WWW - Earnings call transcript Q4 2018 | Wolverine World Wide, Inc.

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Operator

Greetings and welcome to the Wolverine World Wide Fourth Quarter and Fiscal Year 2018 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder this conference is being recorded. turn President, over World Corporate to Mike your Wide. like Vice Harris, Finance would the to call host I for Wolverine Thank you.

You begin. may

Mike Harris

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

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

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

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

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

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

Blake Krueger

year Good This growth growth, quarterly Earlier million, reported morning, our against Global we Growth Mike. represented with rate our Agenda. fourth thanks expectations. everyone, underlying line quarter $XXX the in currency successfully we Thanks, morning, this growth as of X.X% constant constant and for representing highest joining of the currency revenue us. executed

growing Our highlighted double-digit revenue largest two high at Merrell with growing from pace and growth Merrell and rate. brands, at was by single-digit strong and broad-based performance Sperry, our a Sperry a

which of significant initiatives. quarter despite performance, We to our a gross over also fourth earnings our contributed $X.XX XX% share investments in margin per also Record increase adjusted year, expectations. reported brand exceeded diluted incremental last building earnings

the was fueled all consumer for by of quarter. broad-based, growth. driven of at largest revenues territory Underlying and of Starting XX%. eCommerce brand’s double-digit by X.X% the consumer prior and a robust currency results nearly Puppies teens across groups against increases were the for driven by our Merrell’s revenue underlying quarterly Merrell profit a brands flattish Lifestyle the Hike, over strength growth also Gym Outdoor saw with territory Chameleon Global compared growth by Merrell’s on the grew grew consecutive of high also me life of brand Hush review rate and quickly insight on Encore expanded Glove the and by and Vapor the collections. Group. key rate, territory and solid Thermo, a our Moab followed driven Tremblant made Glove and and the Agenda. recent growth basis by with driven at quarter collections. a the the strong Let Nature’s and single-digit growing rate, a pace progress outdoor grew XX% its Growth Cat territory at had to at collections Trail revenue growth mid Chaco The constant year eighth the

full revenue Work in the growth single-digit also For brand. grew Merrell level high and expanded growth US the brand in the for and revenue Cat, was the expect largest to during growth the its pace portfolio single-digits a the category grew XXXX, we mid to the at XXXX, brand full of share growth International of the experienced with the back strong year a for quarter. our half year. similar in fourth broad-based deliver market Cat strong its year. weighted

by all product we and strength XXXX, expect single-digit categories. to For channels, high across growth driven be regions

Sperry constant Underlying X.X% growth double-digit prior X.X% single-digit low in revenue for our business. Group. for currency Boston Keds the single-digit high Boston for increased the the the and quarter, growth Group kids year. delivered growth versus up with from to Moving

strength US robust an with at driven boot expected, boot strength particular strong category sell-through two represents and rate Saltwater, The in As grew the II and improvement single-digits Siren very the was highest accelerated business. last in which Sperry's declined a over the quarters. retail growth Saucony wholesale year, Striper its to the of mid collections. by rate

and casual, this quarter. in addition, In vulcanized gains collections, experienced all sandal

in drive The in Saucony down single-digit business important quarter Sperry's full low accelerate growth Saucony quarter. encouraged the single-digits XX% revenue EMA the in and continued XXXX. growth this grew region. year mid to to single-digit eCommerce We’re to by in the for expect return over to but the mid growth was attractive

a the during While growth we we with In are first encouraged to second during of The revenue single-digits, from brands Heritage The with in as X% Group year, were the for brands continued Group. the to double-digit up both and new declines mid up to of I-XX, key during The pace. the high the offerings. brand and continue the grew Bates Group product at also half growth experienced Wolverine strong revenue nearly experienced compared in at improved all grew brand a was up mid rate return success XXXX the Harley-Davidson growth. saw X.X%, Wolverine grew apparel Wolverine XX%. collections prior constant brand by in closing significant XXXX. and half. the the Underlying trend, a revenue and single-digit teens very including expect styles in currency Floorhand eCommerce year-over-year HYTEST The

on across approximately These me an provide progress all Global million bringing update million. $XX focus Agenda, approximately focus year three full shift total strategic our the Now, to Growth incremental quarter, in continue investments let totaled to areas. important we $XX the where against make investments to the

