Earnings call transcript Q4 2022

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Operator

Greetings and welcome to the Wolverine Worldwide Inc. Fourth Quarter 2022 Earnings 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 my Vice Alex now of President is to host, introduce Wiseman, It ahead, go Please sir.

Alex Wiseman

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

and Mike call Executive Officer. President the today Brendan Financial our On are and Chief Officer; our Stornant, President and Executive Vice Hoffman, Chief

can results XXXX release morning, this and and wolverineworldwide.com. corporate news fiscal The press financial guidance available our our fourth on quarter sites and announced press for viewed Earlier the release and is website many issued our we on for be full year XXXX. at

on costs, today's press call for costs, reorganization This costs, and of and and costs, the year morning's changes. of earnings securitization joint extinguishment with net debt acquisition include release associated the costs related intangible gain Champion receivable for costs non-GAAP Sweaty comments brand. disclosures non-cash one integration adjusts, of to of ventures rate made which cost Betty of non-GAAP the during of Betty, Sweaty Sperry exchange and environmental Sweaty and earnings recoveries, Betty with Prior disclosures, impairment the the impacts include associated of assets, trademark, example, other non-cash related sale company's impairment for foreign adjustments the transaction the additional

the States February to At in and footwear license Brands same Keds announced for exclusive time, Incorporated. intention United On X, announced grant footwear the brands Designer an DSW. we we Canada. the business Hush The of the to XXXX, sale of retailer parent to designer company Puppies the

business. to X, formal divest Leathers XXXX, Wolverine Additionally, we as have process December previously a announced our on started

our Wolverine that from model. States impact Keds and for licensing Hush of the expectations business our second an transition guidance such, Puppies Canada for As included and full-year financial of a reflects XXXX future half exclude Leathers to the adjustment United and results comparable XXXX XXXX and

plans, as release. of within attached References disclosures These I and laws. to describing to fiscal remind those the are to securities made growth today's under predictions on statements expectations, for U.S. body reflect projections, business the expected forward-looking ongoing like the performance Company's trends during opportunities reconciled are would future you statements regarding the our conference outlook affect tables company's also Company's that call these adjustments. XXXX such the year and

a press result, As cause caution could there in differ filings of actual materially risk that identified are that SEC we from important results releases. to must in described a are the you those statements. Company's in our factors These factors and forward-looking number

like over With turn being said, Brendan call now to to the Hoffman. I'd that

Brendan Hoffman

Good Alex. you, Thank morning you everyone, for joining call. thank and today's

fourth with For our per revenue reported earnings line and in the share adjusted expectations. quarter, we

our improved performance the Our gross was to in position more the swiftly to performance impacted efforts inventory in clear Company the quarter for ahead. year margin by

as comment greatly by large Mike certain Our discount rate a the charge will acquired on include impacted to GAAP non-cash impairment brands. results that was applied

This my CEO. month as one-year marks anniversary

period our back on us the environment quickly midway industry year, my was shifted as As for challenging I a certainly look and through. XXXX first

for others which we in when business many correct improve. recognize We as pivotal the must to areas on faced expectations, our underperformed like our spending. Company was against changes too a where also course our our with key our While time initial is that shed complex quickly consumer ability light year it Company limited sudden

our to and our simplify chain. set improve supply business we a path So

XXX-day integral to important Agility priorities the that environment, is plan especially four QX, essential December, in correction but in In place shared in course put we of efforts. are I our as any key part today.

the early update progress we've and priorities these review me on made. Let you

easily announced group similar together, attributes best them with are now to brand our in more practices. in change enabling November grouped and brands the structure First, was where share collaborate

established We million Office achieved a costs. removing improvements. expected 'XX. that is million is $XX in profit annual to while a efficiency At $XXX run least improving identified Profit rate be in Improvement Second,

In redesigning addition the focused supply to costs, process. reducing including our improvement PIO planning chain process is on also continuous initiatives

global industry. structure We also best-in-class our our model and operating benchmarking in peers against cost are the

Third, of licensing our February Hush announced X, North the strategic for Puppies review of the sale Keds portfolio. successful we and On of America.

We forward divest Leathers plans our moving Wolverine are also to with our business.

includes Merrell evaluate drive expanding Sweaty further softening We resources focus lifestyle for and business. the brands businesses, shareholders. global will portfolio investments our and to Betty's that continue our highest businesses in on return the and to This

and guidance ratio down QX of cash Fourth, improving QX. $XXX approximately $XX working X.X was lower X.X Company's November the capital flow QX and Year-end million our the leverage million. nearly to free of was compared end million $XX by at inventory versus bank-defined than and leverage. reducing operating

The made since over in meaningful days XXX last further progress foundation for we've the XXXX. the improvements

to levels reduce year free We flow. inventory of in the and normal expect operating to cash third drive significant quarter the

across of share to with consisting and accomplishments the Saucony, Betty, have Group Active Merrell, Sweaty Chaco. brands. Starting also our We

basis We the pleased are on in with XX% Active Group a very growth XX% constant in quarter and reported including currency. performance the fourth

