WWW - Earnings call transcript Q3 2018 | Wolverine World Wide, Inc.

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Operator

Good morning, and welcome to the Wolverine World Wide Third Quarter 2018 Earnings Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note today's event is being recorded. I would now like to turn the conference over to Mike Harris, Vice President for Corporate Finance. sir. ahead, go Please

Mike Harris

welcome third and call. XXXX to morning, quarter our conference Good

WolverineWorldWide.com. Vice Financial be the Krueger, announced of and The or and Senior Blake today our sites Mike many news release from and Chairman, our On our the are corporate XXXX. Officer financial our results call third morning, Earlier website Officer. this Chief viewed for Executive at Stornant, is can President we on Chief quarter it President, available

you a have you Comments the please will call XXX-XXX-XXXX. If non-GAAP at WWW to titled disclosures news with table that non-GAAP Relations’ release wolverineworldwide.com, of included on corporate website, additional call posted disclosures. link some at were include of prefer QX will the hard to copy by these Supplemental accessible attached the release within would clicking at top There a Deur disclosures today’s press our the sent directly, disclosures This release. reconcile is the during GAAP. earnings and Call XXXX is reconciled the corporate non-GAAP body to to document morning’s under Tyler of Tables webcast our website page. the these tab document Conference Investor The

the of underlying transition businesses which underlying I store licensed of Also, QX, in retail better that performing to foreign over variable. on revenue, Defense to how and isolate the to Department global in Before wanted the business. this impact separately the I in Blake currency changes the context refer of sale growth Sebago are turn comment and model, and brand beginning we the our of information. We reflects for to our results, to revenue, speaking When revenue disclosed Stride best XXXX, call marketplace. will recall believe impact a to to closures, additional on our Blake business and provide some adjusts Mike Rite of primarily the

In transformation be non-recurring providing exchange call financial results, closures, markdowns during adjusted World related for foreign organizational like divestitures its which environmental, costs, looking incremental also impact store Wolverine you addition, Wide projections conference operations inventory I’d securities adjusts other of the today’s other to we’ll to and statements that and predictions regarding restructuring made and are laws. and and U.S. and costs. under related forward remind

are risk in As a must result, you results a in of the prediction identified said, that, we that cause turn to releases. to factors Blake factors SEC with there are over or company’s filings the like press important I’d as to These materially. caution that any actual and could call Krueger. projection, number differ being With our

Blake Krueger

morning, quarter $XXX driven Good with and this XX% Reported the earnings adjusted morning, by representing last far have a our X.X%, results, growth Mike. of $X.XX, everyone, on excellent delivered of for represent X.X% joining Earlier $X.XX underlying and share revenue reported diluted of us. performance the per this thanks per FORWARD Thanks, third over so constant we for and earnings pleased a company. We're year million, increase operating WAY currency basis transformation. year. our record share

XX of strong the business XX.X% and margin efficiency model us performance over the year the was transformation improved cash significant to of leverage has The XX flow. and generate highest basis year. last up global over months of the our company Our operating earnings point represents of last greatly QX quarterly allowing the

revenue and strong balance delivery, liquidity in expansion. and healthy position us position profit that growth a sheet initiatives put improved on to in Our invest focus

is excluding Year-to-date I been our a traction. margin results X.X% revenue be, are global six has growth Leverage is Leathers at the per growth. choppy illustrate XX% more been with as excellent, of rate Our same which would market during headwinds, and adjusted times, bit to than agenda share some the revenue earnings grown XXXX X.X%. earnings dealing that up year-to-date gaining approximately business lower quarterly have like but our underlying increased has period has revenue has revenue challenging grown growth and pre-tax our

over investment our QX. eCommerce offense expect a QX. the over for our high Our and more proving of an growth to bottom which Merrell full incremental Footwear have adopters growth we seventh revenue there's a of recent those direct we this been million Sperry’s brand our to over of low dropped and for consecutive Year-to-date, in tools model, to the $XX key growth boot and winter own XX% is in a were year-to-date and A more the model and X% from has year. new in nearly help the mid-teens XXXX growth is our a brands growth of with year-to-date growth adopter momentum, X% the single-digit was the XX% agenda quarter digital Cat full especially contributed new strong impact Obviously, top investment allocated growth effective, of in high this is to pace business of new immediate growth year. line the drive single-digit deliver growth season area. to component accelerated that single-digit was brand and enters be and set. will for growth earliest which on delivered up fall QX

key increased up up consumer of across increase drive also approximately in growth had consumers, healthy to strong strong product and at to marketing also wholesale, We spend is a the activities correlation to a growth, expect provide a engagement the online we importance premise start. underscores performance store and stories very We've which And effective off of seeing offense. quarter-to-date new helping introductions interest. in flow similar are activation a portfolio, of steady a as com XX%. accelerated start in We're our with XX% between supported a new QX, the eCom good QX, by digital over