XXXX. same expect We at this invest general level for to

investment some Let initiatives me on additional detail XXXX moments few take of variety give to future that growth. a will drive a

area. and our XXXX on to is Global Investments Growth XX% creation of investment Agenda innovative The first incremental related our more a were this of focused product faster engine element approximately and of new growth talent the our to process of support market. made model across speed to and systems a creative product including and wide to variety streamline implementation initiatives, development accelerate brand

were approximately offense element Agenda content. centered focused and customer and our XX% of focused digital-direct primarily social on our retention is Global area. compelling improving more The for constant of Investments XXXX prospecting developing was this a on Growth of flow the spend second capabilities, new on

new completed channel with growing These eCommerce business, been fastest impacted to transition a to over the has XX% business. our XXXX. two Coast owned growth West to distribution center last support our during our growing which We investments accelerating nearly eCommerce directly years, also our

international XX% our and XXXX. especially spend Growth our regional and and represented operational The very with third key focused the other our model associated Agenda China our teams, focused success strategic, and Global our Global encouraging. brand infrastructure in is The of Growth element business of early is approximately to investment resources markets. on added We during growth several Agenda

positioned final initiatives that now and our expand concepts on validated of complete are and the transformation stage We to XXXX. the were in

brands growth urgency a we heightened During all XXXX, that speed sets, is new processes. Building fully to the integration these of that and a do. we incorporate everything and more company our transformation our are moving of efforts, ensure requires phase for level tools in skill focus on the to disruptive

including invest growth to in operating approximately accelerate to profitability in growth $XX Growth this efficient million provides Agenda, more XXXX in based to nearly million and global improved of amount model end, going flexibility similar we the Our growth initiatives to behind capital greater year, million an our invest forward. Global To markets. $XX $XX that and expect

last Our record margin to results over and team the drive which gross last for year, of XX% act per the succeed the overall share, years to XXXX, operating record their for over ultimately, in the all our to retail work to team company the hard fast-changing for global shareholders. of with thank several by for our earnings and the adjusted and transform to reflect environment. the margin effort want our I value years growth, include full couple business global reshape urgency

return growth, that, to in President Mike year for We and our enviable who along With XXXX capital Vice acquisitions. Mike? Senior year now pursue our to our Chief on XXXX. commentary our for Stornant, shareholders the provide Financial invest Officer, expectations I'll will full financial are an with performance additional full turn and QX strategic call over now position and

Mike Stornant

company. and was year thank a Blake, us joining successful XXXX you for for all today. the Thanks,

brand proved the our and the very XX%. growth nearly to our our owned revenue margin growth for be brand Our solid eCommerce model original as business implementation and brands XX% full early expectations. We operating of year adjusted achieved several grew building exceeded of effective target our delivered which investments underlying our

flow the and investments $XX exceptional of incremental generation million was year. during brand strong cash leverage earnings Our very despite was our made

to growth improvements the us allowed to company's to shareholders. capital to Our return operating our and actions structure and strengthen certain value execute deliver important

review the company's our me for year Let details full then on and share XXXX outlook XXXX. results, fourth quarter and

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

quarter. the operating environmental, related of point to in better The expansion $X.XX due were X.X% quarter. from factors, earnings growth our XX.X%, our mix factor, Adjusted our margin considering brand $XXX in certain and from activated expectation, expected as effective XX.X% year, to last declined representing decline XXXX from tax every incremental number of quarter versus growth nearly business sales brands down compared a on and made true-up the tax share the pension gross to of contributed was million and Leathers improvement basis of store benefited in our margin was XX higher administrative $X.XX in product Reported Fourth Wolverine level and portfolio the revenue debt eCommerce And US the margin $X.X year. earnings including and planned Gross the the X.X% the transformation quarter million currency excellent footwear million last XXXX, record growth were basis. quarter. this excluding portfolio significantly of of rate made grew in the portfolio we per margin initiatives. impact costs adjusted fully constant fourth fourth during XXXX. margin slight and diluted adjusted basis of per investment selling, investments impact a marketing, year leverage. changes than exceeded lower lower business, high a the with Reported included point a $X which digital The a nearly higher adjusted strong initiatives XX quarter general prior settlement of XX.X% our quarterly share costs. and changes of closures reform Our the to closeout refinancing compared estimates which saw as impact in lower made resulting in expenses in The quarter. was to included in other increased

X.X%, results, full year a to grew $X.XX revenue the within on billion of basis. range X.X% year. provided at Moving the currency original revenue of fell constant beginning guidance the Underlying

XX.X%, growth. higher than interest $XX.X XX This tax brands margin underlying to basis enabling Reported to Gross net of in is and on investments per year The of store Full million declines diluted effective for increase and adjusted year us incremental expenses the $XX basis our for X.X% and our earnings declined of gross year margin includes an effectively XXX compared was the XX% adjusted XX.X% timeline. executed deliver were per executed share for scheduled points the last adjusted foreign last due FORWARD drive of over year the a company revenue to XXXX, year. to on Adjusted footwear Excluding XX.X%. points transformation WAY year's rate leading margin. million share portfolio changes ahead to in business, approximately was February. were an full up the adjusted and and guidance Wolverine lower earnings year $X.XX, was above the closures and an the our adjusted increase full operating last The basis. well offered very impact X.X% minimal we the of original record XXXX. currency margin Leathers grew company other prior

for of earnings full per the high Our reported company. record $X.XX represents a year share

three cash growth strong be investments in to capital make enviable us has returning an generation consistently years last opportunistic and the to put our shareholders. Our strong over position in flow

