Wolverine World Wide, Inc. today reported record revenue and net earnings for its second quarter of 2005, making this the fourteenth consecutive record quarter of both revenue and net earnings for the Company.
Second quarter 2005 revenue totaled $215.7 million, an 8.5 percent increase over second quarter 2004 revenue of $198.8 million. Earnings per share for the second quarter of 2005 were $0.22 compared to the $0.18 reported for the second quarter of 2004, an increase of 22.2 percent.
For the first half of 2005, revenue reached $460.9 million, an 8.8 percent gain over the $423.6 million reported for the first half of 2004. Earnings per share for the first half of 2005 grew to $0.49 per share up 28.9 percent from $0.38 per share for the same period of 2004.
“Our strong performance in the second quarter of 2005 was highlighted by the Outdoor Group, with Merrell leading the way among our portfolio of brands,” stated Timothy J. O'Donovan, the Company's Chairman and CEO. “Demand for the Company's spring product offerings was significant, as evidenced by the performance of our brands at retail and an increase in at-once orders in the quarter. Of our four branded operating groups, the Heritage Group, the Hush Puppies Company and the Outdoor Group all experienced double-digit revenue and earnings increases. The Wolverine Footwear Group did not experience a revenue increase due to the impact of the planned reduction in Bates military shipments.
“We are pleased with our continued growth in international markets, particularly Europe, where our branded wholesale business experienced a second quarter revenue increase of 39 percent. Our European CAT, Hush Puppies, Merrell and Sebago businesses all made significant contributions to the increase. Investments in our European infrastructure, brand-building initiatives and service capabilities are delivering a significant payoff as the business continues to expand.
“The first half of 2005 was driven by strong consumer response to innovative product offerings including Merrell Continuum, Wolverine MultiShox, CAT iTech and Hush Puppies sport fashion product. Our unique, market-right product paired with our powerful global brands continues to position the Company for further growth and progress toward its goal of becoming the world's premier footwear company in the markets we serve.”
Stephen L. Gulis Jr., the Company's CFO, reported, “During the second quarter of 2005, the Company continued to realize significant gross margin improvement. Gross margin grew to 39.2 percent, a 120 basis point increase over the second quarter of 2004. The positive impact of foreign currency exchange on product costs and a stronger mix of higher-margin goods contributed to the increase. A portion of these improvements was offset by slightly increased product costs from domestic and sourced operations.
“Our balance sheet remains strong, as the Company ended the quarter with a cash balance in excess of $74 million. Interest-bearing debt of $43.9 million reflects a $16.0 million reduction when compared to the second quarter of 2004. Additionally, working capital increases were at levels which supported the revenue increase.”
O'Donovan concluded, “We ended the second quarter of 2005 with our order backlog up approximately 12 percent which reflects strong retailer demand across our brands. We expect this backlog to assist us in reaching our previously stated 2005 annual estimates of revenue ranging from $1.045-$1.065 billion and earnings per share ranging from $1.22-$1.27 per share. These estimates do not include any impact from the potential repatriation of foreign earnings under the American Jobs Creation Act of 2004 which the Company is currently evaluating.”
The Company will host a conference call at 10:00 a.m. EDT today to discuss these results and current business trends. To listen to the call at the Company's website, go to http://www.wolverineworldwide.com , click on “Investors” in the navigation bar, and then click “Webcast” from the top navigation bar of the “Investors” page. To listen to the webcast, your computer must have Windows Media Player, which can be downloaded for free on the Wolverine World Wide website. In addition, the conference call can be heard at http://www.streetevents.com . A replay of the call will be available at the Company's website through July 27, 2005.
With a commitment to service and product excellence, Wolverine World Wide, Inc. is one of the world's leading marketers of branded casual, active lifestyle, work, outdoor sport and uniform footwear and slippers. The Company's portfolio of highly recognized brands includes: Bates(R), Hush Puppies(R), HYTEST(R), Merrell(R), Sebago(R) and Wolverine(R). The Company is also the exclusive footwear licensee of popular brands including CAT(R), Harley-Davidson(R), Patagonia(R) and Stanley(R). The Company's products are carried by leading retailers in the U.S. and globally in over 140 countries. For additional information, please visit our website, http://www.wolverineworldwide.com .