which Lifestyle speak product almost in as including several lower position saw actually the an Sperry’s closeout which and and noted of primarily some results our is was positioned for a currency Both me impacted on single receipt QX better resulting product. good of our international growth more the stronger in growth third benefited third Moc teens celebrating compared Puppies, in of lower delays this by in in from growth to Merrell’s as teens our a growth Group, growth QX decline deliver constant revenue digit brands product core growth franchise, and inventory offset groups availability driven is inventory, America. sales QX now Let well Sperry softness growth and issues, XXth grow partially very year poised business Starting and out decline are such single-digit. revenue back-to-school increase growing prior the digit growing low details and series. mid rate. in season. Siren few have impacted from by in in inventories in lower the transitional mid a historically in for by the a positions single The inventory of market delivery. of quarter year, impacted much at item. was along and delayed e-commerce margin much low sluggish and in was in retail half QX closeout new High-teens sales to Lean inventory, a directly revenue in to for unrelated QX and low one’s Merrell in brand from X.X% our QX, above with and quarter, was in at late order’s product strong the a transportation close standpoint would strong Merrell's low a let quarter from with including of growth to XX%. in related by Now offering in some Leather's brand specific introductions, product double QX overall in underlying for me digit Hush a are Latin in Merrell low Chaco. was collections new some macro delaying Canada related growth the as leather product countries strength creation. MQM Ked headwinds largest also rate prices and Jungle Chameleon, and incoming by conditions strong significant Outdoor X.X% in in demand XX, introductions stores up is performance low with brand. with key provide grew lean & brands the transportation

by up increased in We business Asia-Pacific Chaco women's XL Excavator teens The the of sandal the the limited Work to in Merrell the XX% marketing over continued of drives as product in experienced quarter. low by a in collections region. met. business our engagement, business introductions. edition the e-commerce growth was e-commerce launch the digit boot driven component recent also North category of driven key accelerate, brand's offering, growth becomes XX% and by introductions product. new across success consumer DTC growth double solid expanded revenue the Keds overall and QX quarter expect performance the revenue the and several led bigger threshold new American The was experienced growth deliver

in softness business. was However, by this offset sandal the strength some

growth to to Chaco QX. expect in We return

high collaboration and high deliver in by quarter, Vineyard mid-teens in early were growth help U.S. quarter, growth XX% strong in Keds partially consumer in The which was for Siren the retail XX% of has Saucony has in offset better the Moving in was business. growth increases digit to e-commerce Sperry market, and to Paper, perform Spade increase very with online wholesale mid in at Water year. single the driven single Boston prior was strength a traffic and businesses experienced Vines the Keds the EMEA U.S. down the flat region season centered at was quarter. mid-teens the around brand Challenges market also digit. digit developed Group, continue success down a and Salt, approximately than start and an was attractive strategy others, for the Rifle the to slightly tad fuel in Sneakers business. growth Sperry’s flat and growth which generated collaboration U.S. with Group primarily and underlying brand brand fourth the helped e-commerce. The with to digits has Boston improve. strong the Vulcanized the collection. excitement high kids revenue Kate, Sperry behind versus successful were underlying by well Saucony single our and will and was nearly boot single has the growth e-commerce QX.

Farmhand in brands Heritage efforts expect was to Harley-Davidson to revenue closing We as quarter. group quarter with season, revenue well category share the X.X% the driven Double-digit take with the in And Saucony the brand U.S. our brand and this the XX% for introductions of successful of leadership and hold. group improving autumn Underline Blackhorn compared to The position trends the almost Wolverine number the increased quarter, up growth new year-over-year HYTEST growth Wolverine experiencing in with including the prior the continues Bandit, winter market I-XX, in ended the and for the was perform other for by one double-digit fourth declines for and robust Group. Bates, team e-commerce collection. revenue the begin the year. brand the in work market segment. product

With capabilities fast company, the of and the agenda, growth from engine, the President lever and beginning into momentum new we're financial over expectations our Merrell, also benefits and insight the innovative turn were significant We're the of invest brands over brands offense the last are we our see first new Stornant, now Senior who’ll our our accelerated early digital-direct in the a Financial focused and additional quarter the and further Mike? that, our Officer, performance platform. more Mike to and well creation on positioned pleased adopters new XX XXXX. WAY for on I'll our Footwear initiative. and We tools, Sperry provide are FORWARD international third months. drive Vice to model and to add progress Chief to growth organic global from realize the call is global our efforts to commentary the a Cat process future, market. transformation to remain a which making investment As for with and on growth growth product portfolio

Michael Stornant

It of transformation today. the of quarter and third for margin thank Blake, adjusted delivered joining fourth company work Thanks, even resulted the consecutive you its us that In quarterly all clear sustainable its has XXXX. quarter, since importantly, two result. operating highest underlying growth in and significant and more is years

operating margin and year deliver exceed for XX% our the We XXXX. in are solid target on underlying track expect growth to adjusted to

During on X.X%, constant in basis. the resulting revenue third quarter, of $XXX.X a growth currency we of million, delivered X.X% growth

over a delivered Wolverine X.X%, excellent gross the the gross margin last growth strong basis. lower compared in performance X.X% points and the meaningful our from in brands our of grew cost portfolio Gross year's XXX made footwear related XX.X% And brands to currency as XXXX. in certain on margin e-commerce basis Gross our Leathers business, margin improved margin to in portfolio sales declines $XXX.X expansion. Excluding selling, closeout million adjusted compared than most margin, XX.X% the million margin Adjusted business Adjusted mix lower from from earnings leather leverage illustrating better The lower changes sales, initiatives. million grew in general and was expected to higher last year. product the better transformation decreased related our benefits $XX in constant model. incremental lower administrative initiatives. the operating strong $X.X included compared XX to points and margin investments benefited from business expenses to also growth year. strong a very markdowns earnings and prior quarter basis in and of XX% quarter, XXXX our pre-tax very than Adjusted was