by addition million We investments of approximately In including year. in including alone. $XXX debt in bought And $XX.XX, million shareholders our in refinanced bank $XXX including increase $XXX voluntary a growth our XX% $XX of million XXXX, organic and to we paid year, the of during payments. in we the debt implemented $XXX fourth average million an quarter price stock back to during at dividends the our million reduced

interest with expense We These flexibility by record and our million XXXX to accounts reduce negotiate receivable were able related Our reduce financing provide under our better a capital $XX us leverage approximately strong ratio by million. debt forward. and going $X.X allowed pricing our to also track structure. program in in greater actions will at pricing terms us structure better to low new

made plans status. of our contributions defined discretionary to funded benefit $XX Finally, near million pension fully bring to we

benefit an by addition, buyout company’s we In of executing pricing attractive pension liability. which XX% plan the annuity $XX defined or furthered removed derisked at million

At During of XXXX, was accounts million pension approximately billion. times X.XX flow above. down cash wind end $X.X total XXXX $XXX of defined the ratio excluding only and the the operating company generated and bank leverage noted receivable our was liquidity contributions

ongoing total significant flexibility our to like strategy investment result, I outlook, Growth drive future related has to As an a our company transition the execute on actions return. to Agenda. our Global shareholder XXXX to to including would update

revenue operating model the margin As we across further implement our accelerate good earnings to brand in growth very expansion further XXXX expect portfolio, and with we growth leverage.

$X.XX reported XXXX range midpoint basis. expect of to growth This currency constant be at to the the X% We X.X% revenue a in the $X.XX of approximately of on billion range represents billion. and

currency of organic from general to year, of midpoint to adjusted aggressively selling, expected brand to Building to of reflecting administrative gross We and achieved weighted roughly expected as to the range percentage approximately growth. compared ongoing invest year. on Total we new implementing $XX spending half carryover This Agenda. certain elements in the in across Global key million by to be basis Growth capital XXXX, at pricing the be of plan Much this expect approximately from and to three improvement managing of optimize the range. XX supply will foreign initiatives our to margin and invest chain our up plan investments. actions. planned the be XXXX, are accelerate is is expenses million the to XX.X% headwinds, of first mostly to expected $XX prior performance Gross as XX.X%, success margin we in a the flat revenue in points

to in operating investments, is approximately margin point further We company's in-region XX.X% expansion Reported margin be of infrastructure of capital $XX in additional XX $XX basis expected to range year over costs be of representing investment XX.X% XX.X%, improve of the on midpoint to includes including markets range the the matter. manage Adjusted our range. XX.X% revenue global a to key consulting spend expected capabilities. to to operating and also million and plan the to last million enhancing and environmental at in the legal legacy approximately is

of operations over increase our relative range $X.XX effective projected projected times million XXXX significant expense of $X.XX expected million. per $XX average Reported expenses representing of $X.XX to between income to depreciation million. in per leverage and $XXX guidance. $XX approximately is is flow We to the earnings XXXX to to per tax expected $XX XX% range earnings approximately $X.XX. strong to earnings $XXX and The are to the and other at in Pre-tax million in to X expected including the diluted approximately adjusted and tax X% the year million, expected million. the including midpoint the weighted range diluted expected revenue the in with Cash of previously outstanding the a $X.XX, to share forecasted to $X.X interest rate million is net approximately rate to expenditures from are are discussed. range, in are of in reduction of be XX% expect to range approximately of or Capital Full increase million share. shares XX be increase diluted projected be million share range $XX amortization $XX interest

let current of half the for the the and information general me first expectations our some year first Now, on outlook for quarter. provide

America, partners Wolverine lower industry challenges and Saucony some our demand the that to business lower growth centered to We continue expect including Latin some impact will from materialized through international in including the of headwind. the business, X% bankruptcies. half of Leathers in in In our XXXX, demand the of $XX primarily ongoing in a we quarter, first challenges currency million to be half revenue second manage X%, first foreign certain

growth last the quarter second flat result, roughly be a projected single-digit quarter. with with mid will for first As year, in revenue the

the in growth markets a headwind. and projection in currency million Our unfavorable $X includes offset first by US, certain quarter foreign declines international

incentive very new to and during half quarters. for Adjusted of outlook revenue customer the growth Quarterly businesses. in the the Our is in range by product and mid marketing of quarter expense and Europe Saucony first timing in operations visibility including half to demand, is SG&A both informed of bankruptcy. to compensation the good debt be in second one-time the to warehouse second in cost costs, for international increased earnings of which related be the for higher introductions share incremental year $X.XX, first per trends an single-digit quarter bad $X.XX expected better expected the a investments, international level to higher prior to our range consolidate compared and exposure digital the includes year are to

a We turn that we in normal acquisitions that dividend. win for to will organic over now in continue comment dry in our want our pursue broad initiatives market includes this This capabilities Before need XXXX generate and back to Thanks operator. future the strong million committed environment. capacity our strategic new powder cash to plan strategy. our of our investing XXXX new call to approximately we XX% to to four significant and remain on enhance to on a value. have quarterly flow time in will $X.X variety the to increase shareholder a share your build closing, plans invest expectation billion in capital deployment the and I effective With and growth year morning, years, to we enhance and exiting $XXX and repurchase portfolio add of

