WOLVERINE WORLD WIDE INC DE

Previous wording

The Company’s brands are marketed in approximately 170 countries and territories at March 30, 2024, including through owned operations in the U.S., Canada, the United Kingdom and certain countries in continental Europe and Asia Pacific. In other regions (Latin America, portions of Europe and Asia Pacific, the Middle East and Africa), the Company relies on a network of third-party distributors, licensees and joint ventures. At March 30, 2024, the Company operated 129 retail stores in the U.S., Europe and Canada and 54 direct-to-consumer eCommerce sites.

Current wording

The Company’s brands are marketed in approximately 170 countries and territories at June 29, 2024, including through owned operations in the U.S., Canada, the United Kingdom and certain countries in continental Europe and Asia Pacific. In other regions (Latin America, portions of Europe and Asia Pacific, the Middle East and Africa), the Company relies on a network of third-party distributors, licensees and joint ventures. At June 29, 2024, the Company operated 121 retail stores in the U.S., Europe and Canada and 54 direct-to-consumer eCommerce sites.

Previous wording

In the third quarter of fiscal 2023, the Company entered into a multi-year licensing agreement of the Hush Puppies® brand in the United States and Canada. In addition, the Company completed the sale of Hush Puppies® trademarks, patents, copyrights, and domains in China, Hong Kong, and Macau.

Current wording

In the third quarter of fiscal 2023, the Company entered into a multi-year licensing agreement of the Hush Puppies® brand in the United States and Canada. In addition, the Company completed the sale of the Hush Puppies® trademarks, patents, copyrights, and domains in China, Hong Kong, and Macau. The Company will continue to own the Hush Puppies® brand throughout the rest of the world.

Previous wording

•The effective tax rates in the first quarters of 2024 and 2023 were 4.1% and 36.3%, respectively.

Current wording

•The effective tax rates in the second quarters of 2024 and 2023 were 13.1% and 19.8%, respectively.

Previous wording

•Diluted loss per share for the first quarter of 2024 was $0.19 per share compared to diluted earnings per share of $0.23 per share for the first quarter of 2023.

Current wording

•Diluted earnings per share for the second quarter of 2024 were $0.17 per share compared to diluted earnings per share of $0.30 per share for the second quarter of 2023.

Previous wording

•The Company declared cash dividends of $0.10 per share in the first quarters of both 2024 and 2023.

Current wording

•The Company declared cash dividends of $0.10 per share in the second quarters of both 2024 and 2023.

Previous wording

•Cash flow used in operating activities was $37.2 million for the first quarter of 2024 compared to $97.8 million for the first quarter of 2023.

Current wording

•Cash flow used in operating activities was $10.5 million for the first two quarters of 2024 compared to cash flow provided by operating activities of $45.9 million for the first two quarters of 2023.

Previous wording

•Compared to the first quarter of 2023, inventory as of the first quarter of 2024 decreased $371.6 million, or 51.2%. As of the end of the first quarter of 2024, the Company had $20.6 million of inventory in-transit, which represents a decrease of $32.2 million as compared to the end of the first quarter of 2023.

Current wording

•Compared to the second quarter of 2023, inventory as of the second quarter of 2024 decreased $350.8 million, or 54.1%. As of the end of the second quarter of 2024, the Company had $18.9 million of inventory in-transit, which represents a decrease of $13.0 million as compared to the end of the second quarter of 2023.

