WWW - Earnings call transcript Q4 2021 | Wolverine World Wide, Inc.

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Operator

Greetings and welcome to the Wolverine World Wide Fourth Quarter Fiscal 2021 Results Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure Finance your and my Vice Alex now of President Investor is to host introduce Wiseman, It Relations. Thank you begin. Alex, you may

Alex Wiseman

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

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

describing today’s and are projections, company’s expected year statements the plans, release tables our conference as I’d related non-GAAP prefer the to were predictions, to a also brand fiscal and the and exchange which acquired trends during and performance to you within release tables at supplemental costs Webcast for example, XXXX. of XXXX, If to you Laws. of severance COVID-XX U.S. link. company’s Presentations Investor to adjusts, the in sent the which Securities forward-looking performance Jean company’s This release related organic XXX-XXX-XXXX. and under of pandemic comments net to the made August of rate would for Relations the and please Fontana like costs, These disclosures, for you other recoveries, the reconciled expenses, call made Sweaty call future impacts on have under airfreight Betty in or and include of website foreign the the regarding copy during the costs, press References other disclosures the environmental opportunities cost attached related statements today’s that in was costs expectations, body morning’s such directly, those changes. found exclusion tab including remind at the reflect growth outlook call affect earnings

those the caution like filings important could factors must number now statements. to in described a of being With and the I’d you to that Hoffman. there from SEC we releases. are factors call turn the our a press said, over in that These results forward-looking company’s actual materially cause As result, to that in Brendan are identified risk differ

Brendan L. Hoffman

and in Alex. be and CEO in well our the fourth today Thanks as growth joining and Thank Wolverine World President for I'm us I am a fall we priorities of of product for categories, I team place which first speaking on world you innovation, class for demand talent forward to attractive leading strong during excellence. industry over that across we operate marketplace which as will firmly brands the continue our accelerated and brands. supported strengthened We drive deliver trends that our tailwinds evidenced see further of as confident Wide. you as XXXX by by centers new than more and an business the go believe incredible portfolio past results, with and the consumer in with year pleased we discussion forward provide outlook. diversified To to as our time the potential very the our in full of year. are pandemic ever powerful of the company joined untapped have the quarter

year lifestyles I opportunity. of we begin a against Wolverine I healthy will business the will capitalize ahead I for advancing approach long in in us and and growth. by conclude improve time and update Today we categories an for the sustainable aspects execution growth few set the fourth on pandemic emerge believe that further active we believe highlights and competitively consumers well the in our that continued term will from the discussion outdoor with quarter progress will my some strategies. fuel sharing my on up this that to positioned from As our will maintain are our growth to goals some

fourth yielded our of most were our ahead the very revenue expectations. We brands across XX% For brand revenue the pleased Betty with strong key growth. demand of recently quarter, Sweaty delivered consumer performance acquired which

growth more growth. for Sweaty Excluding supply left Vietnam unmet to detail. Saucony being created grew which the the and Merrell, ongoing biggest closures in top other to Betty, Saucony will incremental the sales by chain nearly impacted from XX% our contributors factory while revenue and and Wolverine with constraints line demand brands Mike speak organic challenges Inventory

of over $XXX revenue Betty we growth from prior delivered of the revenue XX% compared nearly full acquisition. to the the For million $X.X billion representing including year year Sweaty

strategic but leveraged to headwinds remain Excluding in year just and line Sweaty of XX% in a portfolio. priorities diversifies on while the revenue active it to revenue delivering growth. growth its industry during improvement presence continues Sperry expanding Sweaty products direct portfolio with of as about and founded, delivered internationally key can Saucony XX%. the Wolverine’s of which grew early Betty execute women. over XXXX marked team powerful XX%. female and faced excited over female respectively. forma delivering our for XX% significant XX% each delivered We Sweaty further the year capabilities growing lead brands a and few record the across creating on consumer full leading basis be pandemic On Merrell by as grew category Betty Betty products pro the in markets This wear one

XXXX revenue drivers. our up deliver business total consumer the with versus XX% grew the Betty. represented e-commerce and consumer quarter XXXX. Sweaty to DTC While challenges Sweaty throughout XX% on prior versus continued of DTC digital our year store was and penetration and versus primary with revenue mix prior made international to the of we XX% year focus, in our XX% fourth delivering Betty, DTC our and direct versus in advanced further year XXXX. to growth navigating Including direct macro to XX% significant and we revenue. grew acquisition DTC growth three progress compared the revenue XXX% our and Beginning

growth to revenue growth direct XX% XX% XX% grew of The revenue reflecting mix up store e-commerce Excluding fourth DTC in in of consumer to XXXX. QX grew and Sweaty revenue quarter business of XX%. from XX% organic our Betty

double-digit has as authentic and to Betty brands. platform Sweaty Our achieve engagement consumers employing of higher year in conversion by versus acquisition and customers focus meeting XX% on drive to our and and the XXXX. across we're and us grow active they dividends a XXXX, our are The XX% where enabled making compared increases store driving rate, shop, creating to e-commerce paying content rates of flow at storytelling compared retention constant progress prior along enhancement globally with

upgrades focus will and to strategies. We continue through continued digital growth to DTC drive e-commerce on investments