Operator

Instructions]. [Operator

line comes from question. Jim Stifel. question proceed with Please your of the with Duffy first Our

Jim Duffy

I question, to I have have more than choose here. one

Merrell in takes eCommerce be for see. some year, that and expectations ‘XX? the you some the to the margin of factors for then this to second puts gross outlook speak weighted guys are half Let’s of and growth ‘XX causing growth Can

Blake Krueger

the half two. Let timing when but at the of that maybe With for first Merrell, me it's a different of Merrell, of the we tackle the year, QX is new issue number factors, in a product particular first introductions. look really

that. have is some it’s QX, maybe Latin early Merrell in also slanted some pattern. of Easter, of seen including like continuing think combination the orders into It's expect probably late brands factors I our going weather their And continuing maybe of unusual is to from Merrell a QX softness America. that Some

expect soft over for end the a We that up pretty the to Latin on America but firm note year going year, to we’re region.

Mike Stornant

temper up for to that the gross the eComm A Merrell, for strong for will lines. biggest channel and be eComm that. QX form but over double-digits harvesting would just nearly And year, product work. sort that growth up takes were we’re meaningful going that all of benefits see factors XXXX, of we’re kind carrying our of fastest some XXXX tough XXXX business XX% factory the biggest great I be and is of QX that management have the but for work then year XXXX. for Jim, particular. spillover bit to we’re in in mentioned, to the America in work be seeing and momentum ‘XX, growth, expecting the for continue in for transformation little from into We Latin in to for be year, was component going especially was margin of is think our sure. that We’d about just really our starting still product the Blake to that smaller brands, your some and the momentum be double-digits in of fall especially out really the growing XXXX of still in consolidation of recognized we’re product with ‘XX. the us in those for where all negotiation, better is questions puts to strong going opportunities lot still expect a the But brands our

growing as but will QX in eCommerce bit so business, So little is our supply portfolio that positive we good that of business will is mix else, a margin stronger margin a chain in to which gross as QX management, our of pricing see benefit well. be hit gross fashioned and it’s highest old starts than product the and expansion faster course anything

Operator

question. of & line King with comes Marotta your Steve the Associates. from Please with Our proceed next C.L. question

Steve Marotta

hope the first you was also Good and Blake I end. guess do a roughly what very up is about can year within talk I in the more I markets, aged about an from questions. -- inventory incremental in little Mike, have $XX or all quick inventory little Can a going the it Mike from you that that competition? for and is here standpoint two emerging at bit morning, And exactly be can something bit to understand, that’s million talk it’s out? capital perpetuity I expected XX% less

Mike Stornant

we inventory, end I very, of very the in at end the And We inventory the ‘XX were On of lean at last inventory too. of the position. year or QX in talked of position. because quarter it the say we our about missed at deliveries end our should third

we would year-end a than I expected have is and healthier the a kind inventory wholesale the dollars our ‘XX. certainly for much our business our may of been a expectations had little say during first improved, XXXX. bit a our higher inventory inventory, but percent actually bit aged So course supporting the in has overall increased initiatives line inventory even that’s is at the pretty eCommerce we of with part overcorrecting growth of as little our in key The growth and bit. of

inventory comfortable we’re So really with position. the

QX we quarter into the double-digit in transition growth end again least of the see will expected We first at as growth mid single-digit the second the quarter. with at

inventory. the So again normalized levels we’re I think at on just

million, some for US go to investing of the in related of we’re a got stores the that. we in Sperry new that portion investment, -- market. some Of towards is will that relates it that As to $XX

in weighted but markets half have year, some be investing of the We’re a having we where benefit of markets, key back some in direct those the in those emerging particular more our opportunities. also markets going us That’s over to we to our will initiatives of key like more control internationally. feel some

will on into ongoing Steve, that's an for I growth ‘XX and this thing not? and right moving an catalyst or just our international business our frankly that year whether So think focused be now, important beyond. but we’re

Operator

Thank you.

comes question. next of from Our Robert Jonathan your Please with Komp question proceed the Baird. W. with line

Jonathan Komp

first Thank you. a quarter. your in at some I just I And in start far North know wanted of have back especially have that fourth companies and top-line upside, shown you other thus number the to quarter hit guidance America. total on the reported for looking the

if during just that wanted anywhere other? have and downside of there each were the color any if ask to sources I So quarter of itself saw offset you more you areas upside any

Blake Krueger

that not Really report. new to much

Our October more boots it for for November a had and was boot our eCommerce and season, comps, strong everybody and bit business. great stores, we store which were us, now, for December little on very quarter a a a anticipated strong. it was than for was virtually It weaker us. boot like but was right great our us season

business and no Saucony we kind America, our Latin Leather business. So those lower were quarter, mentioned of the but across sales the highlights was as offset big the low-margin during some surprises of by that

except up Latin For QX, were regions America. all for double-digits,

So pretty balanced across the board.