XX% in year, in and basis currency, the Sweaty year point XX% percentage a For full partial constant from Active Group XXXX. a on revenue including Betty a lapping benefit increased reported X

quarter Vietnam and year fourth for prior The in finished $XXX resulted the increased the the a million and comparison Merrell strength relatively on of brand was respectively. by year XX% the closures XX% to $XXX inventory. quarter across in revenue year fourth lack global performance and million easy categories a factory driven to currency rose strong. Constant

pipelines of We the innovation successfully years. in repositioned franchise the Moab one with best

by our up XX% of existing with sales and were Merrell study messaging Report U.S. in for outdoor the our more the accounts of in Impact introduce to brand customers and increase in Global by direct-to-consumer cadence continues Company's and the now Merrell the XXXX inclusivity and over customers. also encouraged which to We Our communication business, published was purpose-led the own amplified in the quarter strength XX% Merrell's

marketing 'XX, shift Beginning to Merrell. half investments in of the first we in our strategically began

up many increases including funnel expand dollars younger to at sequential the to in the was share market importantly attracting consumers. brand year-over-year brand of in in awareness, existing reach both results more new in both increases comparisons and second along merrell.com positive and the Moving new women, improvement with half the rewarded consumers This shift meaningful the our with of year.

the are strategies to marketing to We and portfolio. rest brand beginning the direct-to-consumer transfer successful of the

its As business running. we are leverage with hike look confident will to core trail ahead, positioning its Merrell in that traction we increased and along continue leading,

opportunity that growth believe business. for We Merrell our to our lifestyle highest expand is

continues Reese and Cooper Most partnered York line limited pop-up month City earlier X had with RCI expand to Merrell a product TRL experience lifestyle retail reach this brand's X reserve edition the and with customers. TRL a Our recently New featuring collaboration. partners

grow digits in growth QX to with revenue versus Merrell's expect we in fiscal an easier comparison ahead, high-teens year. mid-single 'XX prior in Looking the

we a e-commerce it was quarter Merrell year was directly before performance brand constant XX% early the with strong as Moving for e-commerce call and integrated in XX% the Saucony's rolling We up team. and fourth $XXX into currency the the including in driven XXXX the Triumph. Merrell, core brands. and the XX% franchises, by Like revenues this - initiative increased $XXX piloted million, centralized in out to other team quarter commercial QX, brand to respectively. fourth updated performance Endorphin million to Saucony, Saucony's

the Best drive Saucony and GQ in 'XX received won Fitness as which Running Runners in X rated Endorphin Best the Shoes including product accolades road Cushioned Shoe in Awards Ride Pro innovation in continues and XX to its Best World.

in JV very quarter, XXXX. again tripled as sales strong had Saucony's a once China

well, working is strategy of new including quarter. multichannel Our the stores eight the during addition

double in We expect to revenue 'XX. JV China from our

Our highest is priority extend to Saucony active core its everyday lifestyle consumers. runner reach beyond for the to and

this product several of market. have initiatives compelling the to We and segment marketing reach

opportunity hub expansion high of and Also is Originals priority for a the our which global international Italy, corporation remains for within global robust the Saucony, business in the expansion.

high grow to QX. revenue growth in in Saucony mid-single-digit single-digit with expect we ahead, fiscal 'XX Looking

by Moving with Betty onto of units Betty $XXX pro well. the at had comps transaction. well X% remains as beginning navigate in currency holiday environment revenue increased driven Sweaty increased head-to-toe basis, as declined the On revenue challenging year per we efforts customer initiatives the The constant in U.K. acquired positive, forma new million. merchandising retail in Store the full fourth XXXX U.K. X% Sweaty the a to constant quarter. currency Betty, and were Sweaty quarter acquisition

U.S. from customers quarter. effective and new reorder tactics, brand our more customers and our in wholesale and Through has negative continued been with U.K. improvements activity Encouragingly, to demand channel robust XX% change operations had begun showing we A in acquired the fourth more partners. new the the the trend XX% marketing the logistical U.S. seeing. in key stabilize in the

compete were U.K. in by promotional negatively affected Brand to market. a discounting margins highly increased

concessions Singapore. with opened quarter XXXX opened the Northern the new XXXX, However, and the in stores XX we inventory stores plan standalone in new Ireland. ended XX We pop-up encouraged are primarily position. We that improved Hong Ireland, the and in In Kong, China. to and open we in brand U.K. U.K., one an

broader leveraging excellence. Sweaty Betty Betty's to exchange This been practices. centers Sweaty Wolverine's Wolverine collaborating The with Sweaty further expertise with apparel EMEA team has team of and Betty includes best direct-to-consumer and supporting

is integration into one of profitability portfolio. and U.K. through number within we the Betty's - rest from stabilize while our the priority market As Ireland, stronger to in XXXX, synergies Sweaty improving look the home

growth maintaining its and their Group 'XX, revenue in and currency. with customers farm for and trade across footwear single-digits low Sweaty X% increased and XXXX e-commerce work revenue expect the positions way constant XXXX. we quarter X% low Work and Wolverine number This reflects strength teen ahead, declines the the fourth Looking across retail Betty leading growth fleet Cat and fiscal QX. increases one in and respectively key three to specialty fiscal in in grow channel in with

Looking Hispanic of ahead, are in the we within participation suited believe including we a range the increase work to the trends Hispanic continue needs of population, participation products the with on category, and rate the meet growing points. uniquely the relevant growing we to price from capitalize

part we reach. program. a private customers Marketing to drove launch The and be the addition, rate. existing second year collaboration of email introduce will us year we'll label see look engage to as capture as a a that will our test also In Halo with successful us its high Bates following customer expand see Walmart with focus

results and in in Lifestyle decreased revenues Lifestyle in XX% discussed XXXX Group in quarter the XX% declined currency. in Puppies fiscal constant today XXXX quarter Sperry fourth XXXX The Group Sperry include Hush fourth brands. XX% constant revenue currency. in Keds and fiscal and the X%

certain more in root product Lower cause customers down XXXX, experience focus core enough we well placed not based of love Sperry less XX% for all trends, and modernize across D&A in sell-throughs declined XXXX to as continues In styles than in But the XX%. XXXX channels. categories headwinds its was marketplace Sperry's boot resulted quickly to Sperry category franchises. core U.S. was cancellations. slowed to underperformance not in proactively and relevant on boat styles the wholesale partner in between our as from of as the did

look to is for we stabilize XXXX, Sperry. consumer As our affection into and goal generate

are is theme use. and to both vacations with casual consumer cool designers footwear on make capitalize spending increasing for increased collaborations through again the Our everyday on our and to objective nautical that preference relevant for

can that of be Sperry mindset vacations know style. its We and with for classic mind timeless top

expect fiscal 'XX to first decline quarter. declined in high revenue in the single-digits Sperry We the similar

on the constant and the XX% our grew in currency. for touch International international briefly will in I XX% revenue business. year quarter full fourth Now,

opportunities JV significant continue see to and well markets. international owned both Our markets, resonate brands in we operated in and

