Wolverine World Wide, Inc. (NYSE:WWW) today reported record third quarter 2002 net sales and other operating income and net earnings. Earnings per share met the consensus estimate.
Net sales and other operating income rose 17.7% to $219.2 million from the $186.2 million reported for the third quarter of 2001. Net earnings for the third quarter of 2002 grew to $15.3 million, or $0.37 per share compared to $14.4 million, or $0.34 per share reported for the third quarter of 2001.
Year-to-date net sales and other operating income improved 14.0% to a record $565.8 million compared to the $496.1 million reported for the same period last year. Net earnings for the first three quarters reached a record $30.8 million, or $0.73 per share compared to $29.2 million, or $0.69 per share reported for the comparable period of 2001.
“I am extremely pleased with our continued growth and the number of our business units that contributed to our record third quarter sales results,” stated Timothy J. O'Donovan, President and CEO of Wolverine World Wide. “Merrell led the way, posting a sales increase exceeding 20% during the quarter. Solid upper-single to double-digit increases were also posted by our Bates, Harley-Davidson, Hush Puppies, CAT U.S. and Wolverine Leather operations. These results were offset in part by continued softness in the U.S. work boot market, which led to lower sales for both our Wolverine and Stanley work boot businesses.
“The integration of the acquired European Merrell and CAT Footwear operations is proceeding as planned. During the third quarter, these businesses accounted for approximately 70% of our sales increase and contributed to earnings which moved these businesses to just over the breakeven level on a year-to-date basis.”
Stephen L. Gulis Jr., Wolverine's CFO, reported, “On a pre-acquisition basis, third quarter gross margins were 36.4% and equaled margins reported for the same period last year. Including acquisitions, gross margins declined 80 basis points to 35.6% from the 36.4% reported for the third quarter of 2001 primarily due to refocusing the product lines of our new European operations. Consolidated SG&A increased to 24.4% of sales from 23.7% reported for the third quarter of 2001. This 70 basis point increase reflects higher pension costs and increases in variable selling and marketing expenditures.
“On a pre-acquisition basis, we have made year-over-year inventory and accounts receivable improvements for the third consecutive quarter. Excluding acquisitions, inventories and accounts receivable were below levels reported at the end of the third quarter of 2001 by 6.4% and 8.5% respectively. Including acquisitions, inventories and accounts receivables at the end of the third quarter were up 1.8% and 3.4% respectively from the prior year.”
O'Donovan concluded, “We are starting the fourth quarter with a 23.5% year-over-year gain in footwear order backlogs which reflects strong increases from both our ongoing and acquired businesses. We are most encouraged by the order increase for 2003 delivery, which is approximately $20 million greater than a year ago, as retailers have responded positively to our Spring '03 product offerings. Backlogs for fourth quarter 2002 delivery are up approximately 17.5%. Given this backlog increase and the anticipated level of fourth quarter reorders, we continue to expect full-year 2002 sales in the range of $820 to $830 million and earnings per share of $1.12 to $1.15 per share.
“In closing, while we are in the early stages of our planning process, our initial guidance for 2003 is for sales to increase within a range of $875 to $885 million, with earnings reaching $1.21 to $1.24 per share. This targeted earnings range reflects a significant increase in operating earnings which will be offset in part by additional pension costs of approximately $0.11 per share. This increase in pension costs is a non-cash expense driven by the current investment and interest rate environment.”
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, click “For Our Investors” in the navigation bar, then click “Conference Call” from the top navigation bar of the “For Our Investors” page, and then click on “Webcast.” To listen to the webcast, your computer must have Windows Media Player, which can be downloaded for free at www.wolverineworldwide.com.
In addition to Wolverine World Wide's company site, the conference call can be heard at www.streetevents.com. A replay of the call will be available at the Company's website, www.wolverineworldwide.com, through October 9, 2002.
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) and Wolverine(R). The Company also markets footwear under the following popular licensed brands: CAT(R), Coleman(R), Harley-Davidson(R), Karen Neuburger(R), Stanley(R) and Turtle Fur(R). The Company's products are carried by leading retailers in the U.S. and are distributed internationally in over 140 countries. For additional information, please visit our website, www.wolverineworldwide.com.
This press release contains forward-looking statements, including those relating to future sales, earnings, margins, fulfillment of backlog orders, fourth quarter 2002 re-orders, projected 2003 deliveries, pension costs, reorders and cash flow. In addition, words such as “estimates,” “expects,” “intends,” “should,” “will,” variations of such words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (“Risk Factors”) that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Risk Factors include, among others: changes in consumer preferences or spending patterns; cost and availability of inventories; the impact of competition and pricing; integration and operations of newly acquired businesses; retail buying patterns; consolidation in the retail sector; changes in economic and market conditions; and additional factors discussed in the Company's reports filed with the Securities and Exchange Commission and exhibits thereto. Other Risk Factors exist, and new Risk Factors emerge from time to time that may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Furthermore, the Company undertakes no obligation to update, amend or clarify forward-looking statements.