Jonathan Komp

guided the a I then high I single-digits maybe higher on than up had think low growth. follow And know Merrell. quarter, up it for that maybe was slightly just double-digit you

you're the what measures and that of and market, of that's around the insights color And there? bigger ebbs more bit see out I get the kind resonating? that help some wanted product So there in would reception is we dig maybe seeing any what comfort any for sell-through and newer about if of about more, any the brand, that picture across I ask given to just recently, quarters in you to a then could wanted share flows

Mike Stornant

answer QX full the it for we clarify and to question before the Dan, year was for performance Merrell high the QX growth single-digits. in just was double-digit double-digits,

Blake Krueger

across also was resonating product really concerned, in consumer quarter. really it's positive So yes, in the the across growth is was in all positive had the five the the as far category performance category as broader Merrell lifestyle board. the quarter, They territories, QX

success a seeing across broad-based growth. number collections, really they're of So different

Mike Stornant

eCommerce And business the the prepared we said in XX%. remarks over up was

So lot Merrell. in we invested was where quarter it a a

was some that those for of to of they business and resonated we and that nicely digital of dedicated investments the timing Some in to and products results. talked marketing good kind the new of have about much brought saw of market, QX Merrell the the we aggregate,

Jonathan Komp

you trying Do what you newer kind about unique as I'm on reads markets? factors any some called of sell-through out, of you sense to seeing in you're product a the end of the the have think quarter early and get just first

Blake Krueger

reads the Merrell with be continue in to performance sell-through lifestyle across strong product you well. would high for good The the as as teens expect very and board,

Operator

line question. of our next question Ed with with Please Thank proceed your comes the from you, Markets. Yruma Capital KeyBanc

Ed Yruma

just two number broader quick I a questions question. guess and

incremental First, excluded reserves? million confirm $XX for what's capital rate question you want to low. some investment that did a million it was then and the I guess expense? of benefit or and so where the tax broader versus 'XX, And the on picture very for quarter, you kind of $XX this Thanks EPS? PFAS maybe fourth reserves On as update maybe what's I adjusted expense of when CapEx dollars, your you are any on the obviously actually of much.

Mike Stornant

year and bit reform, rate, obviously that Sure, there yes, new interpretation weren't the evolving tax quarter-to-quarter. were really on full of of adjustments the We so the some earlier to was relative conservative there the extraordinary in our a from any year. tax

conservative some came as took posture we which a did. in year why is it the that of bit a treated QX just we in the rate So little earlier up and of

your …? I'm sorry. as what As Ed far the was --

Ed Yruma

on expense. capital for million incremental versus investments the XX The 'XX,

Mike Stornant

Right. capital. That's all

CapEx new capital investments, of about would in before. investment to in key sort as on total, we in, $XX million well of there talked be the million but in the is $XX million typical $XX we we those that expense that initiatives invested stuff in operating or some bundled some markets about the XXXX, similar So, talked

Blake Krueger

maybe to just then companies. And respect that continues do or number Stornant quickly The situation reported to from with other PFAS, unfold. Mike include any earlier parties recovery not responsible insurance that

of recover insurance Scotchgard to we In the some considerable and fact filed sued lawsuit also companies against our sum. manufacturer

the in our by study provided house one not quoted recovery know, took filters the So area. have all needed you as area. does approach -- we water, from day any we the that Stornant across is area great houses in and whole got this, entire numbers better We Mike science include

is The took neighbors a and bit an of environment. family families our kind long-lived uncertain approach. particular a So this the It’s chemicals contaminant. proactive regarding we these friends, remains PFAS but in of itself emerging and science were

Operator

question next with comes Securities. Svezia from Chris question. line of the your Wedbush with Our Please proceed

Chris Svezia

clarification, So investments? last the I just guess $XX combined of just So just that two you point sure investment thought top process. is million -- year? in understand just over that just touch of first you on I I spend, year in have just want the make on stack, $XX million to incremental a