The fourth growth In Saucony which by the was of over quarter, top our our revenues. XX% nearly yield quarter international for revenue Maryland brands, of XX%. account international three performance driven

revenue a growth also of XX%. key has strong with been with Caterpillar of its of business performance QX the in international EMEA. contributor growth also EMEA plus XX% continued growth

our to transition and across our Active efficiency work of XXXX, increasing our brands, positive continuing on the we igniting addressing all momentum focused while model. underperforming our As Group business in growth we're quickly

to we consumer see environment retail to remains wholesale demand partners volatile, to The allow some assess and time continue trends. more delay orders

inventory we better and to improving service responsive more the position our with business. positioned chain, supply a However, are

for growth XXXX. revenue X% ongoing to businesses in X% deliver our to expect We

is our from improvement savings to Profitability inventory builds. plan as sequentially we and expected improve rightsized as profit

We full-funnel also newness introduce expect innovation more to journey. across we and brands and benefit our storytelling and marketing as continue

core now behind and their are to potential. better full more growth them our and reach enable leaner agile to accelerate profit We organization, a invest to our brands positioned

we year we in now performance in fiscal operating of original to organizational While structure, the fell XXXX strategy performance believe, expectations, to short XXXX our deliver in XXXX. disappointed the that place improved team margins and and we are our return have in XX% the

to Mike more and I our over call quarter financial details discuss now turn about the to will outlook. fourth results XXXX our Mike?

Mike Stornant

for you And call. Brendan. joining thank the Thanks, all

have been XXX last company. the days for critical The

foundation we cost improve savings against future. the short-term supply debt the business, goals XXXX has leverage building further our executed the We while and bottlenecks our health in set priorities reduced well of and Our inventory that significantly the team chain benefit secured will for stronger beyond. a to and beat

Keds above are will growth. have sale major constant the transaction for revenue represented The minimum of the and allow and this win, that a was a we guidance was as especially of our million $XXX completed, to midpoint pleased fourth quick go-forward business. currency The and was slightly quarter already disruption to transition X.X%

remained the drove accounted category growth, top nearly During Saucony, XX% five for revenue. of the the our quarter, and Merrell, performance and Wolverine, Work consistent. Betty, category Sperry our The brands highest footwear Sweaty

performing these product XXXX. to expect in best the We be categories

year. will we X.X million first accelerate execution will for of and This of our ship future operations. to or of inventory flow this the allow half levels, pleased critical of enhance During cash of improve inventory. the or more ship approximately XX% Much warehouse quarter, future us orders further in to performance the and pair normal end-of-life were secure this reduction logistics to the

suppressed progress, DXC quarter, by costs negatively this higher of XXX in business promotions distributor higher Despite margin. handling liquidation our XX.X% impacted we and of Higher in and gross mix QX points. global incurred our basis international sales margin inventory transitory a also the gross that

by valuation discount million expenses rate million were previously assets. Betty for significant including a Betty primarily Sperry intangible and higher assumption. non-cash was the of Sperry The and impairment $XXX $XXX impacted Sweaty Sweaty slower administrative a impacted a anticipated. and rate was general discount by The recovery higher Selling, valuation than

severance revenue, completed the In reduction, million than XX.X% to Adjusted and of separation were incurred addition impairment, general in costs $XX also we XX is December. and higher administrative the basis points of million selling, $XXX related to other approximately of workforce expenses year. last which

mainly previously related outlook costs separation margin impairment deleverage The costs quarter, higher mentioned. the inventory negative storage a due impact to offsite elevated negative to margin below of the and in liquidation quarter. due X% and operating includes operating a The our of Adjusted the recorded for and costs to higher was was the negative warehousing XX.X% levels. non-cash reported

of was recorded and per the a at share guidance on Adjusted currency a non-cash impairment $X.XX reported $X.XX diluted the for loss diluted per The costs separation the constant loss share quarter end basis. quarter. the low our in includes loss of and $X.XX

$XX provide Now Year-end $XX million Keds compared including guidance in capital was let me $XXX down Leathers inventory, million, information Wolverine our with and from November. about working million which to further and liquidity.

held have and classified the We and inventory Keds, assets the as on of Leathers sheet. Wolverine for balance other sale

to QX. business Inventory of million for compared $XX ongoing was our $XXX million down

As have mentioned, end-of-life we XX% for orders inventory. of secured nearly

to the quality inventory As improve. continues result, a of

with year approximately of liquidity million. $XXX net the of debt in We ended $X.XX billion

in X.X and expected. down slightly than leverage bank-defined was from times, ratio QX times X.X better Our

Operating in inventory flow $XXX guidance. progress line nearly free made quarter. and the fourth million liquidity are to cash in our with pleased we with Overall, improve was reduce the