As making to experience acquisition and recently to facing drive enhancements an and the Future functionality. additional Merrell’s customer on improvements customer mobile example this, we're Merrell in app app our the to focused elevate customer purpose will related launched engagement. XXXX elements be mobile further of to experiential

are the our our learnings consumer we're seeing we to very introduce excited brands. other evolve We engagements to and and by applications further mobile will use

innovation. cornerstone in of to Product the on our brand is and product success. our embedded DNA is innovation Moving

provide that of product offerings the a maintained delivery franchise well leadership a excitement Our brands as and both halo proven consistent brands. in four product add innovation categories have position to as businesses their new the big for introductions through respective in new

Authentic core is new also Sperry revenue brands all running underscore products such well our collections opportunities. provide Endorphin leggings. leading Our collections enough substantial shoe franchise but four the Betty's Originals their Saucony updates which Supported as key XXXX. businesses largest the collection, in and as steady of within the provide shoes, only as businesses growth We franchise Sweaty including Moab innovation launched product not power its the importance cannot boat brands innovation Merrell from by these continued streams franchise resurgence, collection continued

brand equity innovation to Our necessary categories. product the also enter new provides

to is growth. international strategy growth third Our accelerate

full over the revenue XX% year For to as XXXX. compared international grew

Excluding Betty, revenue were to compared excess pleased grew as performance revenue in with particularly levels. our Sweaty which international XXXX EMEA and XXXX of delivered in XX% we

the XX% respectively half and XXXX XXXX. XX% Asia Pacific America pandemic and versus revenue in are growth levels we delivered to accelerating occur first and Latin pre to which expect of of

grew fourth quarter approximately sales For XX%. international the

revenue the in the and quarter. region in America APAC grew the Revenue XX% Pacific Betty Asia regions. Excluding fourth international Latin by Sweaty led XX% grew

China While still in driven the by venture. XX% in Saucony over predominantly Maryland through early our joint growth innings, revenue we saw

book of improved demand we Turning in EMEA, sequentially delays. impact order expect to revenue by improve was flat to late due normalize. the factory EMEA, product and inventory strong the and are levels as results encouraged roughly deliveries Nonetheless

XXXX to momentum ahead reasons. for our about several in the optimistic brand remain Looking we

an incredibly in strong our momentum order have book we reflecting brands. First, continued largest

are brick take distribution our right by a with well strategy wholesale other and our refine as to e-commerce made that focus and advantage both mortar continue partners brands as on decisions of brands. We for

pleased and in outsized continue to and we Second, are in we as with business growth the our drive increase e-commerce new our in the initiatives advance engagement. customers DTC

of we sustainable. that are have industry believe in we dynamics tailwinds categories outdoor the Third, active work and favorable

our XXXX number new I how the products the financial supported these help I of to and discuss over And before in innovative adapt return strategies a by to growth and collaborations, quarter product approach and beyond. Mike our consumers to finally, we fourth earned media. to stories, activities, us resulting to brands exciting marketing will call have drive experiential XXXX turn of As use biggest our across now in elasticity to execution and our improved launches we changing portability will the discuss trends. powerful results outlook and lifestyle

Michael D. Stornant

you thank and Brendan Thanks for joining call. the all

additional insights and factory detail nearly Sweaty was million XXXX. briefly revenue and the the the QX quarter touch family delays. newest exceeded despite Let our fourth logistics on XX% Wolverine our into contributed $XX Fourth our outlook for coming and quarter to over Betty performance, well-known me company's results, revenue exceeded in year with quarter expectations the and finish the Vietnam providing by the million closures the of full $XXX start quarter persistent addition up on of year to expectations. on compared prior then in

XXXX. call, the digits. book hit by hardest Merrell's closures. mentioned during our remain million fundamentals entering least As demand The factory as healthy, order for Merrell result and incredibly $XX very global of earnings low declined at an in we Vietnam QX by QX Unmet business including single revenue was strong was a Merrell

category and brand’s QX the lifestyle XXXX. mid-single-digits over grew nearly XX% Merrell’s nearly compared and to category XX% DTC business work the grew by QX grew During XX%. versus XXXX

for fiscal was exceptional year with mentioned Brendan record As XX% XXXX growth and an Merrell revenue.