Mike Stornant

be on incremental Yes, we’re in I we think over ‘XX, a that to two not clear, to just $XX ‘XX. an But year at of be in million $XX incremental adding to we spent look base. period our that the million top

well things So we’re as rate, of continue type investments talked same about. will on at had CapEx focused ‘XX, in as to catalyst we that ‘XX going to be those we higher that in we spend that

percent So -- at but you SG&A we’re the Chris a the revenue be our going incremental the we’re for of CapEx guide saying to as year essentially when flat. is look

growth. continuing obviously We've invest. We’re to got

And plan people wouldn’t it that marketing investment so, be to a be portion increase we cost frankly and in that some spending. in related just growth would of to support half the have that in of part considered variable of and investment XXXX, about our SG&A additional the

growth our implementing agenda really importance brand model to and those into So overall, and SG&A seeing tools Caterpillar later and openly year the the next with but the came we’re and invest Sperry XXXX good about right in year the on rest across talked great new going this portfolio. had implemented two and the growth have discipline of now. model pretty the sets. and continuing in We’ve we’re leverage great success we that behind brands Merrell in biggest of momentum business

greater lot So of that growth we as XXXX and even sort continue tweak results. we've get that in able confidence will it to -- the been to those in us a test and fact model invest that of gives we process

Chris Svezia

that about quarter neutral on I for second just seems like prospects Okay. continue the growth Keds given these fourth to a Cat little little and and more just revenue on nicely, Chaco Merrell, stacked outlook of accelerating, did orders to X% the basis. how you QX, thank and X.X% accelerating, the just ballpark your ability in growth half. for guess the in -- what the towards making, currency XXXX? Sperry to to are put And call accelerate around about a grow and you’re But quarter, like little up you, it you’ve are just through investments a QX thinking on the investments outlook higher curious roughly bit balance a confidence overall. back year, given in all the as you the relative just that the X% range the move Looks

Blake Krueger

living got year where We rate growth right pick -- frankly. living now, mean, expect the I some great and would years, for we’ve the we've value. proved this to up examples ensuing

two, quarter. in expect our four for Global brands little as portfolio. the rest to the the and year, mid particular bring especially to sets, processes off, investments right behind So a we the model to for this single-digit other right could those continue pay we of and and improve tools we three But Agenda anticipate our quarters bit now a in growth That Growth growth brand we now. skill

Mike Stornant

turnaround to Saucony important, why down major That’s for third the year. largest for well will flat right? of brand Saucony have we revenue underway. But in that reason turnaround first The and the is our half to is going we’re be guiding quarter. a the be That’s QX in

own some seeing on eCommerce great channel. reads product new We’re success early with our in

critical point. rebound will we’ve this our prudent that about approach American the half at which general, taking that and the as is of of confident guidance we’re to this quarter. to and in working turnaround we’re the and start But back really already really Latin timing early Saucony pretty a as second and So international component are talked investments

or momentum. have already are We seeing confidence good the strong the for -- that in brands performance guidance strong

Operator

you. Thank

proceed of comes from your line question the next Our with Erinn Murphy question. Please with Piper Jaffray.

Eric Johnson

our Eric for Thanks today. taking is for question, This on Erinn guys.

single-digit guidance regarding on for the what's First other versus boots XXXX, categories? for contemplated curious the and shoes boat Sperry mid

Blake Krueger

Sperry right developed they’ve at large look vulcanized a now you business. when very think I

boot in XXXX. to grow continue their to expect business We

essentially January in ‘XX we think to this and sold the I in out year. pair of

will not on growing but counting in maybe boat. happen boat -- any right yet, that XXXX our now We guidance are we in are so growth not does contemplate not

Eric Johnson

then or you your any XXX have the the to and half XXXX by level are days thought Saucony, into is or than second say beyond? contemplated what in worse gains recovery, is share is And second or half on that XX ago further would better curious or going that confidence be

Blake Krueger

to tied confidence of our the we QX. certainly days complete to I the perform; high and to for the XXX don't brand some have had ago, But QX basics, that a Saucony. are know team and two, and on flow that's about ought just much having new the new be impact we product really management how think market of share and higher they introductions going than team, in year, pretty share taking gains the level we is

high. is level confidence our So

Mike Stornant

even that the for year. continue the revenue Saucony expecting percentage to have is first the business of overall we're and half positive to EMA Remember international global the momentum and of total large in the business a still

weighted So international our intentions the brand. level to certainly is for for confidence growth the

Operator

our question DA next Please comes of with your line from Kawamoto Michael with you, Davidson. proceed Thank question.

Michael Kawamoto

for taking Hey guys, questions. my thanks

of you there in anything summer, in that there or that the call else out really number what's Merrell, strength there lifestyle subcategory? introduced offerings this that is to is Just past driving first, for growth a

Blake Krueger

Yes, business for that still collections done I new and have by styles continues while. and to well, introduced a the have styles existing in fundamentally new a but collections think Merrell all around very Merrell have some collections in great been

is kind lifestyle and across performance category. its of all and growth of really Merrell So strength seeing

Michael Kawamoto

Got talked you foreseeable What M&A how capital the then exiting 'XX. it, or And like think the dry guys about environment you for for in the deploying look does you X.X billion thanks. now powder future? right about