Importantly, supply capital stabilized, flow expect and have we continued operations improvement chain XXXX. throughout and working cash

transition to me XXXX. let our for Now outlook

contribution Wolverine our full expected EPS $XXX Leathers for Puppies reflects in the businesses of performance and million of projections Keds these year fiscal for reference, diluted XXXX. $X.XX business, Hush had the for which X, ongoing for the of transition licensing July revenue excludes and guidance Our expected adjust on and

compares and XXXX. constant from represents of our billion to is approximately billion of currency $X.XX X%. XXXX $X.XX revenue X% to business the $X.XX to in expected ongoing Revenue growth This billion range in of

the our with expect performance Group from We mid-single-digit Active strongest growth.

high-single-digit. expected is Group Work consistent Group is decline Our expected finally, to And Lifestyle our deliver low-single-digit performance. to

margin impact Gross of prominent basis a XX% compared point, are costs Certain to XX.X% related higher XXXX. negative margin, XXX be will most to to in first year. is have expected and the inventory gross the in be transitory to expected half on approximately

$XX in $XX from approximately sales. chain costs, of closeout of costs XXXX, $XX mix million will and approximately of ongoing a expensed be from More specifically, that higher million XXXX million transitory supply handling

secured the offset that Profit approximately logistics heavily half $XX has Improvement these the of Office benefit To more cost incremental our will product second of gross margin costs, million transitory savings and in year.

savings set During continue XXXX, more our operational cost chain a for supply future will team improvement planning, speed SKU to actions These performance. in foundation product will engineering, drive and market. reliable to and optimization, stronger

Adjusted selling, costs will reductions. by profit Higher workforce $XX to the costs million XXXX. inventory office from storage initiatives, indirect from offsite be expense essentially including $XX with be million and were compensation improvement general approximately are administrative other from benefits for December reduction XX.X% incentive flat and and expenses offset expected the

X.X% other margin to to is approximately is tax effective be in and Adjusted projected XXXX. expenses rate to operating be XX%. projected X.X% to compared be expected and approximately Interest $XX the are million,

share adjusted result earnings the our business. XXXX of compares As in ongoing This $X.XX is to expected to key $X.XX. be range of a assumptions, to per for these diluted in $X.XX

As sold of 'XX $X.XX year that you will footwear will earnings last recall, also million we recognized $XX not share trademark and in XXXX. per in reoccur for royalty Champion the

working keenly and XXXX. in remain focused cash capital flow optimization We on

year, due lower styles. inventory much inventory by expect to intake sale of $XXX inventory during approximately We core improve well to of the million the end-of-life and accelerated

$XXX million. from us to in cash tight operating expense divestitures range addition, flow the allow cash should million $XXX of and generate In free control to

we million debt times. approximately defined $XXX X approximately of of net As expect year-end and leverage a bank result,

excludes and Cat Our our first performance the Wolverine the outlook and business for quarter Leathers. of ongoing reflects

the approximately $X.XX. contribution quarter reference, these for XXXX was businesses the XXXX $XX EPS first and was revenue million, For

and approximately of of constant growth expect $XXX revenue growth X% currency We X%. approximately million, reported approximately QX of

expect gross inventory operating and costs We approximately of XX% million liquidation of related of margin million including incremental $X of approximately costs inventory. QX from margin X%, holding and and elevated transitory XXXX $XX to

The to true-up expense $X.X of timing approximately QX share a tax high due per stock or compensation $X million tax required million the of projected purposes. unusually is $X.XX for

expect for We includes of currency impact negative per $X.XX $X.XX which adjusted share a rates. from quarter, diluted foreign the first exchange approximately earnings

made logistics allow the the in working nimble more teams clear XXXX will to XXXX strong with and supply us will our systems executed chain fewer obstacles. sourcing, priorities future. navigate to in and our conclusion, operations work In Changes by us make and and warehousing capital

We improve flow the and cash expect profit performance throughout to sequentially year.

will Profit in half cost challenging XXXX. from to the first performance inventory be and more due hangover

we in. However, kick these same should profit move the by beyond QX. time, headwinds the initiatives improvement At

We to and earnings savings show profit of supplemental added this initiatives. costs transitory timing have release morning's quarterly to a table press the improvement

growth have we brands $XXX while to target XX%. of giving strategically in strong line sight future of our our to margin Finally, operating annual a to for cost expanding million our savings of capacity XXXX us invest

turn now back call to I'll the the operator.

Operator

Thank you.

conducting be Telsey with comes now question-and-answer Dana Telsey question session. first will Advisory our from [Operator Our We Instructions] Group.

Dana Telsey

there. lot A to morning. Good unpack

color you the you're going there As wholesale the Mike, and be seeing trends? And businesses second cadence you obviously, more of to is is your are or due and of the what of And you. versus the would the account the the Brendan planning year, of and first half How it business the away promotions? order Thank that is from you first How margin XXXX, are year helpful. think seeing the the promotional any gross both reduction about are levels? half in in how looking? compares the quarter, that

Brendan Hoffman

Dana. morning. Thanks, Good Yes.

materialize retailers the those business It's seen I like it's orders out choppy. we've placing last in inconsistent of get not like bit the over line. bit of others, certainly but a think a with They're little a their in lot couple inventories wholesale little with didn't -- the around them as the months orders, world, years, anyway.