North and Saucony Moving from venture. All gains growth to nearly led XXX% Asia and China Europe. The delivered geographic XX% Italy share XX% compared in over benefited in gained regions share continues XXXX and market joint strong reached in revenue quarter in by DTC category its nearly our market lifestyle growth increasing an improved market to the and running share compared also brand market. revenue versus important all-time to Pacific trail Saucony, grew high road QX and U.S. America the nearly to mix in fourth XXXX. as which Saucony XX% achieved XXXX. its categories running the e-commerce increase

by Saucony helped the a Vietnam relatively While inventory mitigate downside. was impacted factory to entering strong quarter the position closures,

despite due the up prior our centers. $XXX to Sweaty margin addition million labor quarter from and variable results. increase which general, XX% higher XX% adjusted in costs higher to was to expenses of was Turning excluded QX year. Adjusted expanded extraordinary administrative costs $X.X partially the were headwind in adjusted or Total and higher from of point of and distribution XX an for million Betty, freight and revenue, QX of million $XX selling, air was compared basis the profitability, in approximately freight This XXX XXXX gross costs. million ocean points considered rates basis $X.X versus an

most to up consumer X.X% Adjusted More of QX the legacy year. importantly growth per quarter The $X.XX share year, incurred of is exceptional earnings the quarter. year-over-year teams the XXX points Net matter. reported for to we the times quarter. approximately the Adjusted aimed brand to in share the contributor due continued $XX marketing four million invest $X.XX compared operating per or was executed in $X certain in heat related versus basis The strategic in our nearly earlier $X.XX costs XX% down debt acquisition and financing includes prior our year. environmental margin the growth in revenue quarter. during of million for were prior diluted in at costs our significant expense loss interest was to the

make meaningful we a accrued the settlement During towards resolving the progress $XX outstanding portion million quarter were large pleased very costs. litigation of in to incremental approximately and

XX%, inventory XX% $XXX of million grew ending the Betty. Sweaty sheet, or excluding $XXX balance approximately Turning to million

Our in improvement available sequential improve inventory position and we continued quarter expect to XXXX. each

increasing was our performance and operating XXXX. disciplined a to Full unforeseen strong ocean to from outlook changes quarter-to-quarter margin by I'd year year. XXXX healthy earnings a will This management help that freight, model to earnings for parcel $X.XX outlook our of year adjusted Before hourly per share flexible pressure strong business, to for and These full small highlights labor, few adjusted like driven respond our from our was global turn leverage gross cost share XXX%. to of moving in inflationary now were during I to earnings expansion, mitigate benefits performance the market marketing. XXXX. freight, the

the true benefit and footwear inventory from improve demand relevant supply demand XXXX. XXXX to as of taken global increased to remains to last exceed demand in the all portfolio very availability brands our to trends This actions order to is in apparel. higher should the service allow strong our believe a category high the continue and forward continue capacity for and inventory year consumer Looking expected level very is for we in we in at and near-term. us Thankfully position

brands one revenue We of expects to in growth we to XXXX, our $X.XX deliver that in keen number double-digit This inventory record a range risks XX%. includes Betty. Sweaty growth billion of currently have of supply logistics $X.XXX from billion operational company fiscal in time. the to developed believe XX% excluding appreciating organic on that will improvement chain our The the with persist, getting priority awareness is outlook our

Our four DTC international Betty in in our two The businesses Merrell, contribute thirds of largest of are to XXXX. approximately our will also Sweaty of XXXX. Sperry, Saucony, Sweaty the and expected penetration and revenue brands addition Betty benefit

be direct of expect markets revenues year. approximately be our We global of for our full over global consumer revenue to XX% to businesses and XX% the international to

revenue XX% direct-to-consumer year. over XX% full be be our to of revenue for our and businesses expect We global global approximately to markets of international the

expect the adjusted gross range of margin We in to XX.X% XX%.

XXXX, the DTC, the year of are will increases expenses higher chain costs. of in be of administrative heat. elevate In reflect to planning mid-single-digit as including believe brand plan selling, spend a be Betty. mix to monthly our our X.X%, phased an to the full these attract in offset in year continue new approximately supply momentum of Sweaty growth of benefit in year. including benefits Marketing will the the for and approach of and by as and to spend marketing Adjusted DTC, should to of impact related prioritize phasing revenue XX% general We price on We year a awareness the a consumers. we higher we biggest marketing accelerate Sweaty Betty brands. expected will funnel earlier top effort expense are percent of brand be that significant full and benefits throughout in weighted fuel The revenue is

compared and $X.XX. the diluted costs earnings effective tax to share $X.XX several XX%, approximately of share of are margin per the same Production early of primarily count time diluted and Reported production have rate of more reflect continue chain, related committed operating to supply core and expected XXXX supply to be proactive range estimated the range point secured for an to expected over pursue very are million. an to approximately in of inventory. share in legacy in this but orders built the flexibility litigation. earnings are like in reiterate future we to $XX.X last adjusted placed reinforce $X.XX production Adjusted per expect network. environmental $X.XX to XX% on to regard confirmed capacity Brendan and taking year. to I we've have average hit actions We We that up our are and XX% on approximately and in XX%, to were would more be

against continue us demand unforeseen approximately forward support this the quarter, all XXXX during We to expect added end, $XXX the To giving brands. in our across chain. we we to protection core expect each sequentially of increase on to inventory working in coverage million capital our position see future supply invest volatility to

Vietnam is to but the first For factories in improved planned. levels, XX% our happening the production of about recovery slowly more has quarter, than pre-closure

$X.XX, revenue in We of $XXX to of operating the of $X.XX of Adjusted to flat million XX.X%, QX or approximately share Merrell X%. to including approximately to approximately $XXX with QX and to growth quarter. Saucony expect be be margin expected approximately million the XX.X% earnings per expected are range for in