Previous wording

Revenue was $394.9 million for the first quarter of 2024, representing a decline of $204.5 million compared to the first quarter of 2023. The change in revenue reflected a $96.1 million, or 24.9%, decline from the Active Group, a $24.4 million, or 21.3%, decline from the Work Group, and a $84.0 million, or 84.8%, decline from Other. The Active Group’s revenue decrease was primarily driven by a decrease of $47.3 million from Merrell®, $32.5 million from Saucony®, and $14.1 million from Chaco®. The Work Group’s revenue decrease was primarily driven by a decrease of $10.5 million from Wolverine®, $8.6 million from Cat®, $2.3 million from HYTEST®, and $2.1 million from Bates®. The decline in Other revenue was primarily driven by a decrease in revenue from businesses that were sold in 2023 and 2024, and the licensing of the Hush Puppies®business, including decreases of $62.9 million from Sperry®, $12.2 million from the performance leathers business, $8.4 million from Hush Puppies®, and $6.5 million from Keds®. Changes in foreign exchange rates increased revenue by $3.1 million during the first quarter of 2024. Direct-to-consumer revenue decreased during the first quarter of 2024 by $20.1 million, or 15.9%, compared to the first quarter of 2023.

Current wording

Revenue was $425.2 million for the second quarter of 2024, representing a decline of $163.9 million compared to the second quarter of 2023. The change in revenue reflected a $77.4 million, or 20.2%, decline from the Active Group, a $12.8 million, or 10.9%, decline from the Work Group, and a $73.7 million, or 83.8%, decline from Other. The Active Group’s revenue decrease was primarily driven by a decrease of $39.7 million from Saucony®, $33.9 million from Merrell® and $3.7 million from Chaco®. The Work Group’s revenue decrease was primarily driven by a decrease of $5.6 million from Cat®, $3.3 million from HYTEST®, $2.4 million from Harley-Davidson®, and $1.3 million from Wolverine®. The decline in Other revenue was primarily driven by a decrease in revenue from businesses that were sold in 2023 and 2024 and the licensing of the Hush Puppies®business, including decreases of $55.6 million from Sperry®, $10.9 million from the performance leathers business and $8.0 million from Hush Puppies®. Changes in foreign exchange rates decreased revenue by $0.7 million during the second quarter of 2024. Direct-to-consumer revenue decreased during the second quarter of 2024 by $19.0 million, or 14.4%, compared to the second quarter of 2023.

Previous wording

Gross margin was 45.9% in the first quarter of 2024 compared to 39.4% in the first quarter of 2023. The gross margin increase in the first quarter was primarily driven by favorable distribution channel mix, less end-of-life inventory sales, less supply chain costs and less promotional eCommerce channel activity.

Current wording

Gross margin was 43.1% in the second quarter of 2024 compared to 38.7% in the second quarter of 2023. The gross margin increase in the second quarter was primarily driven by less end-of-life inventory sales, less supply chain costs and less promotional activity.

Previous wording

Operating expenses decreased $6.5 million, from $191.0 million in the first quarter of 2023 to $184.5 million in the first quarter of 2024. The decrease was primarily driven by lower selling costs ($10.7 million), lower advertising costs ($9.0 million), lower distribution costs ($8.0 million), lower general and administrative costs ($6.5 million), and lower product development costs ($2.4 million), partially offset by the 2023 gain on the divestiture of the Keds® business ($20.1 million), the impairment of long-lived assets ($6.1 million), higher environmental and other related costs, net of insurance recoveries ($2.5 million), and higher reorganization costs ($1.3 million). Environmental and other related costs were $1.9 million and $1.6 million in the first quarter of 2024 and 2023, respectively.

Current wording

Operating expenses decreased $34.1 million, from $372.7 million in the first two quarters of 2023 to $338.6 million in the first two quarters of 2024. The decrease was primarily driven by lower selling costs ($22.6 million), lower general and administrative costs ($20.4 million), lower advertising costs ($20.2 million), lower distribution costs ($13.5 million), lower impairment of long-lived assets ($6.3 million) and lower product development costs ($4.2 million), partially offset by the 2023 gain on the divestiture of the Keds®business ($20.1 million), higher environmental and other related costs, net of insurance recoveries ($16.2 million), higher incentive compensation costs ($8.8 million) and higher reorganization costs ($8.0 million). Environmental and other related costs were $12.7 million and $3.7 million in the first two quarters of 2024 and 2023, respectively.

Previous wording

Net interest expense was $12.0 million in the first quarter of 2024 compared to $15.8 million in the first quarter of 2023. The decrease in interest expense is due to lower average principal balances of variable rate debt.