our chase there is the do to see as the So positives business think brands that. given one they to are to that's inventory ability be going the of with who the I for them we trends. have looking I think And situation, able

over more way last taken cautious we've the So look we're to a year. is years. we of we at-once seeing to the through couple orders going have think the But wholesale outlook than as

that's mean, time the on saw of holiday a I and gross but January, I of margin, we year. certainly through think this atypical not into promotions of lot

to was As Day we anecdote the it, we on price. Saucony. only Endorphin it's had Presidents' a get launched start to on focus Full more One price gangbusters real-time regular past one Day, yesterday, Elite and in response and color. we in

promotional going think and selling to regular price. So have when certainly, newness get year, still to as I season, into we see what back and just the think came main more as innovation, get we than more of. out And the And we that. are respond of to half I we customers far the we'll less

still And our us, but has balance down year, of impacted come this as in input costs anything? benefit And we inventory just the advantage to half on get miss we sell and this Mike burdened the also less behind promotions, of go freight half half year, have back and margin sheet. through year. as said, throughout for will margin start And of to gross low-margin as us, only that not year that's that positively like the gross inventory. the -- in that's the we and the the on back the dramatically way I of first the containers Did we the take we as

Dana Telsey

new No, it. for price and introductions maybe product for Wolverine new the what this year growth, how your And you the got and about the the for pricing compared Saucony, on past thinking new mid-single-digit to and AURs? example, just products are products, you Merrell

Brendan Hoffman

to going much see Yes. I of a don't there. too change I you're mean think

the we customer we what than attributes the to IMU try are we're making rather we've the worth. for margins the tried think profit price taking our are improvement goods input as really what years, and even over for price pay going understand X.X merchants with that's what mean and the do strict and more us still product costs think think out sure just last can the be and calculation. I office to valuable a we to I of more

is we of we discounted have just was started out there of whatever alluded getting what the taken my concern to at just promotions and More that price it.

using think analytics price figure in those all So initial should out help brands I what to much the the more and a are shape be. better price

Dana Telsey

Thank you.

Brendan Hoffman

Thanks Dana.

Operator

Our comes with next question from UBS. Jay Sole

Unidentified Analyst

XX% Hi, gross behalf This that the by on Sole. to talk like plan, that our first how decline guess half like high is for margin I Sperry in turnaround XX% the around imply should you. questions. implying think It think a we about should specifically get guidance that about about in gross ask just good second And margin? to morning. provided, you margin brand, on of [indiscernible] the Thank you what outlook. about 'XX? about single-digit And to brand's Thanks we for for Jay then wanted guidance gross does like should given taking actually quarter? I seems -- like -- how the could how quarter. the the think second cadence fiscal the Like maybe year we the half, the XX%

Brendan Hoffman

were question back a et dealing said was what everything and in previous recognize these cetera, with the Yes. and top and lot were off -- P&L Sperry. just containers to margin then of and but the costs burdened now. I'll the high Mike let with cetera, it is think the et I we first with $XX,XXX, But to half and gross in start was come of storage for, over that the from we when costs all airfreighting year we're didn't last paid I

all the the One, half have double we a of those get I opportunity. flipped gone we and are way. just as really the mentioned, as So other to see back year, of

also work, to the improvement profit other margin and input six plus But months going the of costs get we're really office start benefit as on the materials on during to work we components. last the

really XX good ourselves So what base. up the have to I feel that? touch the only but improved future margin over you months, not new given Mike, set last opportunity But for to we with away the do recapture on about want

Mike Stornant

in section, the costs press well flow Sure. improvement No, from seeing of last as we too, added the office. benefits reductions in -- supplemental supply script, chain mentioned as but from importantly, a I in the think, it the the I table profit improvements, helps, the these cost that the the that explain we're release,

you So from I benefit to profit the the improvement of the guide seeing the away really to and from it cycling to costs start expected both in improvements those helps transitory year half QX. think savings in back

rates coming through But certainly the are sorry, XXXX especially a XXXX, the balance to start to and given the on half million sheet in the would cost in expensing that amount that costs the the margin we're I'm of back year kind that And -- of really part are that of first in in the of in that year. in $XX -- be Nearly important to in to timing. XX% large XX% XXXX. range, the is related emphasize

and to. the us we We know timing that great expenses costs of year. have the middle by will visibility So be those behind the of

that's issues margin gross first So the suppressing of major the year. half that's the of in one

of question I let trajectory I'll the Brendan second on your there. is think and part the start. Sperry

Brendan Hoffman

Yes. I to really do what Sperry's mean co-labs business, be making we've Sperry, lot in we've perspective we've months boat the need years, we and been our few differently cool and on product And or the relevant done with the others really that work refocus to I on mean, some had product last chasing focusing need with And but three really wrong, focusing done wrong what's missteps boat we've last recovery. a taken we and of what over again. in weren't to four includes on that to success in, realized marketing. our We customer. over

John duck core. with well were to new with Torrent the that that to marketing as our that replacing it We like boat to boat took and to looking updating with on didn't focus styles and Legend what ahead trend the it go we were but We for. was also late boots to function, resonate is wasn't amplify declining do. and Around the as have updated core to our we the provide money really some fashion collaboration, recognize more like enough trying core people big bets then one, what

in We dropped work think boot back fashion of around about -- last it business to core couple lot the XX% the over out a our was I we've not boat XX% just the historically, and that -- there core. boat focused years did go So uncovered and let marketplace. of to getting

now using And So the great York I around a understanding thing the prep, Sperry. one XXXX that's you a think was there pillar very and the shows, better that team big to for positive mix. lot has saw and New job done fashion reset if a

In with in fact, line. product Elizabeth food which really into and show, is flu prep and were Nautical She styled and Sperry. Hilfiger's everything leaned the they showcased

So but some there's made. some advantage take to of, the real recovering opportunities steps think biggest of I out there. us is the thing need for We we've

Unidentified Analyst

Great. And if I very capital may add one allocation. quick on just a

XXXX. they taking by seen have that healthier balance But in place we is of the that of of should how year really the I half hasn't terms mentioned sheet to been the since, like second to buybacks? the think, focused end We've You deleveraging. a -- get haven't been really on about plan think

So how in XXXX? should we you. think Thank XXXX that beyond of and

Mike Stornant

No.

other And Our consider will opportunities, we'll priority year for debt but down focus here. balance of the coming opportunities, see be deleveraging. pay continue we now the on those our is as primary certainly, to to

Unidentified Analyst

much. you very Thank

Operator

Thank you.