was tax an X.X%. effective quarter third rate low The unusually

our were one-time to in the Given or our discretionary fully tax in which This $X pension million cash unplanned to make better. brings million flow share. late benefit essentially able continued funded per generation, $XX our plan to approximately any benefit result we quarter, plan, the of in $X.XX contribution strength defined

grew share year. the XX.X% per earnings prior adjusted quarter $X.XX Third of over

which was with expectations line our tax $X.XX company. earlier, the $X.XX, record per reported quarter, Transitioning balance adjusted in one-time sheet. Excluding earnings for with the EPS earnings benefit the represents the to for share noted

executed core Inventories quarter the inventory $XX.X as X.X%, held position million Our back down but inventory improvement Blake changes store the brands majority QX with were to of during some quarter. improve portfolio pleased in We're decrease or continued in the year. SKU on and closures attributed revenue. management to this mentioned, were last this with tight which

gear our than levels inventory in and expect strong, the owned expected up channel. for We year to part Cash reduction excellent by actions of operations million. from receivable the better brands driven inventory our discrete to performance pension cash in quarter, million voluntary used flow offset million related and program. a year-to-date flow earnings. by the items end was the in cash sale contribution $XX wind-down $XX flow increase the growth they the online of organic and as $XXX to store these impacted accounts wholesale, Two On by basis,

operations Excluding these from the strategic to actions, cash year. million be approximately we full expect $XXX for flow

$XX.XX. quarter, million attractive total our our third price $XX to of the of During and year-to-date stock. an bringing we repurchased average million $XX

share We net total ratio current execute to significant position million million at drive this and have billion X.X quarter The of end. $XXX.X to total liquidity future under to due $XXX has leverage ended with quarter actions return, net healthy company $X.X shareholder repurchase available over the total flexibility credit leverage program. times. and intended our approximately still of debt agreement a We available of

cover bankruptcy Now billion of reflects now approximately markets updated now remainder our basis ongoing our XXXX. approximately of weakness a from the the of X% outlook. top in dollars X% Full margin impact year performance line expected guidance of between quarter, customer. the fourth let points, third underlying in American expand certain to is expect and We the The previous up growth XXXX the for me gross Latin be in slightly XXX Working to to with revenue expected $X.XX the quarter. softer updated outlook

to is that XX the We changes impact portfolio recognized basis This year-to-date trends, XXXX points. the due of of by moderation benefits accelerated from than expect quarter forward the expand approximately and fourth margin lower way quarter gross fourth certain mostly to in were XXXX.

remain to cost estimates $XX approximately expected spend previous to be to in other including We and our We Including investments, remediation track from cost is year fuel manage are margin to anticipate growth margin adjusted XXXX on to unchanged to million environmental activities future expenses to and company's now of now initiatives. net legacy interest approximately XXXX These other be operating be approximately $XX million operating is $XX $X XX.X% these million the expected assessment. $XX reported million full XX.X%, to matter. million.

and expect We expect the the rate quarter now full XX% rate tax during the fourth tax year in XX%. be we to normalize our range of to to

$X.XX share in earnings share the range. the in an of $X.XX are high range $X.XX, expected per We increase Reported are of end to outlook per raising of diluted adjusted at XX% the to $X.XX. last full be for diluted over of earnings year year our the range to

results for reduce can strong to is also model. business continue and While the that the from global seeing This play diverse certain helps a the important year. or acknowledge model benefits plan operating for are companies. single our brand to the business exceed us we risks smaller It

we XXXX sources political deliver economic volatile American customer and market. very control outside in of will a like countries, despite some from solid unrest in headwinds our growth organic During leather Latin bankruptcies

focused because to we agenda. brand your against the sustainable channels able turn over emphasizes execute a and our businesses. brand our are consumer on operator growth overcome in will time growth now back model We remain growth, and implement of we global of Thanks direct challenges international morning. call We new model as and to driving the our to our these expansion consistent growth that for And this

Operator

you. Thank

[Operator Instructions] Please Jim first We Today’s comes question ahead. from will now question-and-answer Stifel. the go begin session. of Duffy

Jim Duffy

well. morning, you're doing Hope guys. Good you. Thank

Blake Krueger

Good morning.

Jim Duffy

A guys. questions couple for you of

least bit little is better maybe what – maybe you're U.S. As in you assessment. b, there be than the prepared international seems speak expected remarks your field all fair it of can some. international around Latin the size American at a the or compartmentalize in risk a tracking XXXX? detail seeing a may the market business lagging and and of in into that like some

Blake Krueger

– I the most assessment political mean, your your bit with came of low EMA the accurate, respect think America, Jamie and increase to are single was don't international any positive, In handful dissipating Latin to countries as especially face around million guessing U.S. I'm experiencing that I we into surprise. and that soon. Yes, of the standout a our countries impact XXXX. was challenges We probably $X a pressure. is economic of We QX and time pretty from inflationary QX had QX especially that's going from digit challenge think the of of market, little a bit those maybe see some continue

So, certainly those is of the what can is size handle, it countries some it that we in but

Jim Duffy

Thanks. looking to leadership detail you you related bit there. inflection that the the a stabilization shifting brand And speak year, new into Saucony of about forward? you in brand, some that product little and factors coming then gears had issues Can confidence give

Blake Krueger

some and Yes, I product think I continue an to it’s mean, to great Saucony winning going that. makes award product, do

think for is bar on management really product. an to I there the the raise there opportunity team new

technical team complete that product and And of the And brand, so turnaround have new will probably related categories the probably a bit their would is view and a on for issue that direction. in it. the time. related world we it’s confidence XXXX fundamentally but year in run some Saucony take I some

Jim Duffy

the go-to-market just that I as product of earlier was surprised issues one you hear new to the transition? that management the strategies. mention that adopt because of was to Is brand and didn't Saucony the

Blake Krueger

frankly, That management an to issue I team. the Jim that that has was changed. also think, was mindset tied old

Jim Duffy

guys. Okay, you great. Thank

Blake Krueger

Thanks, Jim.