QX. QX, in Looking in beyond expect growth a growth high we mid-teens with the teens and first to low QX quarter,

alignment book, from the pipeline the earlier. order This insight mentioned back quarterly I'll improved to the is call based on in inventory our future execution our on of phasing XXXX. strong with pass Brendan

Brendan L. Hoffman

Mike. Thanks,

drive we'll business sustainable to Now, performance. I'll share be our approaching how improved

increase First, and prioritization. focus we will

bets more our We business. concentrated a meaningful will make that will have impact on

the to we prioritizing can growth where runway for in biggest addition in In and direct-to-consumer have that long the growth largest accelerated then brands a payback, invest markets we international business. will financial generate driving our

become international we will expand global, China, e-commerce regions, including continue Saucony for and in to invest key As with capabilities Merrell more and JVs we globally.

end in seeing are was new we where also third Sweaty we the potential of XXXX sales adding exciting. for came are incredibly from incredibly strong UK. the for Sperry, Betty boat distributors over in For a The shoes. XX demand the of By outside EMEA, year, the

globally, including plans the will confirmed Ireland, the first Singapore markets, of U.S. expansion in grow continue brand its to with and the Following launch retail stores in several

opportunities encourage greater to and accelerated drive to chase will brands growth. we speed our agility Importantly, with

greater awareness. innovation, emphasis we more our position values, leadership brand driving investments messaging leverage and will on in product Second, largest brand through informed brand’s

agile comes to our better the testing direction. a These as utilize franchises product that focus in investments reach. This and invested consumer-centric fail need we more in a more to proven as inform well consumer quickly, to will In consumer with introductions research deliver course capabilities our will include and XXXX, product as informed innovation testing correct and developing decisions. We expand with best product enable practice. learn,

but We We great and will values. authentic that want also purpose brands for emphasize choose customer brand aligns stand brands also with consumers something. that products, know make that messaging with that our they

customers. a create on A marketing engagement awareness focus drive a with to line is also to acquisition, and priority our performance balance our will of in driving We maintaining brand top top brands, customer leading new while higher drive loyal unweighted better with growth.

marketing as shift placement more will top-of-funnel designed growth and We including investments influencer strategies media accelerate to new programs, as well customers. to social in

We will continue test these we strategies as learn. to evolve and

white opportunities. go Third, space after we will

We equity customer development drive into customer. reach will spend our will higher broaden our that and product to expand per categories leverage brand capabilities new and

We own that have efforts a categories addressable markets, market market total can focus clear our leader, performance extension share position. where are our will attractive logical on brands of leading achieve we and no

we For best across example, to in sharing practices Sweaty expertise and portfolio. leverage plan our of apparel Betty's through strengths the

excited remain also about front collaborations, potential, and of us product Betty. operational with in Sweaty the We synergies growth

growth create empower, mission support teams of talent best-in-class on the updated and customers works conclusion, acquisition, with great fit of on prior be industry and continue is Sweaty the our to to of In focus collection organization. offering Wolverine. this within the our demonstrating in step introducing our to approach outdoors, strategies to strategies, in we'll way. we We focused capitalize will footwear Sweaty see backdrop collaborations additional the was further a inspire the will portfolio expanded to engage, to the add with committed to categories. same; be we we performance primary our remain across a continued the our execution Betty Sweaty collaboration favorable and come. the Merrell. sustained, first snow brands, the time and to This advancing With remains ski more is the in as Betty In collaboration collection Note and Betty will our be approach executing every an hiking with to outdoor our partnering that one

of the developing of growth more up powerful to our our forward process a the of I operator the strategies will I our to extremely details future. strategic businesses. excited plan Q&A. longer-term in a team plan in look portfolio that, providing turn are right call unlock also strategic the we are execute, back the our biggest With and to to to the about brands, potential in place, We for it With potential. on talented open

Operator

you. Instructions]. Thank [Operator

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

James Duffy

for by inventory the at give Good balances across you. And help much for to the brands transit? I the on speak start the the inventory in year how then, perspective for quarters? you major some brands books the about that positions morning. four to will of our could growth us the Thank inventory. the of you composition expectations each if Can set wanted of Thanks. end are asking

Brendan L. Hoffman

directionally, brands. our number Yes. Thanks, Jim. big especially it's Yes. one mean, and Well, day is for obviously, our I every focus shoes delivering challenge and

can So, the I'll and Mike go bit little a but more, the still like yes. we not that given specifics question, you challenges, give the inventory have would on in into the we position all

Michael D. Stornant

into similar when Yes, it's in-transit the about year. today, look $XX in coming question, a position. the probably it's million you say I'd Jim, at

things obviously goods. are on added those up And the side the so backing of logistics days

has the and but coming whole the of kind out been time the production obviously, things and the the stronger port So goods the of at slowed of availability has down. logistics factory,

James Duffy

major on has that And brand four than stands Understood. others? franchise franchises, any color then challenges preaches different greater inventory that

