Slower, Softer Footwear Sales Impede Wolverine Q2 Profit

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Sales at Wolverine's Merrell brand continue to be a strong

Rockford, MI—Hit by softer footwear sales especially in Europe, Wolverine Worldwide today reported its second quarter profit was down 14%.

For the quarter ended June 16, Wolverine reported a profit of $20.5 million, or 42 cents a share, down from $24 million, or 48 cents, a year earlier. The results included 6 cent expense due to Wolverine’s $1.32 billion deal to acquire Collective Brands’ wholesale and retail operations of  SperryTop-Sider, Saucony, Stride Rite and Keds brands.

Total sales edged up 0.8% to $312.7 million, compared to a more than 20% increase a year ago. Gross margin slipped to 37.8% from 39.4% as input costs rose 3.5%.

The results missed analysts’ average forecast for earnings of 44 cents a share on sales of $314.6 million.

Collective Brands Acquisition Closes Later

“We are pleased that despite the softness in certain global markets, most notably Europe, we remain on track to deliver another year of record financial results,” said Blake W. Krueger, chairman/ceo. “Our diverse brand portfolio and a business model that spans geographies and distribution channels help to mitigate risk and smooth out a choppy global retail environment.”

Krueger said the company’s U.S. had a solid quarter, with the company’s consumer direct business “a bright spot, posting a strong double-digit revenue increase from both brick and mortar locations and the e-commerce channel. Our Outdoor Group, consisting of Merrell, Chaco and Patagonia Footwear, delivered a solid revenue increase in the quarter.”

Indeed sales of the Outdoor division increased 2.7% to $130.6 million. All other segments posted declines. At Wolverine’s heritage division, which includes Wolverine, Caterpillar and Harley-Davidson brands, footwear, sales were down 3.4%. The lifestyle group, which includes Hush Puppies and Sebago, saw sales decrease 0.5%.

Despite the slowing sales trend, Wolverine reaffirmed its full year forecast.

“Recent feedback from key retailers reinforces our positive outlook for the remainder of 2012, and we fully expect to deliver another year of record financial performance,” Krueger said.

Wolverine expects 3.6% to 6.4% growth in annual sales to as much as $1.5 billion. Analysts’ average estimate expects $1.6 billion.

While the addition of the Collective Brands divisions won’t close until later this year, the acquired brands could add another $1 billion in sales to Wolverine in its next fiscal year.