Operator

& Please of today Steve next comes Associates. our question ahead. Marotta go And King C.L. from

Steve Marotta

go-to-market were fiscal the Ked particularly little We're in trend? the will, you who morning how you period, if about that Can the affect be growth in organic Merrell, talking adopters a just early Good new bit and adopters. XXXX will about may and everybody. your new Sperry talk strategy

Blake Krueger

the will of I brand. XXXX I of quite be new Yes, think rest the – this and our the for honestly the mean, rest brand of QX year adopters

our new or be again very So brands of process a rest smaller model. the sophisticated the the some will maybe new brand, adopting but little of less our the for

Mike Harris

Mike, Steve. is This

creating seeing just different model; we're the portfolio I in those this guess very I business the benefit think It's not specific direct adding and the activities. activities a to a the channels it's in of measureable. ability having results that to that see are benefits that, are like what of

even between we much There quite where as in pipeline the in that so not relationship the as And had QX there might was product clear we outcome. wanted. work have and

last even tested our to have roll to point the us and in to months So XX Blake's the much that ability of as brands, focused out model more this the the right the has have now, nine areas its confidence to even over pretty in rigorously we be that it more given successful. ability is we to rest confident

Steve Marotta

up. follow quick A

talk bit a sourcing about China First, specifically? demand exposure good can of and your domestic you little to cost

Blake Krueger

in the we've that. we had years Yes. involved situation. long we've and was we've I to five diversify last a before mean, before a executing This strategic terror is elected, action been been – long for were China potential of plan against out Trump

So there up as delay much average to scenario. company, industry, we lower be teens be scenario When a we U.S. ramp month tariffs in – in we to the a would worst mid expect exposure in here exposure six case have XXXX, any the the a about U.S. to worst look imposed. company XX% case than footwear theoretical compared should Obviously, a a

continue be or our diversify that exposure pass on either cost. for XXXX. to our we'll, offset simply base, less else, other even So some occur fiscal with price of should increases one, action everybody would sourcing the the And like

footwear I tariff because is frustrating, industry the category. highest the all duty of industry it's U.S. think

doesn't seem this here on we've sense, make additional we're duties least industry, tariffs the to So been for years on but footwear at now. putting -- and much domestically

Steven Marotta

last a all well two as at benefit this there from us that something obviously, might transformational given assuming our very again, sales normal taxes of can you above That's Can this as be are disclosing long the a point the forward from but benefits without do up. what remind tracking you us helpful. term those the or do, least, I'm There any are? next above goals below of follow beyond strategy. was an you. lot standpoint? little what it's the the remind order Thank year. quick and over actually an year One you, noise, other EPS bit book, well as your a indications trend? growth your plans and But normal growth not and even I – for incremental as year plan next As know or either

Blake Krueger

Yes, longer term high organic we for would of have a growth target company. single-digit the

side, On line. when it been bottom comes excellent always way the down to the all dropping the leverage we've to profit

So it's forward. probably that a going a one-and-a-half of at multiple minimum

agenda For know -- XXXX, we we realize our to internally XXXX, we of not put our we growth be, looked single-digit brands we would to disappointed frankly, achieve low place for at yet. have several as we still in And global -- growth.

that's be mind would our years our last efforts therapy. internal couple the we over all of aiming of given So above but that

Steve Marotta

you Thank very helpful. Very much.

Operator

Jonathan and Komp Robert our Baird. today ladies ahead. Please And gentlemen, W. from next of question comes go

Jonathan Komp

inventory are you kind I'm Yes, and constraints overall or I first any impacted the of you. hi. wanted dimensionalize results? constraints sales of maybe delivery those to on the some you back think in. circle further could wondering Thank if

Blake Krueger

late transportation, look when deliveries. mean, I at some know QX, I we some Sure. you had

our had impact shipments. internationally QX Latin talked new a inventory. tariff those we're our down and on this already But which lean you a all imagine can just to at they of probably hindsight together, adequate to out We've margin it's of now warehouses you With to few we leather in business little $XX QX. also some all beneficial when of And least we challenges corrected brands, a We brand is had quantify. way number in we've trucks total low difficulty and an America. actually of hard were environment, our for are getting and to from in Canada about to As that million close amount standpoint.

a our missed we QX. But our $XX revenues core brands. about out guess in for more would stock Some when million of of the best were or of be some few missed sales,

make be I those did been and fact know, to clear that obviously QX, lot about We've think And core the, inventory. a to inventory new a brands brand inventory of and with the down. really think our not teams. under I opportunity impacting bring in those a adjustments on putting issues of might there. we've us of us. necessarily of We in it's in areas And allowed key the our I temporary special us it was given QX. levels any kind a our strong make couple We're pressure had But a inventory have of of an sure as issues all think have in couple for cases a of of too. some But doing some you management we we overcorrected Jon us to few management that to a that in of couple control. got issue that

but that and position just the it’s marketplace pipeline inventory a gross other for not brands, obviously much the of cleaner, our especially margin warehouses Some cleaner. expansion in is in us things for piece, key quarter, close the that the marketplace of mentioned, driving out the lot Blake in that's our