Duffy question from next Stifel. Jim comes with Our

Jim Duffy

morning. Good guys. you, Thank

sounds good the Some to on of growth and and year. revenue the for cadence inventory end-of-life of of much quarterly handle quarter? curious the trying I'm details Saucony X.X revenue planned in contribution growth that. get in It across very the Thank $XXX the first helpful release cadence the and and plus. savings. flattering pairs is the million you How transitory from what's that on Merrell like a expected the quarter. costs first in the Merrell like quarter I'm million first Saucony the

you conservative active on of year? of to guide for and revenues that related revenue base promotional Other of that, the year. balance the second half deceleration clearance And balance then the for keeps the consider the outlook 'XX segment to the the in implies

Mike Stornant

first the take part. I'll

shipped referenced Some than product, we million that QX, more we in of that that some a of little X.X expected. was

product not to you impact the those and Those are great for to The on have can that estimated, us and it's development QX. out of move goods we warehouse. which have able is over QX we good visibility be the a to those order orders quite Jim. that now, we spread secure So when

quarter the with QX. the impact impactful especially bit of first inventories They in of into very phasing remember the chasing a for revenue, QX, not And year. factories. Merrell more having suppressed results just and XXXX and of so to Vietnam from delivered little with of So were coming that year last low kind closure Saucony biggest in sort the the and business, in the actually,

So of the growth based rates are for the that. rest year quarter in Sperry and the outpace just Saucony first the going probably to on

the year, is quarter. our the first of half at different versus overall, the So rates and the end second It the 'XX, growth ebbs growth I I growth and of not we half in growth the differently supply very a think X% little constant half it's flows the brand by chain in phasing are standpoint, think similar some similar currency bit the brand. in outlook because first for from of in first almost saw the in the the high versus that issues that of and terms half a comparisons year. little a of inventory by disruption second year normal and But bit

right? And under bit. a back and into more changed expectations, year come the quite again, market a with of performance the then the XXXX, had optimistic the our view, half certainly back half our in We in was

which given outlook very And of 'XX in continues the for practical very half I the business be think, we're that the visibility trends cautious the is, in seeing, of our to inconsistencies back Performance to our volatility that consistent. Saucony there. and But the some we're seeing out Work business, so in Merrell the given especially brands, retail

view So back the for comfortable we're the that year. with half of kind of of

your sorry, I of question, the second missed was Jim? What that. part I'm

Jim Duffy

it. think No, I you covered

pass to release. Just I'll the really end-of-life that. did around the course want to and year how savings, detail revenue then also one I cost inventory outlined factor of the the I the ask directionally of pairs in in to impact it cadence and on the over of along. and appreciate

quarter. quarterly of as think a that that in should 'XX rate million got continues planned fourth savings about run $XX baseline You've of cost the Mike, we fiscal kind the off fiscal into 'XX?

Mike Stornant

Yes.

that a part, of little kind we'll based of the in think quarter bit some safe a and But on I into of get that's the ebb the of the pushed I obviously, fourth that benefits onetime inventory. most flow think get for -- a fair the terms assumption. flow that's numbers

Jim Duffy

Great. much. so Thanks

Mike Stornant

Thanks Jim.

Operator

from question Jonathan Baird. next comes Our with Komp

Jonathan Komp

any Hi, go to then above embedding assumptions you're year? margin and just the I good you a to were DXC on just the August, can still morning. in above share back And ask you directly, Thank back operating earnings projecting wanted wholesale give that $X I maybe more then for ask, color XXXX and be if to X%. you.

today directly. you visibility address And about you then So ago? visibility both on thinking just and months you're than had giving for margin? maybe how the more could XXXX comps overall changed six XXXX that's more maybe you What's

Brendan Hoffman

I'll Well, with second that start first. part Yes.

in improvement do on office attainable. the has taking and much like we've so I have through the over more the taking being our of of -- improving X months line because costs input feel we of really and that and control this, the costs. through the I out progress think those team sight confidence margin made real profit last

XXX-day to really the row what move needs think in plan organization galvanized action the talked direction, the same and I get together about understanding to has I done. December in really

gives that achieve able health free investments such not And provide to to And long-term our tremendous be us for time made of to to confidence to short so the profitable be we we've a to but progress reach. only we'll more in and business able the that. expand up a to also business, need be period the able of

Mike Stornant

guess, the a range. or in positive probably I question, channel question, to Jon, low contributor On your this growth DXC single-digit we be would expect year, DXC to

a on basis. We are comp

We adding XXXX Betty some markets. in in home store are Sweaty for their

bit as well. DXC single So that the of low digits growth planned little channels. drive Wholesale in help a will also is

Overall, We of which know, XXXX. helped of business, our was area on expected itself. And distributor up businesses to channel timing the distributor the Europe drive you though XXXX. standpoint pressure caught a little year-over-year the that sell-in third-party grow some and going outpaced Canada, that growth will own in business tremendously as channel. to of bit a down some in kind of Probably be on the up basis. was our And even are nicely, in for is up, that's correct first part on

Jonathan Komp

Are that and appreciate actions And you Betty. follow-up, Could the brands color. at of one the I just just Thanks portfolio? lifestyle all the Sperry took profit positive And expecting operating you're across just deliver for to both are you looking Keds for what using Okay. Sweaty brands. given comment criteria again. maybe this Leathers, you the and year? the looking