Current wording

Net interest expense was $11.9 million in the second quarter of 2024 compared to $16.1 million in the second quarter of 2023. Net interest expense was $23.9 million in the first two quarters of 2024 compared to $31.9 million in the first two quarters of 2023. The decrease in interest expense for both the quarter-to-date and year-to-date periods is due to lower average principal balances of variable rate debt.

Previous wording

Other income was $0.8 million in the first quarter of 2024, compared to other expense of $1.2 million in the first quarter of 2023.

Current wording

Other income was $0.8 million in the second quarter of 2024, compared to other income of $0.4 million in the second quarter of 2023. Other income was $1.6 million in the first two quarters of 2024, compared to other expense of $0.8 million in the first two quarters of 2023.

Previous wording

The Company’s portfolio of brands are organized into the following reportable segments.

Current wording

The Company’s portfolio of brands is organized into the following reportable segments.

Previous wording

The Active Group’s operating profit decreased $15.9 million, or 30.5%, in the first quarter of 2024 compared to the first quarter of 2023. The operating profit decrease was due to revenue decreases, partially offset by a 350 basis point increase in gross margin and a $14.6 million decrease in selling, general and administrative expenses. The increase in gross margin in the current year period was due to decreased end-of-life inventory sales and lower promotional activity in the Company's wholesale and direct-to-consumer channels. The decrease in selling, general and administrative expenses in the current year periods was primarily due to lower variable costs including advertising costs and selling costs and lower employee costs.

Current wording

The Active Group’s operating profit increased $2.3 million, or 5.8%, in the second quarter of 2024 compared to the second quarter of 2023. The operating profit increase was due to a 550 basis point increase in gross margin and a $17.5 million decrease in selling, general and administrative expenses, partially offset by revenue decreases. The Active Group’s operating profit decreased $13.6 million, or 14.8%, in the first two quarters of 2024 compared to the first two quarters of 2023. The operating profit decrease was due to revenue decreases, partially offset by a 440 basis point increase in gross margin and a $30.8 million decrease in selling, general and administrative expenses. The increase in gross margin in the current year period was due to decreased closeout sales and less promotional activity. The decrease in selling, general and administrative expenses in the current year periods was primarily due to lower advertising costs, selling expenses and distribution costs.

Previous wording

The Work Group’s revenue decreased $24.4 million, or 21.3%, during the first quarter of 2024 compared to the first quarter of 2023. The revenue decline was primarily driven by a decrease of $10.5 million from Wolverine®, $8.6 million from Cat®, $2.3 million from HYTEST®, and $2.1 million from Bates®. The Wolverine® decrease was primarily due to softer consumer demand in the U.S. wholesale channel, high inventory levels at certain retail customers, and lower closeout sales versus the prior year. The Cat®decrease was primarily due to lower closeout sales versus the prior year and softer consumer demand in the direct-to-consumer channel. The HYTEST® decrease was primarily due to timing of shipments in certain channels. The Bates® decrease was primarily due to softer consumer demand in the U.S. wholesale channel, high inventory levels at certain retail customers, and lower closeout sales versus the prior year.

Current wording

The Work Group’s revenue decreased $12.8 million, or 10.9%, during the second quarter of 2024 compared to the second quarter of 2023. The revenue decline was primarily driven by decreases of $5.6 million from Cat®, $3.3 million from HYTEST®, $2.4 million from Harley-Davidson®, and $1.3 million from Wolverine®. The Work Group’s revenue decreased $37.2 million, or 16.0%, during the first two quarters of 2024 compared to the first two quarters of 2023. The revenue decline was primarily driven by decreases of $14.1 million from Cat®, $11.8 million from Wolverine®, $5.6 million from HYTEST®, $3.3 million from Harley-Davidson® and $2.4 million from Bates®. The Cat®decrease was primarily due to timing of shipments in the U.S. and international channels, lower closeout sales versus the prior year and softer consumer demand in the direct-to-consumer channel. The Wolverine® decrease was primarily due to softer consumer demand in the U.S. wholesale channel and lower closeout sales versus the prior year. The HYTEST®decrease was primarily due to due to lower closeout sales versus the prior year. The Harley-Davidson® decrease was primarily due to declines in top dealer accounts. The Bates® decrease was primarily due to softer consumer demand in the U.S. wholesale channel, high inventory levels at certain retail customers, and lower closeout sales versus the prior year.