Blake Krueger

drive position cash about to to to we're think million say the spend I spend were other. in that we're of one hard It's year we capital over and going and Yes, in to a another our Obviously, we we’ve to indicated number active priority $XX has areas. the any this going our to use distribution at would the fit expand very But incremental These for or going could a be these looking shareholders. could growth. could that be brands brands capital our across strategic that company. domestic to be remain international We're base. return we global at brands

kickers. very active remain we So tire

Mike Stornant

do ourselves is significant put Michael, of key a at for us and The have we levels. thing great different in -- a to position be thing to here lot able the key things

be in as and with invest M&A strategic continue we're also we opportunities organic looking So but to will well. opportunistic to growth share buybacks

Operator

Thank proceed the you, question. Group. our next your line from question Vasilescu of comes Please Laurent Macquarie with with

Laurent Vasilescu

question to M&A. for follow on morning, thanks question. prior Good taking wanted regarding Michael's my I up

you think on bank you right to leverage how about you talk leverage for are I times. called much willing defined could is out Maybe your acquisition? that X.XX take ratio the

Blake Krueger

was our billion, and to compared that We went Well, mean, debt-free probably that basically of ideal time. revenue we on billion you strategic base look $X.X early. a from back borrowed the company, $X.X about the us, if PLG, I down acquisition very large paid structure acquisition not at a for a capital

acquisition, took space, us involved areas X, -- that a So filled around leverage over of different little the brand company. brands, ratio a that whom to also X, but four white of single was all of our not strategic for kind a and strategic key

So that take that for we’d last to willing probably that acquisition, again. we quickly the four strategic proven pretty be go years have the right over down. ability to five We've ratio to or the level

Laurent Vasilescu

evenly question, about we for quarter? should think how incremental term terms in flow and And by tax near through you. Thank spend of helpful. expenses modeling neutral the then margin should XXXX, Very for think operating then that million of gross first quarter the we And about $XX rate?

Mike Stornant

delivered we business, there. relates revenue it being growth, reason high Yes, be royalty gross for that the margin I flat QX softness gross QX we’d that some from of and QX year-over-year margins our is back where some guidance to right, as revenue expect the high our to in revenue quarter, have international on and kind think for gave where in of the EPS we

of So for QX, for rest then in margin year. gross about flat improving there from quarters and on the the

through bit year evenly be testing -- putting front little of more in initiatives more will the where even course out we little weighted of the some On distributed it year, we during year. our more new activate and maybe systems new in more weighted, some as kind people the and QX. the year a last things were where it back investment of was place and This upfront

Laurent Vasilescu

tax as thoughts quarter? any well first rate And on Okay. for the

Mike Stornant

be the compared For to flat year. will last will the -- quarter to rate Oh! the slightly quarter, in first be better first tax it

Laurent Vasilescu

one last then question. And

I first down are parse for think out quarter was the called America X was the year? the X half XQ the or quarter million to out expectations quarter. maybe your then it and what for impact million Latin that dollar last you first of Can for

Mike Stornant

two within correction QX to distributors starting is that was in to or QX in more and key similar been normal again so. of the there. down We And $X going levels, our QX. see particular even million three-quarter kind that’s be order region, a around specifically returning demand of

it a like for feel QX. quarters, back meaningful starting course on was adjustment few with a we we're here so like And while feel we

Operator

comes Our the your next Telsey Telsey Advisory with Dana of Group. question Please question. line from with proceed

Dana Telsey

see the And channel, increases wholesale each base and pricing As and you do the lastly, coming Thank do where you and think brands, on for growth both of the you how brick in about mortar, your see XXXX? physical you. of the online price customer from? level

Blake Krueger

Yes.

base customer customers business. our growth in we accelerated our wholesale For have in their dotcom seen

and store And online … accelerated QX, of growth one -- in physical levels trend seeing off decline. little business long-term our is a as all from traffic we’re virtually every bit wholesale that every So know the to continues virtually customers. down we but from It

Mike Stornant

our our our product pass seeing margin business pricing our significant either I to improve necessarily gross the -- Dana On to or in not line for continue to maintain keep what now along to increases cost think have it's ability we’re is price overall. right and

kind driving inflationary some cost necessarily strategic have or and we’re business to new also entering terms that. in do price anything of of international Although product of into areas higher some with not opportunities kind points with like up pressures product we our where pressures responding or But any there.

brands. story the our result our a promotional profit just quality our continue as And to the is closeouts and between part margin all lower of better. in to So of less that of is other get just

And benefiting so that as selling well. our from average pricing is or prices is benefiting that from

Dana Telsey

you mark were too down year last how do where inventories mentioned last you’re leaned. And similar year the planning mark now, how With you or downs? inventory to levels expect a maybe bit cadence to be

Mike Stornant

going Don't count our XX%. XX forget to the great down up cleaning months are the they over driven probably last really we’ve over and by job I be SKU think I about of a same, managing did think over a year the inventory. we two period,

normalized to pretty markdown at point. to So it's promotional think cadence should we this be cadence needed the where I be,

we we a itself of So wouldn’t would or expect in stabilize. but to that sustain expect ‘XX it from sort tailwind major