I opportunities to and the positive to allowed open lot into more think us just about be QX. buy a one

which we're be $XX So there our issues, shifted it's customers us challenges probably for the of contributors. about million bankruptcy when in quarter the were is for where of seeing kinds originally really in then real new us one issue some this to won't and America temporary to that focus it's QX. for the fourth the of quarter, But really hit Latin particularly the there markets, on navigating not fourth our QX was we're kind in – those workflow a our is recover we international $X plan of million in you

for are headwinds the those So, really QX.

performance we see the to the remarks, the You and really in the business including of flow, perform at both level in of in can see new of e-commerce our performance strong brand innovation, driven really QX and a in QX. the Sperry model are product very high excited fundamentals how the prepared Merrell on success and a

QX, from those we But And, prepared it fixed now on. to the learnings we some moving and fourth a dealing think the we're overall course, and I overcome growth. learned of quickly, So other challenges. we're quickly luckily quarter was strong with

Jonathan Komp

of number Got follow-up moving those shaken your there there's differently to there, your of that as the underlying lower you down ago? is since you have when guidance maybe kind optimistic way your XX excluding there are factors it. to end they do core of at parts boil that any prior And but maybe any said helpful. where would parts out That's now all being operating business think a are kind of of range, you days were less think or than you of a

Blake Krueger

correlation headwinds didn't But market initiatives. that. of that that'll of But that but come to we've fundamentals going any not. us for absolutely not little or initiatives was return mean, forward, a performance the I would really in cases. be were that yes with in the our operational and particular I that tough our The that had had we and in direct execution some our ahead market. at see look QX challenges any all DTC more on bit Canada of margin way underlying our anticipate even expansion say back international frankly the schedule on No, in has some to successes ecommerce focused we're a in in forward and the in QX the businesses growth – way business, international track. I in

brands into and and ever as year going see I'm right. think a encouraged see the continue we rest that, go game our Blake effectively and of it, for of as be we're execute the that's And So plan more that I we're bit to going benefits on about year. to this mentioned tailwind little going next feeling to a next as to

Jonathan Komp

Understood. fixed basis, And multi-year then you're other should think XX a and maybe How of discretionary investment kind structure terms of, cost more this kind year. in embedded about forward? what incremental then that maybe the versus spending what's that just or going topic on of, the we one in million of,

Blake Krueger

needed were to call to into support you would ever people, more if About brand that, model. more be adding that be that well growth half tools, fixed, you resources, nothing's things this we number, kind invest but say I of of fundamental to fixed able to to if would

the rest of although, continuing going results from and a half year. maybe at say divest this for we is we're that despite We'd year, somewhat but initiatives similar investment some investment. in amount good will softer that the obviously overall exact probably little similar And your of in sort way it bake to in is invested results. and amount But about not discretionary, level same So, be that projections seeing John, year, we're But that on I the next still anniversary we're because specific the seeing bullish along top-line things next from we've definitely the same dedicated tested way. probably that or learned will as of stay reason the it a amount into year. around the move would next

Jonathan Komp

could the just. increase missed I I in if about And have securitization? year-over-year last Would your might something said one you talking you receivables, about mind Okay. maybe

Blake Krueger

down. as didn't a gone earlier And year, leverage our cost higher it a program sense than in we facility. under This different cost program receivables infusion the we couple Yes. on while. debt that higher sales and was that receivables, realized for of a a that one-time fee a sales generate our our cash our quickly, we've credit things. cost when was make business. a hit year We, been on put improved into time XXXX there preparing the was one, program in that need a place lot we've actually our to debts of And of of kind our of of, Number at this debt operating our

cash And and strong. really since flow generation XXXX so our of also – has been

So and for we didn't really didn't that need a premium need to we tool pay it. certainly

in million about because it we to nice down cost benefit XXXX. from be overall $X So interest of we'll There and a see should wound that. upside that a our

Jonathan Komp

you. All Thank Okay. right.

Blake Krueger

question next Please Edward KeyBanc of today our Yruma from And comes Operator Thanks. ahead. Capital go Markets. welcome. You’re

Edward Yruma

Ed. morning. my good Matt Thanks on Hi, for question. taking for

some how talk your this And Can how change pick next this trends examples start finally any discuss have being are affect expect year? at an And capabilities has year to inventory. the centralized you forecast brands to you projection on able how Do year? with team you will Dash data your inventory can chase of up So how all. to tied now. you we performed And inventory, inventory. Dash about can with [ph]

Now as reported sales return last changed year? portfolio to growth and you lap the

Blake Krueger

That's a mouthful.

believe organic levels So to we years. we're to be demand. will various increase not pass last over bringing inventories bit the start But tool learning only to we of We've as a let course that need several service more to of into high of specific set that way forward of our the we've by start as inventory from items would end that SKUs I sales decreases to at the certainly our the transformation kind couple me had in channels a the dozen Mike. a increase tool is inventory kick of had thing a single-digits importance in But and expect it probably Only in inventory utilizing our of in our up level we broader our we of and standpoint just We expecting see area programs into here of double-digit. it. product try here. that add of a and application the because but respect get we and from still Dash, we're QX, XXXX. our over deal growth to that new also dramatic the up or over With We're programs, little few time expect with reduction I'll to expect now of we're a pipeline.

planned year. So for are some of the from will items the half of the increase that first that introduction new of come

Edward Yruma

Okay.