Previous wording

The Other category’s revenue decreased $84.0 million, or 84.8%, in the first quarter of 2024 compared to the first quarter of 2023. The revenue decline was driven by a decrease of $62.9 million from Sperry®, $12.2 million from the performance leathers business, $8.4 million from Hush Puppies®, and $6.5 million from Keds®. The Sperry® decrease is due to the divestiture of the business effective January 10, 2024. The performance leathers business decrease is due to the divestiture of the U.S. leathers business effective August 23, 2023 and Asia-based leathers business effected December 28, 2023. The Hush Puppies®decrease is due to the licensing of the brand in the United States and Canada starting in the third quarter of 2023. The Keds®decrease is due to the divestiture of the business effective February 4, 2023.

Current wording

The Other category’s revenue decreased $73.7 million, or 83.8%, in the second quarter of 2024 compared to the second quarter of 2023. The revenue decline was driven by decreases of $55.6 million from Sperry®, $10.9 million from the performance leathers business and $8.0 million from Hush Puppies®. The Other category’s revenue decreased $157.7 million, or 84.3%, in the first two quarters of 2024 compared to the first two quarters of 2023. The revenue decrease was primarily driven by decreases of $116.1 million from Sperry®, $22.8 million from the performance leathers business, $16.4 million from Hush Puppies®and $6.5 million from Keds®. The Sperry® decrease is due to the divestiture of the business effective January 10, 2024. The performance leathers business decrease is due to the divestiture of the U.S. leathers business, effective August 23, 2023 and the Asia-based leathers business, effective December 28, 2023. The Hush Puppies®decrease is due to the licensing of the brand in the United States and Canada starting in the third quarter of 2023. The Keds®decrease is due to the divestiture of the business, effective February 4, 2023.

Previous wording

Other operating profit decreased $2.0 million, or 32.3%, in the first quarter of 2024 compared to the first quarter of 2023. The operating profit decrease was due to revenue decreases partially offset by a 2,550 basis point increase in gross margin and a $26.2 million decrease in selling, general and administrative costs. The increase in gross margin in the current year period was primarily due to the divestiture of the lower margin Sperry®business, performance leathers business, and Keds®business, along with the licensing of the Hush Puppies®business. The decrease in selling, general and administrative expenses in the current year period was primarily due to lower advertising costs, selling expenses and the divestiture of the Sperry®business, performance leathers business, and Keds®business, along with the licensing of the Hush Puppies®business.

Current wording

Other operating profit decreased $5.3 million, or 39.3%, in the second quarter of 2024 compared to the second quarter of 2023. The operating profit decrease was due to revenue decreases, partially offset by a $22.5 million decrease in selling, general and administrative costs. Other operating profit decreased $7.3 million, or 37.1%, in the first two quarters of 2024 compared to the first two quarters of 2023. The operating profit decrease was due to revenue decreases, partially offset by a $49.9 million decrease in selling, general and administrative costs. The decrease in selling, general and administrative expenses in the current year period was primarily due to the divestiture of the Sperry®business, performance leathers business, and Keds®business, along with the licensing of the Hush Puppies®business.

Previous wording

Corporate expenses increased $27.7 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to the 2023 gain recorded on the sale of the Keds®business ($20.1 million), higher impairment of long-lived and intangible assets ($6.1 million), higher environmental and other related costs ($2.5 million), and higher reorganization activities ($1.3 million), partially offset by lower employee costs ($0.3 million).