Operator

you. Thank

Our next comes Poser Group. line Please of with with Susquehanna question. from proceed the question your International Sam

Unidentified Analyst

on more our detail positive in for when that for Can Hush talk This Sam. seeing is Thanks I believe about to some on Will to taking you inflection brand? Puppies. wanted you provide questions. a

Blake Krueger

we second going year. to this Yes, think the is that positive come inflection half in of

than less leadership new place a As have been Hush little you in Puppies in the we know brand, has leadership the a year.

remains business in Hush international So strong. our Puppies

We the our to and world, opened we are Hush store global profitable brand business and it half their but around markets, down Hush design year, their and still capital. are this XXX But things. with distributors supply in see licensees, model for and all inflection in many an those well the We product in checkbook, a of expect other profitable very second us. Puppies remains stores Puppies stores over standalone

Unidentified Analyst

international international much in -- but quarter, then this business? And apologies how missed in that’s I grown the if

Mike Stornant

QX? In

Unidentified Analyst

Yes.

Mike Stornant

that. in growth, right with and Latin softness in the X% included for international business X% growth single-digit around America QX in to the that was Mid

Unidentified Analyst

And then lastly.

go-to-market happened? Is or will that that mentioned expect has think you that I your brands when that this about your brands strategy, call -- all track So your adopting in quarter. have adopted XQ you growth on by model,

Blake Krueger

remember right brands you all It as in I right involves just in but some think now. little have have -- process involves change now are this to change. And fully operational and also that well. not brands all process adopted a cultural

this it Sperry We before I off certainly our largest have but QX. obviously fully and brands in Merrell should and kicked with be implemented Cat Footwear, think

Operator

you. Thank

Research. the with Pivotal comes of Please question. line Our final with Kummetz question proceed this your from morning Mitch

Mitch Kummetz

thank for Yes, you questions. my taking

year to in help said in the you're I Cat half, up mid-singles, full Saucony to up X% just think Sperry reconcile because Mike, guide high-singles, you Merrell kind half. second up the First, sales down high-singles, the to X% first saying of me

a year? is think Puppies, So the X% you up X%? on than bit, name I kind to actually the of aggregate, Hush of do when the lot a down And then, or I where it, things down seem little are those to X% in firstly, aggregate brands more the flattish Keds, to how is rest get on kind Saucony of of guess, I X% business that Chaco, year to in still about

Mike Stornant

of of everything think the be smaller you of else flat. some Saucony of the brands about the that and some netting kind will mentioned, I

the hold, correlation Saucony until expect the application back direct between growth larger half agenda to there. see brands again momentum and year. we're and see a we of that So going the model growth taking our our creating the won't growth of in

will Sperry single-digits are about Cat implementing why and Saucony that's back be trends first positive the be for going year Merrell So the that's and in in mid trying the overall recovery later those I but terms those probably is rest to to guidance. all balance of of driver But and brands we’re that, tools half out really weighted, the others expecting guess. of biggest some and the

The Mitch year, our here the is coming guidance into being we other would right, say with for revenue. are thing I prudent

first predict. we strong obviously is happen XXXX clear today, as visibility to, pretty that I in half have evidenced, terms half seeing think that can't are things you fairly we the of the back but what was

a be conservative. back we're little to And more think standpoint the so trying from half I

Mitch Kummetz

Blake then made and that now. the more you boots you right you wish it, had comment Got

Coast finally hit West gotten after So winter, Coast what the that I has pretty West, the I Mid East think some yet again. a has know weather winter been getting mild

consumer, part mean rush of I So …? any meet some the boot that still at can you of you there is boots and too -- this to are the demand mean is it or or any late there on out just of I trying this in point demand

Blake Krueger

at side little Mitch, on We a it's some late right I be the now, in the probably March shoveling it's at point. driveways won't almost Mid West, here point. hope some our

So we're and too and paid kind brands boots we especially putting brought think off that our up on, not about pricing, and other on several pretty were us Sperry that in maintaining of judicious things late promotion was for again. -- early, I probably will and it of boots was to we it a probably to frankly but start the overall get great the industry season spring. going for But a a US, for get

we boot for great are items continues good pretty to clean a and was be head are higher think it ‘XX. out year So and and the as as industry whole is there priced these fall year, a the inventories into good boot a news I

Operator

our session. to and for Thank will question-and-answer Ladies floor comment. Harris back gentleman final concludes you. that the I turn any Mr.

Mike Harris

And until XXXX. would available March On Wolverine World and our replay is conference website at be behalf today. as The you good reminder, a of to will us Wide joining XX, replay you. available on call our like day. Thank you Thank for I thank wolverineworldwide.com.

Operator

concludes teleconference. This you. today’s Thank

lines your You for participation. your at may disconnect this time. you Thank

Wolverine World Wide (WWW) 20 Feb 192018 Q4 Earnings call transcript