on you progress to nice translate Keds. What you've up brand Okay. about in causes e-comm talk So really there? this continues. know channel think on you Can maybe the Keds, do growth I e-commerce? your on discussed cleaning well so

in e-commerce? team that progress so look it’s on think on translate this lot on well now, So causes brand do of Fundamentally, growth. to is Keds What Keds. maybe the channel channel the at Yes, contribute the got I the at your on has they've footwear tailwinds cleanup about the their now, cleaning certainly when talk you point, focus look you I you Can e-commerce you mean up consumer. When there? helped to the vulcanized Keds, us so of when at right most look price you behind nice the think right a now. continues. e-comm really Keds growth brand I know discussed you've

for that. but Keds have big continues owned the the had and against also and expectations time brand, we big have we very area So team the have well expectations in some for execute e-com to

Edward Yruma

next Okay. [Operator from Thanks. ahead. of Today's question Instructions] Svezia Please Operator Chris go Wedbush. comes

Chris Svezia

everyone. morning, Good

Blake Krueger

Good morning.

Chris Svezia

move single I going think launched I is lot product? upon the forward done product most that going you the back build growth can work as am I to look In a a it's as Jungle wanted Merrell. given of brand to guess on levels other most – a is single-digit look moderate, mid had at going these Is sustainable? lot you say, situation do this growth step to of like done Moab, that on I at growth one and you've forward. digit about when of transformation to but wow, not start of Going Chameleon So sustainable how we seen forward you words something that Moc or for growth? to of the high lot touch move this whereby now and you've we the you be we

Blake Krueger

Yes. be implemented and plan on growth I would growth – brand has been a this. particular, in a as brand It's mean know year this little lot our as choppy Merrell counting you the some of we largest for the they've model.

performance And in primarily I brand. other some of and XXXX. – more down very been. that compelling crisp would growth ever still in predictable, high-teens Some for a story level momentum their its We quarters of hope little the We're kind bit great which year product we high-single-digits the don't a see it's driven growth. pipeline any in the the little robust end-up quarters of is more would and of category. letup this will that from but low most will single say than growth

lifestyle is Although, you comes argue capitalize it footwear, but performance the lot the and lifestyle today to or can a of area is the brand it Moab on the beginning just performance area. casual to is from wear

ever of more for stories male the the view so product pipeline been. our have brand high we So and does expectations and it's compelling the than team is robust

Michael Stornant

year they've in you counting little brand largest lot implemented It's mean would Merrell know brand particular, of has we the as this – model. as been growth a a the and our some growth for choppy I this. Yes. be on plan

still of say will letup driven year will in the And for XXXX. see great predictable, category. any most primarily the story some than other would low of I a that quarters high-teens growth. this in high-single-digits its the pipeline growth that of it's we quarters but We're crisp and in little Some performance don't brand. growth their We end-up product ever hope little the bit which single momentum kind would – robust and compelling level of down is very more from a more been.

brand the the today the can argue lifestyle is on to performance and but is the it footwear, it beginning Moab is lifestyle comes or a performance lot capitalize Although, from of to wear you area. area casual just

and So pipeline of been. we for ever high than expectations the view our does male compelling brand more have stories the robust so product and team the is it's

Blake Krueger

geography brand So right really e-commerce Merrell’s relative also doing that a really is business diverse are primarily well well, the business international performing very to our in is now. stores

portfolio Merrell the those different Latin to year this company high-single-digit having of can the brand half success in each going think back and primary they're still is the categories impacted has in the in perform elements So and they're represents American of that growth and of the the of all year. the despite, the for And in different just when channels. about and channels and about obviously all deliver them which growth all probably grow agenda Merrell you

next year. has auctions into that's and So bigger Merrell but contributor continue going the the there in of a on is one the focus well that brands as overall and to the marketplace, been major diversification digital

Chris Svezia

do going to brand, with that, maybe then I really fact, to – category think boat compression Thanks. think about are accelerate, but with the that what's foods I and on was we campus I Okay. very I brand the just forward that? what's how think first, when in it and word how begin given the business, of we do you the his on And on don't about relates think Sperry that's as guess, in going this mentioned, on [ph] where guess a kind just going

Michael Stornant

in but Sperry across think last seen XX all U.S. less else it’s quarters is category that south quarter category, and in both to boot, has collaboration, than giant so. down product, overall down going in been Vines, fresh working. country the Vineyard less The the positioning it I silhouette the Boat owns here quarter, over Yes, the or that months the to to a we've the there job was that the We take the vulcanized little know brands Sperry their continued it's decline, boat the is in have to future. than as and we're this and declined Sperry through for team is keep an advantage in in appealing to Sperry cycles, good understands category in news always in the consumers. for of go that also boat/shoe the in Sperry past everything and

has drag appeal. brand the U.S. Certainly especially broad so core And market. still the in brand no

kind bullish there and of the So We year. Sperry. the on beyond view we're as brand XXXX the for XXXX as pretty turnaround year growth in

Chris Svezia

about Final historically XX.X. but margin target I splitting operating I’m it Mike comments we're – hairs here, -- your XX% to guidance exceed you. thank you, the just – your on Okay, potential go your will year, says this question, guess, going confidence… just to

Michael Stornant

set mean, I'm really to ago bold end course operating a are a And XX% that that. sorry on expectations goal that that first. this No, and run it margin to off. increased rate not by we through the don't to XXXX, clarify to delivering forget get we've you I the cut I our around of right. of want that year long were was

out margin as that so we but and So, when terms over stake the ground we delivered around I well, of the in itself, in think put the have that just about it timeframe not in the was really

Chris Svezia

Okay.