Current wording

Corporate expenses increased $41.5 million in the first two quarters of 2024 compared to the first two quarters of 2023, primarily due to the 2023 gain recorded on the sale of the Keds®business ($20.1 million), higher environmental and other related costs ($16.2 million), higher incentive compensation costs ($9.7 million) and higher reorganization costs ($8.0 million), partially offset by lower impairment of long-lived assets ($6.3 million) and lower employee costs ($3.4 million).

Previous wording

(1)Cash and cash equivalents at December 30, 2023 and April 1, 2023 includes $5.6 million and $4.4 million, respectively, of cash and cash equivalents that are classified as held for sale that are not included in cash and cash equivalents in the Consolidated Balance Sheets.

Current wording

(1)Cash and cash equivalents at December 30, 2023 and July 1, 2023 includes $5.6 million and $3.6 million, respectively, of cash and cash equivalents that are classified as held for sale that are not included in cash and cash equivalents in the Consolidated Balance Sheets.

Previous wording

Cash and cash equivalents of $169.7 million as of March 30, 2024 were $49.1 million higher compared to April 1, 2023. The increase is due primarily to cash provided by operating activities of $182.4 million, proceeds from divestitures of $199.5 million, contributions from noncontrolling interests of $31.2 million, and proceeds from company-owned life insurance policies of $7.0 million, partially offset by borrowings less repayments of debt of $325.0 million, cash dividends paid of $32.3 million, and additions to property, plant and equipment of $12.4 million. The Company had $728.1 million of borrowing capacity available under the revolving facility as of March 30, 2024. Cash and cash equivalents located in foreign jurisdictions totaled $149.4 million as of March 30, 2024.

Current wording

Cash and cash equivalents of $148.3 million as of June 29, 2024 were $31.8 million lower compared to July 1, 2023. The decrease is due primarily to cash provided by operating activities of $65.4 million, proceeds from divestitures of $199.5 million, contributions from noncontrolling interests of $29.1 million, and proceeds from company-owned life insurance policies of $7.0 million, partially offset by borrowings less repayments of debt of $300.0 million, cash dividends paid of $32.4 million, and additions to property, plant and equipment of $8.5 million. The Company had $768.0 million of borrowing capacity available under the revolving facility as of June 29, 2024. Cash and cash equivalents located in foreign jurisdictions totaled $119.3 million as of June 29, 2024.

Previous wording

The Company did not repurchase shares during the first quarters of both 2024 and 2023.

Current wording

The Company did not repurchase shares during the first two quarters of both 2024 and 2023.

Previous wording

A detailed discussion of environmental remediation costs is found in Note 15 to the consolidated condensed financial statements. The Company has established a reserve for estimated environmental remediation costs based upon an evaluation of currently available facts with respect to each individual site. As of March 30, 2024, the Company had a reserve of $48.1 million, of which $22.1 million is expected to be paid in the next 12 months and is recorded as a current obligation in other accrued liabilities, and the remaining $26.0 million is recorded in other liabilities and is expected to be paid over the course of up to 25 years. It is difficult to estimate the cost of environmental compliance and remediation given the uncertainties regarding the interpretation and enforcement of applicable environmental laws and regulations, the extent of environmental contamination and the existence of alternative cleanup methods.

Current wording

A detailed discussion of environmental remediation costs is found in Note 15 to the consolidated condensed financial statements. The Company has established a reserve for estimated environmental remediation costs based upon an evaluation of currently available facts with respect to each individual site. As of June 29, 2024, the Company had a reserve of $46.2 million, of which $17.8 million is expected to be paid in the next 12 months and is recorded as a current obligation in other accrued liabilities, and the remaining $28.4 million is recorded in other liabilities and is expected to be paid over the course of up to 25 years. It is difficult to estimate the cost of environmental compliance and remediation given the uncertainties regarding the interpretation and enforcement of applicable environmental laws and regulations, the extent of environmental contamination and the existence of alternative cleanup methods.