Brendan Hoffman

as It in Active will of recovery profit. to the Sweaty positive the terms and Group. of part is mean, the Group. before Betty has operating that's the I be I Well, in in be just do. in as around Lifestyle the Yes. past, Sperry to been clear, Sperry won't mentioned positive it some is thoughts need we of be

of headwinds of related Betty, market terms are in the lot Sweaty In their a U.K.

levers utilize So and they're tools to combat different that. working hard to

customers QX remarks, the year. they my for time new in mentioned all I As in acquired first

nice was which The some that doing is for the part showing paying them stores, of is four-wall of are big are a all their that things off. the thing business So positive. we're

much stores depend their profitability. see and some plan three get to up some how Part currency in Wolverine some we And they're moves. and lot synergies more that their are new so U.K. opportunities just tactics they utilizing some to of will opportunities of the today. in they is profitable A is them a the on just market, they of that open But it have year to that place. putting and -- more as helps overall of than bottom of the line

Mike Stornant

mode healthy on Last get of from standpoint. the said, contribution of we mode of growth more contribution brand. and business the criteria. viability is Jon, a right, about right still, potential that And was just Sperry We recovery focus then to first future now. is the of the part to credibility, stable profit a and the question, kind -- your And is in that turnaround as

future. types step use we So in to I similar those focusing Keds direction, the with the Puppies moves we're of and in as criteria the to portfolio, Hush think we right made continue going the improvements and the certainly were a for on were

Jonathan Komp

Okay. again. Thanks

Operator

Our Sam with next question William Poser comes from Trading.

Sam Poser

Good I of questions. a morning. my handful Thank you for have taking last. --

Brendan Hoffman

two, Sam. top the Prioritize

Sam Poser

All right.

you're in mentioned you to regard normal? that return as normal to Can would So inventory define the you third levels you Number what quarter. going one.

Mike Stornant

of of this year. core just in in and the the network reduction sourcing is the that think a by through Sure. franchises expect year. improve we're inventories by the that A portion first supply of of that to regard. is another intake half we product that Obviously, in chain end-of-life that No, the that in I QX, would big moving from we've part million reduced $XXX

Sam. So being the we able of I consumer where think and to inventories to as a to our supporting grows forward mix in prominently the direct down supporting our of coverage visibility more get that, level the good And that our in to are revenue growth brands. achieve channels

QX? normalized to normal be by healthier the it end but position So -- the as of of in down a much and to level are we optimal not, end-of-life relates by more level. QX. think an Certainly, product, I end Probably we'll

Brendan Hoffman

action new be get normal levels inventory big in our customer. close service processes say, to going want talked excess think the And down plan an more dividends able flow the get the despite the just way efficient warehouses, and leaner when this of to a we to unbelievable that's in I inventory to us we're allowed that much to customer. huge do we pay have to the service grid the inventory. putting last goals done job has all in lock about reduce of given was I procedures And XXX-day to the time, thing to one and team other The our

Go ahead, next. with Sam,

Sam Poser

two, okay, the one here. mean, -- know Would to -- Just sell just you a an that think appropriate well, given -- do you what somebody inventory that -- just from I Sperry? follow-up as asked fact optimum -- don't supply ICR weeks to you And the perspective? think of an other forward if would offer, consider I thing. Well, which I you would I to you alluded be you for

Mike Stornant

Well, we it's can't brand. different by --

don't in assortment Work our bit little tight business to and like where brands Lead very tight brands, be a be forward impact because can some times longer. it's needs other have coverage a We to very question far optimal, but level it We the of that. year. end in as the be the that is XXX-day as range -- be I to until that we'll think And XXX-day try to other

Brendan Hoffman

it. feel whatever time think some in track macro And As make a far of Sperry mentioned, uncovered do transition, we some us the over just thrilled I recover think the lost now, healthier years, few focus as Right goes, last on then we Sperry the what that help stuff and reassess. conditions there's I decided that what we've to as we've will that for take would should be and through I some business opportunities We're given anything. with don't Keds the were that outcome. to like prudent which we working still can

Sam Poser

jump I'll in. Thanks. back

Brendan Hoffman

Sam. Thanks

Operator

Thank you.

Our Kummetz with Mitch next from question Research. Seaport comes

Mitch Kummetz

taking because to in the the better on XX.X% for starting you're understand gross just I want the my I XX% tables. starting guess at Thanks questions. margin, supplemental

kind like to net of it you pieces margin. together, If a million $XX the it's looks two negative gross

more back kind similar that get obviously, offset 'XX maybe year-over-year really in And kind So maybe pickup, see QX you that big a there. some to the trying I'm that. to Is margin QX reversal of an it better of of you the QX way there's gross that's Is a should maybe expenses. 'XX. of understand to million? to in transitory get $XX QX

Mike Stornant

see biggest whether improving those the the the piece Mitch. promotion that XXX that throughout the "promotional as of impact gross but represented And contend is, we took out And work to of the least We points sequentially sale environment" not an think just on -- It's end-of-life at closeout higher inventory. we I mix frankly, our basis QX just hard QX channels, in it's be that's through our end-of-life and has margin, off we in selling product. and tables know alone. or there the the that the inventory. all a year with hit year more -- excess there through will through especially

back that's a in we table, So work going reflected that's and the margin through, not half to as of improvement the be especially in the source major of year.