Michael D. Stornant

bit out the And Vietnam and a the an going Saucony have timing-wise, on QX. Merrell impact, that's and was I of for in think remarks call to prepared

of Merrell so more as production, improve normally year, end bit a the bit better relates Vietnam. flowing of a goods But they coming I'd already And quite the it that out get we're than would the say, seeing the and Saucony to quarter. in towards little into the position

coming even the position into position So we've on the is improving, stronger. other inventory nice are just the overall, inventories brands, in got think a I year. Obviously,

that to deliveries But the seasonal in over recovery. they summer. spring later and that the relate challenges the mostly of Vietnam for quarter, product later the first mostly of carry part think yes, in are will us into some I and And

James Duffy

Great. And and approach. learn I your on test product to Brendan, the about comments wanted ask strategy and

some Certainly, franchises. important. productive have remain very key You those

between As franchises product? you mix growth, composition new think and that key the about of how does

Brendan L. Hoffman

think Yes. the heavily rely learn will And key test those always franchises. of and within we think on the Well, I part franchises. innovation is and I key the

for So different shoe the is launching X X in modern looking. the looks the is later more like Moab, -- example, be year. what shoe, -- Moab this quite more Sperry to with which going boat of boat PLUSHWAVE bit [indiscernible] we're the look quite from modern more The a launching traditional

So our franchise in Merrell. that's biggest

and -- but it's line Endorphin in next also, and up version come to evolve obviously, Saucony, with the not year's just product continues So then extension.

and what franchises, So seeing say and works the and putting learn what up on. site can throughout there's them using on and trying then, our innovation things and test with tremendous we and I'd insights just customer expand

James Duffy

will I over Great, else. somebody guys. it thank you to turn

Brendan L. Hoffman

Thanks Jim.

Operator

Thank you.

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

Dana Telsey

Couple of Good morning, everyone. things.

And think the first first seeing did factor you then, then way? that in heard how and just quarter the quick quarter the pickup since would follow-up. shape play as you you're from a as January Omicron quarter others or about guidance, a and So we've first

Brendan L. Hoffman

we business it's much -- to mostly in to a staff. Betty, part and challenge Yes. just here of in able the impactful our Sweaty only our seeing of just I were with a own obviously, because but us continue we tone I'd stores huge they Omicron business, did. terms that have shopper mean, with of retail our Christmas it goods. keep EMEA of business, But in general happened the and legacy say, even becomes some outlet it that in more bottlenecks moving warehouses in of less and the in was that important the as for got before open. just with there our terms real with January, stores a Well, then stores And the don't not first hit just certainly to December UK,

feel So kind lot at how we with of the February certainly better burned it's now a through. end of

Michael D. Stornant

was I congestion, also of really in impactful cases to the the January, think that started has off think That by port obviously, Omicron. and impacted Dana. normalize, I -- so tail that was more by

Dana Telsey

freight What approach sales of Three guidance $X.XX the you about XXXX, I it what you. given or it. any Got the differ what contribution that of you changes? for type be Sweaty had accretive air think it to previously Mike, on still is could any XXXX, Betty, are in the on other nuances? you by $X.XX to follow-ups. Brendan, in XXXX? you're thinking quarter the case And update thinking terms X.X% for marketing, how about it and we are XXXX. for, and looking does Thank planning, in should of be that

Michael D. Stornant

Yes.

Betty, on that you two we XXXX. they're that track That what the end Let high first there, questions probably closer we're to Sweaty against gave, of With definitely would Dana. me expect. range range for cover the

XXXX again, performance line, in the the good growth in there. than And slightly better actually was So expected. really period in we stub

good Betty. Sweaty with So progress

adjusted all in, air million obviously, we as we year last freight and in a $XX side, of freight air about almost think out And that. the spent On XXXX, we portion we air total with dollars the in that the mentioned freight come think that will had you remarks. bit, increases price to the price a progressive but opportunity the down obviously, in

that, the costs rates think freight will itself of going year nature. cost and impact we that it of full airfreight the are outlook, come that in overall. in than we've more factored got think going there the and to offset into for be the But we've some obviously, We other so come will are accordingly to the priced down. ocean permanent but down, And

Brendan L. Hoffman

inclusive, marketing that's to I as question, being obviously see we to course, are And And there. we more Betty expense already become on direct-to-consumer. our going marketing of think, Sweaty penetration rise of the just continue

is in to In terms here I equally phases the just as to e-commerce remarks, marketing that spent at and said try for level get the after holiday. recognize a across the it only QX, the we go stage funnel. phasing, future. funnel, brand the the of to of big a pretty awareness, and in the up time more into long and as We've to that obviously, year, not in making shift my going more XXXX, get we set of But brand marketing the we're the change excellence little bottom need center for the we performance but bit the mix

across do see So that, hard that and the the just launches. make funnel, to is but will a trying intended we're product with balance why -- make marketing that match deliveries we're the you'll go the as way the around, turn, in move a change, the up starting some Dana reason of to we And left sure the product more not year. other penetration make of only messaging campaigns balanced shift

Dana Telsey

Thank you. guys. Thank you

Alex Wiseman

Dana. Thanks

Operator

you. Thank

from with proceed question Please Exane. next Our your comes with Laurent Vasilescu question. BNP Paribas

Aubrey Tianello

good okay? Aubrey This me morning. is Laurent. Hey, hear Tianello Can you for actually on

Brendan L. Hoffman

Hey Aubrey. Yes.