Previous wording

The Company’s debt at March 30, 2024 totaled $856.9 million compared to $920.8 million at December 30, 2023. The reduced debt position primarily resulted from repayments of debt using proceeds received from sale of the Sperry® business.

Current wording

The Company’s debt at June 29, 2024 totaled $814.7 million compared to $920.8 million at December 30, 2023. The reduced debt position primarily resulted from repayments of debt using proceeds received from the sale of the Sperry® business.

Previous wording

For the first quarter of 2024, an increase in net working capital represented a use of cash of $28.0 million. Working capital balances were favorably impacted by a decrease in inventories of $15.8 million and a decrease in other operating assets of $5.1 million, offset by an increase in accounts receivable of $2.6 million, an increase in other operating liabilities of $42.2 million, an increase in accounts payable of $3.7 million, and an increase in income taxes payable of $0.4 million. Operating cash flows included depreciation and amortization expense adjustment of $7.1 million, impairment of long-lived assets of $6.1 million, stock-based compensation expense adjustment of $4.1 million, environmental and other related costs, net of cash payments and recoveries received cash outflow of $10.0 million, and pension expense adjustment of $0.2 million.

Current wording

For the first two quarters of 2024, an increase in net working capital represented a use of cash of $3.9 million. Working capital balances were favorably impacted by a decrease in inventories of $72.4 million and a decrease in other operating assets of $4.3 million, offset by an increase in accounts receivable of $13.9 million, an increase in other operating liabilities of $38.8 million, an increase in accounts payable of $23.2 million, and an increase in income taxes payable of $4.7 million. Operating cash flows included depreciation and amortization expense adjustment of $13.3 million, impairment of long-lived assets of $9.3 million, stock-based compensation expense adjustment of $9.8 million, environmental and other related costs, net of cash payments and recoveries received cash outflow of $31.7 million, and pension expense adjustment of $0.3 million.

Previous wording

The Company made capital expenditures of $5.1 million and $7.3 million in the first quarter of 2024 and 2023, respectively, for corporate headquarters improvements, eCommerce sites, new retail stores, distribution operations improvements and information systems and technology. The current year investing activity includes proceeds from divestitures of $92.5 million.

Current wording

The Company made capital expenditures of $8.1 million and $14.2 million in the first two quarters of 2024 and 2023, respectively, for corporate headquarters improvements, eCommerce sites, distribution operations improvements and information systems and technology. The current year investing activity includes proceeds from divestitures of $92.5 million.

Previous wording

The current year activity includes net payments under the Revolving Facility of $40.0 million. The Company paid $24.2 million and $2.5 million in principal payments associated with its financing arrangements during the first quarter of 2024 and 2023, respectively. The Company paid $1.6 million and $5.5 million during the first quarter of 2024 and 2023, respectively, in connection with shares or units withheld to pay employee taxes related to awards under stock incentive plans. The Company did not repurchase sharesin the first quarter of 2024 or 2023.

Current wording

The current year activity includes net payments under the Revolving Facility of $80.0 million. The Company paid $26.7 million and $5.0 million in principal payments associated with its financing arrangements during the first two quarters of 2024 and 2023, respectively. The Company paid $1.7 million and $5.7 million during the first two quarters of 2024 and 2023, respectively, in connection with shares or units withheld to pay employee taxes related to awards under stock incentive plans. The Company did not repurchase sharesin the first two quarters of 2024 or 2023.

Previous wording

The Company declared cash dividends of $0.10 per share duringthe first quarter of 2024 and 2023. Dividends paid in the first quarter of 2024 and 2023 totaled $8.1 million and $8.4 million respectively. A quarterly dividend of $0.10 per share was declared on May 1, 2024 to shareholders of record on July 1, 2024.

Current wording

The Company declared cash dividends of $0.20 per share duringthe first two quarters of 2024 and 2023. Dividends paid in the first two quarters of 2024 and 2023 totaled $16.2 million and $16.4 million, resp ectively. A quarterly dividend of $0.10 per share was declared on July 31, 2024 to shareholders of record on October 1, 2024.