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Wolverine Worldwide Reports Third-Quarter 2015 Earnings In Line With Guidance

The following excerpt is from the company's SEC filing.

Wolverine World Wide, Inc. (NYSE: WWW) today reported financial results for the third quarter ended September 12, 2015. Adjusted financial results exclude restructuring and impairment and acquisition-related integration costs.

“We again delivered earnings in line with our expectations for the quarter, while continuing to fuel our long-term strategic investments,” said Blake W. Krueger, Wolverine Worldwide’s Chairman, Chief Executive Officer and President. “Our earnings performance is a testament to the power of our diversified brand portfolio and disciplined b usiness model and our ability to deliver solid results in a challenging global macroeconomic environment. Looking ahead, the Company remains focused on accelerating the growth of our brands around the world through product innovation and deepening our consumer connections through our demand creation investment strategy.”

THIRD-QUARTER 2015 REVIEW

Adjusted diluted earnings per share were $0.48, in line with guidance, compared to an adjusted $0.63 per share in the prior year. Reported diluted earnings per share were $0.44, compared to $0.57 per share in the prior year.

ross margin was 40.0%, better than projected and flat with the prior year's gross margin despite challenging foreign exchange headwinds.

Adjusted operating margin of 11.9% was better than expected but 190 basis points lower than the prior year, due primarily to planned incremental brand investment and higher pension expense. Reported operating margin was 11.2%.

Adjusted revenue grew 0.7% after adjusting for the impact of foreign exchange, retail store closures and termination of the Patagonia license agreement. On a reported basis, revenue was $678.9 million, a decline of 4.5% versus the prior year.

Marketing spend increased approximately 26% versus the prior year as the Company continued its incremental demand-creation investment strategy.

Cash and cash equivalents were $196.4 million. Net debt was $629.2 million, a reduction of $235.9 million from the same period last year.

Inventories were $495.5 million, representing a 6.3% increase versus the prior year.

he Company repurchased $6.7 million of its common stock in the quarter.

“We are pleased to deliver a strong earnings performance in light of softer-than-expected revenue for the quarter,” stated Mike Stornant, Senior Vice President and Chief Financial Officer. "The Company also delivered better-than-expected gross margin in the quarter, despite very challenging foreign currency

headwinds in many key international markets. Our operating margin was also well ahead of our expectation, benefiting from continued discipline over discretionary spending without compromising our demand creation investments, and we continued to generate positive cash flow.”

FISCAL 2015 GUIDANCE

Certain trends and conditions experienced during the third quarter are now expected to continue and to put pressure on the Company's top line performance during the fourth quarter of fiscal 2015. As a result, the Company is updating its full-year guidance as follows:

After adjusting for the estimated impact of foreign exchange, retail store closures and the termination of the Patagonia license agreement, revenue growth is expected in the range of approximately 2.1% to 2.8% versus the prior year. Reported revenue is expected in the range of $2.69 billion to $2.71 billion, representing a decline in the range of approximately 2.6% to 1.8% versus the prior year.

Adjusted diluted earnings per share is expected to be in the range of $1.44 to $1.47. Constant currency adjusted diluted earnings per share is expected in the range of $1.57 to $1.60.

The Company now expects to incur total pre-tax charges of approximately $50 million to $54 million related to the previously announced Strategic Realignment Plan, exit of the Cushe business, certain organizational changes across the business and debt extinguishment costs from the debt refinancing. Of this amount, $26 million was recorded in fiscal 2014, and $25 million is expected to be incurred in fiscal 2015 with the balance of the charges to be recorded in fiscal 2016. As a result, reported diluted earnings per share in fiscal 2015 is expected in the range of $1.28 to $1.31.

EARNINGS CALL INFORMATION

The Company will host a conference call today at 8:30 a.m. Eastern Time to discuss these results and current business trends. The conference call will be broadcast live and accessible under the “Investor Relations” tab at wolverineworldwide.com. A replay of the conference call will be available at the Company's website for a period of approximately 30 days.

ABOUT WOLVERINE WORLDWIDE

With a commitment to service and product excellence, Wolverine World Wide, Inc. is one of the world’s leading marketers of branded casual, active lifestyle, work, outdoor sport, athletic, children’s and uniform footwear and apparel. The Company’s portfolio of highly recognized brands includes: Merrell

, Sperry

, Hush Puppies

, Saucony

, Keds

, Stride Rite

, Sebago

, Cushe

, Chaco

...


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