Aubrey Tianello

all for Thanks going growth guidance. Great. this for looking still supply to questions. I It's organic taking great hear start chain be our the wanted year double-digit the with to despite to revenue you're disruption.

Sweaty any about on Betty Does implies high what's right that Sweaty Our growth pro on you a to -- single-digit and quick color for that can growth in like math something give you implied for forma sound basis. says XXXX? Betty

Michael D. Stornant

XX%, would Sweaty closer for a that pro rate, for basis the slightly still walk later can No, and growth terms I in want. yes, year through maybe puts you average Sweaty We the outpace of on expecting to of Betty. the if you above forma growth we're XX% say, takes Betty to

Brendan L. Hoffman

growth. fuel them growth with because we want we're a And closely a that and trajectory, on to Julie and her team. -- bought growth working We were they

going we're to when on that them. path to that they stay we everything sure So number on can -- do were we acquired make we

And so thrilled far, the with we're results.

Aubrey Tianello

great I That's not? XXXX, And out the just Excellent. there's Curious XQ follow does inventory. on question of slipped alone called XQ think Merrell I any XQ on of in-transit million $XX move that quarter, any inventory. then just into this the appreciate color or revenue hear. about that out into to to if up on wanted you

Michael D. Stornant

that production forever. of this won't We to in that of unfortunately didn't the production big kind the shift. portion happen being factories Well, about talk related revenue Vietnam a so lost gone that

there the factors as And much seasonal QX a not QX. normally But of it benefit wouldn't we including some a in product based production. will that over that, was was on certainly from of you number have in of and producing to negative of with a good and continued QX impact lot some there fact as it that of spill expect related timing factory so it a having of would be was it, but that some shift, portion in for anyway, kind

Aubrey Tianello

Got it, sense. Thank makes you.

Operator

Thank you.

from comes with Our next with question. Jay Sole question UBS. proceed your Please

Brendan L. Hoffman

You there, Jay?

Operator

Jay, are on mute? you

Jay Sole

international on is Sorry, the there. question I just about was business. mute My

just could markets about different you be you. if international talk Better, through a Thank if great? and go bit you the include Sweaty little If outlook, your you would that

Brendan L. Hoffman

just down with next stores. Betty haven't able region, playing regions It Yes. open differ more up does excited as going Ireland, They're had bit been one of to Well, a in the some I bullish start is part to we're great travel Thrilled with America through by there getting. results regions results. our is we I and partners general way to XXXX. virus we finally trip mean, a results certain is can opened in little Singapore in make big Opened are visit one but story, and by product continuing overall. a and and is month. of very in to my its to travel. and up growth delays, and the our seeing South impacted obviously, Sweaty international our Also, Omicron pleased the up first that

see firsthand. some this of to excited So

Michael D. Stornant

in mean, that Europe the seeing due Jay, partially for business international slower is benefit outside now I guess, to I -- some the right markets of slightly we're of the the recovery, us. in

back certainly on are expecting rates The America, track in Latin key in Pacific. countries normalizing are getting growth and we're So very, Asia strong. joint very that in particular, those -- the Latin venture for now that America

those the in XXXX, So our with in Merrell we'd Europe in higher brands expect for international was one sure be mid-XXs strong strongest those regions strong markets at in performer overall outpace kind a and of of not, being growth and of Saucony markets. to countries. end, if XXXX rates the in growth rate for terms

better And so recovery. Europe our those on in even performance other based strong in still guidance in the the growth of really overall international expect and line timing with markets

Jay Sole

Got much. it, okay. Thank you so

Operator

you. Thank

Baird. question comes Komp Our Jonathan with from next your Please proceed question. with

Alexander Conway

changed This business QX of your Conway for revenue and more growth share a on for previously? Jonathan outlook prior what's can on is Alex you detail you're mid-XX% least growth the at assuming Komp. gave organic you the just Yes, since little one of that question,

Michael D. Stornant

included all of Right. have seeing. I -- water. a we the mean, we And previously outlook have Betty, but production of QX, just was in essentially I we it's the that lot -- -- on logistics a The lot we're delays think it's gave we Sweaty

haven't timely it a or and goods lot the March. of the customers going getting into have we that until aren't to in port had We goods those to hit around a in of the way. And confidence predictability necessarily just warehouse making middle turnaround the the

took cautious in So back they're with a -- we then legacy would have And Sweaty it's same we so for a for it's don't -- have brands Betty, there our challenges expected respect. in line in that November. what pretty they outlook the

Brendan L. Hoffman

changed was we as And just and I that Omicron we how in mentioned mean, earlier. down Yes. obviously spoke seeing were has everything last what to earlier, slowed addition since

getting here the -- that the product meet just It's there. demand. certainly is it's demand So to

Alexander Conway

Helpful. guys. Thank you

Operator

you. Thank

your with Anderson Our Susan comes proceed question question. next B. Please Riley. from with

Susan Anderson

Thanks Saucony, a color and quarter Merrell by little there? question. could the morning. around I I give but my I you just think gave if of any in wondering color bit taking brand, for performance heard good was Hi, you --

Brendan L. Hoffman

They and to for in XX%, Yes. year. Well, Saucony range high the continued were about XX% XX% deliver up the growth.