Mitch Kummetz

in And Is and freight all of margin to impact Okay. a standpoint than 'XX? there? and that 'XX then, Mike, that, adding year-over-year, from containers airfreight the gross the way quantify better is on in there any

Mike Stornant

It's better for sure.

the However, we of half have first in had we 'XX, lot a of airfreight.

month there. again, with see next the I there's our puts finalizing takes our say, actually But and in ocean so. continue to are So We there. carriers contract or improvements would some

be. so more ocean on And here, we'll the But then year as freight. it to solidify as we're see better And And could strong potentially through much upside certainly relates the certainly, we to have that seeing we those get as improvements table even how we're improvement costs, exactly information more number. our there supply chain in the that counting contracts. to some that of we savings part it's but hope

Mitch Kummetz

provide guys so, from real thing but year? a last maybe prepared target if might what you comments, the flow is have And I that? quick. Okay. for missed your in And it operations did cash

Mike Stornant

and $XXX or million was of range. target million at middle that then of of driving so down cash for million inventories 'XX. the $XXX between flow $XXX free kind And operating The Yes.

Mitch Kummetz

good luck. Okay. Great. Thanks and

Mike Stornant

Thank you.

Operator

Thank you.

comes with Piper question Abbie from Sandler. next Zvejnieks Our

Abbie Zvejnieks

for And benefits the my are state the acquisition? thanks you on questions. you planning Betty, the Group at taking the did competitive? And fueling into that particularly there strategic see Great. Active expansion a do in How of bigger as the growth increasingly time how Sweaty navigating you becomes U.S? you are same the

Brendan Hoffman

ago, with that's we're stores. Betty of we opening is mean, I it our I -- one U.S. think we the and now, focus A where have just Betty U.K. focus that's to a market. right stabilized the we certainly is. foundation Sweaty growth I the up But would few the when on the have while their stores That's decided we climate, expected bought where levers mean market, on wholesale opened feel year now I in in the Well, the we in set Sweaty here our U.S. up to main business. have focus U.K. given

with they them some time Nordstrom warehouse. the other as last moved as mentioned and U.S. I our we relationship have specialty think well stores, I into nice

we we been from in fourth have quarter, more to XXXX, think that's they the had servicing also there. which servicing U.S. wholesale give be of in contemplate to, what the them U.K. more terms we drive hiccups agile them allow like Previously, exposure And looks will a store market, the e-commerce believe we while while rollout some much in going it business U.S. to

the about. I Group of terms think of in Active terms of the broader question you in trends the market talked

in As and core. company my we the mentioned, the moving priorities of expanding biggest Sweaty remarks, Lifestyle Betty as for Beyond I two Merrell are in our mentioned

overall And so categories few the are a the you strong about I and were think think we when trends by very that way, in still where years -- back. these

had and grow to innovation, night mentioned just earlier feel for tremendous there's I brands Abbie continue these us ample growth grow a -- as to you're with the will we We last ultimately room know product Elite. So fan. a and launch down like I to Endorphin Saucony come

frankly, a despite and still of do being promotional newness when that to a So bring the great is that confidence, Merrell which environment us well, you more gives in even does, innovation, customer I think as deal of going bit too little quite course, the respond.

Abbie Zvejnieks

in Do follow-up on brand-by-brand while that through new top you think line how like that Or you perspective? such products you inventory, that drive as balance And prioritizing like do just that? a bringing a limits working maybe that just are Great. Endorphin demand, that consumer growth? on Thanks.

Brendan Hoffman

said inventory on the our we try overage goods a it lot growth a core in making and perspective, ago aggressively. I where see think three more did I to even flowing sourcing of this be in core when in part, for was we Yes. months mean brand-by-brand made is X.X products. ago, the for that most years anomaly Well, would sure as But sure, shoes shutdown, and -- product. we're the chase we, we that where the is the

So in product. that's where bring don't we have to

The newness to able is still flow.

some time last across didn't get newness collaborations year. have and We in that here we brands the

brands are couple chock-full actually collaboration. a of So great of the

the that help So newness is drive we recognize what's to and needed core. innovation

that hasn't took. it been challenging So I think approach sounds, as as maybe given the we

Abbie Zvejnieks

Got it. Thank you.

Operator

you. Thank

Our next Carla question JPMorgan. comes with from Casella

Unidentified Analyst

taking for This quick in Hi, last can. but I And wondering guys for Carla. be was you Did is A update our you know Mike good how an say I your XQ. quarter, if questions. much transit. was for of there morning. quickly currently inventory I'm disclosed on question. as thanks I'll that

Mike Stornant

We didn't a add quarter down quite from substantially that, but it's come ago.

but in the has improved container throughout last as through I the three tremendously some to still to think logistics, it's in of we storage over It's expect work down we'd normalize the transit $XXX million. continue the sequentially year. months. bottlenecks and elevated And

Unidentified Analyst

you. the guidance? Thank much how kind a then of give sale of of that ever guys And how bakes the Great. timing did divestiture you on that the -- into Leathers disclosure

Mike Stornant

process. as very Sure. shared a Yes. guidance kind it of that today. our But Well, taken we've active the We've business operation. it's out a Leathers of held-for-sale we taken

a but We we'd middle the yet, one couple strategic by interested a parties are not have did give the some of the specific expect we time have opportunity. don't year. evaluating that because resolution frame of We

Unidentified Analyst

all Great. That's from Thank you. us.

Mike Stornant

Thank you.

Operator

this Thank Brendan like floor questions you. I at over further the to Ladies and gentlemen, would there back for comments. closing are to no Hoffman turn time.

Brendan Hoffman

us early in your We call providing you to Thanks joining update interest very forward May. for and in at another everyone, you, our earnings Thank much. continued look today Wolverine.

Operator

teleconference. today's conclude does That

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

Wolverine World Wide (WWW) 22 Feb 232022 Q4 Earnings call transcript