XX% So the exceed into is of don't being that, exceed context it's you XX.X -- what XX.X? more comfortably that that you’ll guidance can XX% just is take

Michael Stornant

is there – guidance we XX.X, I my guess, put yes not out more target I I'm but the I the Well, year. guess, approximately than reference a to target mean, was the

Chris Svezia

All it. Okay, the got All you. right. best. All Fair enough. right. Thank

Michael Stornant

Chris. Thanks,

Operator

Please Davidson. comes next And today Kawamoto ahead. D.A. go from question our of Michael

Michael Kawamoto

Hey guys. Thanks for taking my question.

for on into some next year. you're Just highlight of and Merrell, can about excited you XQ then that products the

I the – anything about? think, excited you're that is point hiking and some lifestyle

Blake Krueger

entire category mean a that Gym the we'll season. here hike category I products for strong X the of be remains for robust X Chameleon Yes, and XXXX remains just Moab brand. week and fall that Nature's the very some introducing in a

other athletic Bare Quite of and expanding up work trail mentioned bit also growth Merrell that. a running in for outdoors the from an category for brand. Access right through use in that's products So, And product then activity the now.

the quarter. but grow continues loyal Merrell and and That's brand the to of little responded a a category for consumer brand, has that been every to niche So Merrell good bit work expand more well -- elasticity extension.

Michael Kawamoto

there, color being Can about worked Got you then more recently talk you it. I maybe for a one there? any Thanks. -- of are saw hired project, you some And just guys are Merrell. that CMO trail that initiatives the on

Blake Krueger

realize that interest are all world, think product today's excitement Yes, that brands, be stories. with big be in and with brand search increase job to that their like can Merrell, their and our it's can interest maintain stories of that I the

different remember consumers just You Saucony but that on or excitement Donuts may ago or pairs was so, with from collaboration that a Dunkin' incredible. so channels many X,XXX the the generated only quarter was across

right that implementing and So, plenty just of they've Merrell to got a success. digital offense full now a focus make ammunition and that primary is the

Michael Kawamoto

just more. then And it. Got one

begun focus is how all thinking that's given noise China before area about just that right the that to we've on, and resources we're add region now? mentioned You going on

Blake Krueger

underpenetrated view that for great a owned there. as got some the got We've growth. market. look market. very chatter despite important and that we be we that that's tremendous opportunity and in partners But few when we're that, wars at moment, billion-person in at going initiatives important China and currently the market and consumer Frankly Well, X.X a the We've market. this tariffs around a to trade

So, China. we're on focused

Michael Kawamoto

your right. year. time the good All luck Thanks for of and for rest

Blake Krueger

Michael. you, Thank

Operator

ahead. - And ahead. Macquarie. Q go of Macquarie. our And Vasilescu Laurent of question next next go Vasilescu today our question from Laurent comes comes Please today from Please

Laurent Vasilescu

on thanks XXX basis margin. components more question. a terms give can morning on taking my Good little Mike maybe I bit then maybe bps of the Any color gross And XX quarter. want be would looks for great? for like in expansion the the gross that it follow-up up you bps on to and that bps. be more could margin adjusted on thoughts in an adjusted XQ

Blake Krueger

break of through would Sure. Yes I there. typically to be key improvements are some certainly they gross in benefits we product and but bps, the the contributors the it went continue prepared say, We certainly remarks down initiatives on margin. in cost don't big

year work pricing get We last diversified factory to improvement vendors and been critical done the to but work from on are our that's and right been the our not now, just has base year. product sourcing with stabilize this a cost base really benefiting

big chunk from coming pricing. is that of So, a

year then, ago seeing some growth growth things which made like-to-like stores a to improvement the especially the high in and changes well. business. of a Some business in certainly -- We're portfolio as margin drive the and that. of that closures e-commerce, helped we And organic other it is our our have us store the

driving stronger. really quality So our really it's like much the do fact the line specific that across It's the sales first Laurent. top is one our of not board, inventory and I mix factor.

well I margins us go would more the headwind revenue flows gross as When the margins. we QX, than gives into stronger So basis will there expect on points. XX by the lower out as on performance improve

line sales So stronger. mix is board, like and that our fact inventory top really quality driving Laurent. not the much it's I really our factor. across specific It's the of do the one first

the flows revenue us performance we QX, the as stronger lower XX I headwind more expect by would there basis When well gross out margins. gives go will on than the So as into margins points. improve on

Laurent Vasilescu

hear. to then wanted up. And great to I follow That's

parse you terms annual do terms? And on next in work-through the think customer. think you've in XX about of of a basis? impact that a Maybe quarter bankruptcy the that think that months the an I out talked dollar we as we about third how about can customer then, number,

Blake Krueger

good -- terms really able with QX on impact there wasn't wasn't account. It we've Yes. this really there. really a to QX for This is issue us. operate a been And really

through And we've and/or impact, be other of some a the work been customers to been continue this degree would bit that able mitigate this obviously, and that product to through navigate next but work expect that with year little to account through continuing able we'd to channel. we to able so, finding to in that with

Laurent Vasilescu

for that question. With regards to how AR on that on And a or the question. about accounts million way, asked the last in fourth $XX my number to year-over-year Or the quarter? wanted up adjusted impact Should think on increase to down. increase Okay. basis Very the we then different receivable maybe helpful. reported I fourth a follow do wind quarter?