As Mike issues the of Merrell given said helped demand. here, a earlier, about. they talked inventory the had inventory more started bit little struggled getting more we that the and with the year fuel more

they year. for full up the is XX% at that were quarter, over closer still to but historic flat, levels. the for just So book And with order an

Michael D. Stornant

performed what in expected. line The the well, Susan, other quarter, we with in brands

Susan Anderson

Great.

so in Sperry up the also And quarter? was

Brendan L. Hoffman

flat, XX%. the for Sperry was slightly up year up, the for quarter

market. to those great were Fannie saw during there [ph] in York New see of to turnaround that that for some of and product happy that So the they're you bringing

on bullish XXXX go and really So forward. their

Michael D. Stornant

shoe having trend a forefront terrific that as obviously, is boat news we're the And of at well.

Susan Anderson

mentioned year for? And It Great. seeing what within year, then the expect gross extraordinary Yes, gross you're you too? the about product this be looks you on if we great. across to maybe, raising down could talk And prices the other then Should margin. then And on also, airfreight bit follow-up just in drivers this any sounds adjusted freight expecting I all pressures, other year. are of air are you like a think come margin for to Betty? Sweaty the brands, planning you the inflationary the a

Brendan L. Hoffman

Yes. Well, up. I'll and start follow Mike can

with value customer for I terms took middle I of we and product think brand the and match have every retail. think appreciate as this our great which the is the to to strategically in pressures, and power brands. year the went in of the both we was us price got the of knew offering better we across certainly coming, pricing pricing, we're adjustments, pressures a freight And the inflationary opportunity last the

Betty, for Merrell, shoes the the took to the $XXX. went $XXX $XXX gold Endorphin went example, from Moab from from up $XXX to $XXX. and boat Saucony, in $XX Shift So to $XXX we up And Sweaty

the continue last starting price what So what to prices. us bit think a half at and be any anecdotally, there's in it of we retailers continue look took will normalize, market see to them we hold price as to I made things good changes. haven't more able did we're that just of from seen no importantly, little to and start now opportunities. I the We as for year, where we'll get and competition we'll changes relation think seeing those got provide And digestible to our to pushback and where in coverage feel those back pressure about price the to adjustments very

really about So feel that. good

I have is of the We're said, like against we inflationary some guidance. do what done good enough we, as ourselves adjusting terms terms report the in the as have going freight they just XXXX shown issues in going for charges permanent XXXX, to transitory trade the in to on cover pretty feel -- that. costs out in are and of not the extraordinary In we're mitigation and numbers hope as to

Susan Anderson

luck so you this thank Great, much. Good year.

Brendan L. Hoffman

Thank you.

Operator

Thank you.

Mitch Kummetz with question. Seaport. proceed Please from next with Our your comes question

Mitchel Kummetz

think impact pushed And kind quantify away your chain taking there, can the get or Yeah, into you sales do into supply thanks the out sales will kind XQ for like on guide QX is margin I and and have my QX, go operating did you of the then issues of do factored Mike, questions. they they a shortfall? those follow-up. that

Michael D. Stornant

ago. ocean and about or quarter costs a chain, XX supply other pretty the been the or the on for that mean, of I the Yes. talking that occur we've didn't some year meaningful. the XX It's it's about in transitory freight newer probably bps

the pressure put we're that impact Brendan for. that So the of pricing on margins. in just about seeing phasing talked

a impacting just margin, So pressure there, the mostly mix couple you're new of see are chain we timing the business as factors in I permanently some putting our impacting costs. QX, issues of wholesale pointing think that operating than then, so in more supply it, out, on QX And Mitch.

expect shift right? remarks. in QX be So but think though, QX, mentioned we QX a and would to in all that there'll the of QX, So shift from phasing probably is outlook, from that prepared of reflected growth yes, we I our to similar the to

Mitchel Kummetz

of brands. then secondly, just bigger across Okay. some your And

we just pro growth gave Betty forma And give so the on XXXX a context can a have to gave is brands of? Saucony, revenues how Merrell, XXXX? pro year for in then for forma off that you so kind as what and growth in some was coming sense we performed -- versus those rates, also, better XXXX, you full you the growth XXXX. those Sperry, basis just So two-year gave have What across Sweaty of you

Michael D. Stornant

Well, on the line for is what shared. Betty, pro with XXXX in forma Sweaty we

or the in that range. right in acquired August business, when around I think, $XXX back so, we million

obviously, stack, forma probably pro we XX% for overall, able go for the to On the going basis pretty in exceeded was a in some deliver detail. would challenges there. business, the brands just that not the had business. that that were over growth I growth in of that to So legacy single-digit through the and we're say, think chain obviously. XXXX, the low I And saw good favorably But we XXXX face overall, a supply performance we that some didn't. two-year

Mitchel Kummetz

luck. alright. guys. Okay, Good Thanks

Brendan L. Hoffman

Thanks.

