockford, Michigan, to better retain and attract good talent.