Blake Krueger

million $XX going down wind will QX we'll then the forward I think, have another so and completely or in be that like-for-like. comparisons to

Laurent Vasilescu

and much best the holidays. of for helpful. Thank very Okay. luck you Very

Blake Krueger

Thank you. Great.

Operator

of And comes next Advisory from go Group. question Ross Telsey today ahead. our Licero Please

Ross Licero

provide AUR Could on units my a just little Hi. sold? Thanks you color for versus question. taking

Blake Krueger

in For – connection with? The…

Ross Licero

trends the across categories. the guess, I

Blake Krueger

upper price I trend as vulcanized and that several the outlook, like, macro to all market, up athletic trend years over I success into continue. on tends especially footwear last we we product. to the think, though program. think that also a We've mid very Well, U.S. the is Wolverine strong the where know, When traditionally there's from Mile had lower at been played the at take X,XXX be end, point going have a to, we to tier

be trend vulcanize. to a toward strong continues there So

they lower a that where actually for topline percentage delivering grown category they out Sperry call short You growth Sperry just time by that's average a growth or a - with see bad the product period Sperry in they're some to can of is very and the to doing important that are categories that are business, because large for are, at that be price. that that

are channels, our it's that the given before, on put really to with about factors by It hard tell brands mix impact a the just AUR different trends would brand respect the major Blake's that statistic obviously a we're brand of just measure there. for cleaner but play, The give talking component. right seen impacting always you really specific about. to story, now. we're price all but that, seeing talked haven't - into overall me are the closed we our overall we've healthier our doesn't the We Those company, even fundamentally mix international out almost given if that across vulcanized right a seeing increases business, that that

Ross Licero

unit any rationalizing the are then loss you seeing there? Saucony And a or doors Thanks. Okay. per of brand, are on you just guys door

Blake Krueger

No.

in specialty run unit seeing think we’re their lower in I We're core the channel. U.S.

a prepared in for a original I run on bit was Europe As spot bright my strong business in both a They've side. indicated Saucony. of and in remarks, technical very got EMEA[ph] the

quarter, a are that technical Saucony but spot bright the So in arena. the run resurgence was in for focused on they

Ross Licero

Thanks. Okay, great.

Operator

question of Mitch Please from have go today. last And we gentlemen question final time Kummetz ladies And for ahead. comes and Pivotal Research. one the

Mitch Kummetz

my taking a guess first. for few Thanks questions. Yes. I I've got

you in bit issue that the to Canada quarter. that think expect you was elaborate would I the into on continue on mentioned something quarter? Canada a you that? of an fourth First Is that Could

Blake Krueger

pretty also as position last XX Canada. know but Actually rebound amount Mitch, in stable now, you in five a over years the it's QX has through over years been lot consolidation or of a And think market that right of But last gone we just substantial so. a consolidation. expect the we certainly a

in in Canada So expect QX. we rebound a

Mitch Kummetz

there much Canada. segment break it much And down that EMEA the you down Tell any of was QX? way out, outside kind to piece I American be the know in there's Is the your reporting market Latin us? of of you in quarter then on expect size you Latin and America, how us another kind how for in can

Blake Krueger

is have know region years in certainly the programs. - But next a seen America as where down some we're in year I short look Latin some in got million, time $X a the I it's of you mean and for decade now just obviously - two. volatility very or multi the when here strong A for numbers this right a corner. lot Latin easier volatility QX we've distributors over America expect through front bit we in region don't of QX. and When Yes was some me. the million probably $X going bit easier us, those little we we a at it little in we've term over the of right

Michael Stornant

bigger issue. expect America for And the is candidates, headwind us a Latin then other QX unlike some we be QX… of to where example in be really would that actually to going just a

Mitch Kummetz

lot you is any of Hushpuppies pretty If soft guys correctly America business margin on impact? you. there, does recall margin is a which have that I if Latin Latin Mike do America So high license for

Blake Krueger

it this would by Maryland mean, the are cost being line actually most be but at does, particular brands I probably standpoint. impacted

Mitch Kummetz

Got think like outlook now Saucony on the brands that said of on you on and Merrill it. this question but of you the know the just touched if last Sperry for of And single I your what's then call. year. the don't terms last up in brand you already I now for your in gave high some outlook kind digits year

Blake Krueger

QX. could Merrell Sperry, Saucony expect in high year. an so the result a X% of EMEA low single Sperry. brand. year. around improved we And for perform the bit It digit turnaround for or for complete the about, be Saucony. for better for to We've I year for in that digits XXXX a growth, but QX the outlook some X% -- growth said, area see we think single year was softening continue think upward will it'll for we'll

that performance our expect to XXXX. We above be certainly for

Mitch Kummetz

guys. it. luck. right. All Thanks Good it. Appreciate Got

Blake Krueger

Mitch. you, Thank

Operator

question-and-answer and back the Harris to final conference like ladies to concludes I'd this session. over turn gentlemen, remarks. Mr. And any for the

Mike Harris

On behalf today. you of thank I'd Wolverine World us to like Wide, for joining

website is will you WolverineWorldwide.com. at a conference our replay available replay XXXX. our be As Thank good reminder, The X, and available on call until day. December

Operator

Today's all we conference and attending Thank has now thank sir. you concluded you, today's for presentation.

disconnect and now may day. You have a wonderful

Wolverine World Wide (WWW) 7 Nov 182018 Q3 Earnings call transcript