Operator

you. Thank

comes with with Erinn from question Please next your Sandler. Our question. Piper Murphy proceed

Unidentified Analyst

on for I guys, morning. Good question on had Erinn. just this Matt is margins. Hey a quick gross

kind freight, mentioned call times until they're in so locked the give ocean margin on Appreciate puts and about the last few year think and Betty there? Can in and you us the for May. just you of I a the think and far of and it. more kind how the increasing kind takes gross impacting, is half of back is puts of, takes Sweaty it I and

Michael D. Stornant

of XX% strength the mix factor business. their Sure. of It's contributor positive DTC a Well, because margin Sweaty of of gross of over is Betty to their the business.

will Obviously, be that going continue direct-to-consumer our QX is So quarter. to biggest a the benefit year. into

mix. in the we QX gross But that in gross margin QX lift see to the overall, where biggest increases that factor the margin related think I phasing is to and in QX biggest improve of so start And will pricing from hit.

that outlook have don't the settled. all there. conservative we some to the now. the around but in once point right expire we've takes second you're got on progressive right estimates and see all got puts freight, the based May. built we into a that XX% airfreight, settled contracts and out improvement And on negotiating third ocean and freight, improvement in So comfortable to are margins be quarter pricing right we've that We're pretty learn capacity We the the contracts costs, kick May able that. will contract to the yet, to the of We're those need will the other that in

Mitchel Kummetz

you. Thank

Operator

you. Thank

proceed Our with question. Please next your question King. comes from Marotta CL Steve with

Steven Marotta

and Good maybe innovations Merrell that mentioned on exception Betty impact delivery maybe What practices better utilize into Sweaty brands, design legacy brands could be as some and And had consumer-centric say categories with morning and product brands? Brendan you the comments thank could you have new expect when apparel of of you. to can I of Sweaty what you collaboration. of able might expect the to more apparel be earlier from those the there one that some of considering mentioned in the and Mike. additional dovetail some legacy we we affect Brendan, Betty's other the and based the well, that best can follow-up, else

Brendan L. Hoffman

Ann teams, Merrell the Julie mean, I Saucony the imprinting from at those apparel doing XXX%. Chris already Yes, working Steve. Betty onto specifically with team two and and the Thanks, are practices team what and brands. Okay. an on Sweaty we're best company her with and team specifically

think around but from the or up them. the opportunity, have So a DTC or important or the we're whether to lifestyle think is be standpoint, where me out stores It to do a brand excellence have revenue trying apparel of or we U.S. some not apparel. to learn leaders other centers or only to each and just from integrate able around open figure very to the bring I we it's much e-commerce in we exactly it's how we can Not world, market.

to you customer. think connect have adjacent I categories offer and reach the with those to really

of So mind that top happening. is and very much

be Bravada is around aspect campaign light going Merrell Sperry footwear marketing some of X, next water into then whether the for extensions within the our a of like it. that hike it launching you month, is further talked and big within that will have or In surfing Sport boating lifestyle which other they're that. to brands, about them also takes to really which a terms categories launches water, footwear the authentic business the do

are So their I and within the distensions constantly business lot our different a brands there's core think leads product that on. of product working

will boot brand addition some company baseball with continues April, and campaign Sperry work is Hikers, brand, I'm happen with if Unlikely including important to drive brand The collab in their our Sweaty as collabs heat, which been Yankee mentioned, that's in most a few Betty, a at which to is another to the one the doing best. partner is months. launch has And of one do with and a coming them. about excited doing being Stadium Rawlings, collabs played. has Merrell doing I next typical they're In to Wolverine the baseball Blazers. a -- Rowing Herschel

So to had is and of brand sure brand generate collaborations chockful making said you every a Then heat. news follow-up? we you have

Steven Marotta

end you leverage you. the to year ratio expect terrifically a Mike, what Yes, standpoint? helpful, from thank that's do

Michael D. Stornant

End XXXX?

Steven Marotta

Yes.

Michael D. Stornant

of line are, cash facility at we'd say Yes, at at a be I'd of definition I two under the with probably year. well. flow credit the place that pushing as going invest in will my support to seeing times in in we're end similar the we inventory to core we're in end portion in XXXX where leverage the and inventory half the think be large business. of to a hard comments of our invest growth Noted our we're free and

Steven Marotta

Excellent. Thank you both.

Brendan L. Hoffman

Thanks Steve.

Operator

no this any for would floor are time. to There I you. back closing at comments. turn Thank further to Hoffman the over questions like Brendan

Brendan L. Hoffman

to your Yes, you you. to Thanks, today along care. the Really everyone. way. thank Take talking appreciate time look forward and

Operator

This conference call. concludes today's

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

Wolverine World Wide (WWW) 23 Feb 222021 Q4 Earnings call transcript