Wolverine World Wide, Inc. (WWW)

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Wolverine World Wide, Inc. (WWW)

Q2 2009 Earnings Call

July 15, 2009 8:30 am ET


Christi Cowdin – Director of Investor Relations and Communications

Blake W. Kruger – President, Chief Executive Officer & Director

Donald T. Grimes – Chief Financial Officer, Senior Vice President & Treasurer


Jim Duffy – Thomas Weisel Partners

Scott Krasik – C. L. King & Associates, Inc.

Christopher Svezia – Susquehanna Financial Group

Kate Mcshane – Citi

Diana Katz – Lazard Capital

Mitch Kummetz – Robert W. Baird & Co., Inc.

Sam Poser – Sterne, Agee & Leach

Jeff Mintz – Wedbush Morgan Securities, Inc.

Elizabeth Montgomery – Longbow Research

Jeff Blaeser – Morgan Joseph & Co., Inc.



Welcome to Wolverine World Wide second quarter 2009 earnings conference call. All participants will be in a listen only mode until the question and answer session of the conference call. This call is being recorded at the request of Wolverine World Wide. If anyone has any objections you may disconnect at this time.

I would now like to introduce Ms. Christi Cowdin, Director of Investor Relations and Communications for Wolverine World Wide.

Christi Cowdin

Welcome to our second quarter conference call. On the call today are Blake Krueger, our CEO and President and Don Grimes, our Senior Vice President and CFO. Earlier this morning we announced our second quarter 2009 results. If you did not yet receive a copy of the press release please call [Abby Brandt] at 616-233-0500 to have one sent to you. The release is also available on many news sites or it can be viewed from our corporate website at www.WolverineWorldWide.com.

This morning’s press release included non-GAAP disclosures and these disclosures were reconciled with an attached table within the body of the press release. Today’s comments during the earnings call will include some additional non-GAAP disclosures. There is a posting at our corporate website that will reconcile these non-GAAP disclosures to GAAP. To view the documents please go to our corporate website www.WolverineWorldWide.com, click on investors in the navigation bar, click on webcast from the top navigation bar from the investor’s page and then click on the file called WWW Q2 Conference Call GAAP Versus Non-GAAP disclosures.

Before I turn the call over to Blake Krueger to comment on our results, I’d like to caution you that the predictions and projections made in today’s conference call regarding Wolverine World Wide and its operations may be considered forward-looking statements by securities law. As a result, we much caution you that as with any prediction or projection, there are a number of factors that could cause results to differ materially.

These important risk factors are identified in the company’s SEC filings and in our press releases. With that being said, I would now like to turn the call over to Blake.

Blake W. Kruger

This morning we reported very good results for the second quarter of 2009. Revenue in the quarter exceeded our internal plan and our earnings leverage was strong. We are obviously pleased with our second quarter results and our continued progress on several key brand initiatives. To this end, Merrell achieved excellent double digit growth in the important US market.

We made good progress in moving Hush Puppies up market in North America. Our consumer direct business reported significantly improved trends towards the end of the quarter. Our fast track innovation of Chaco enabled us to deliver early shipments to our retailers and meet their demand. Our brands maintained and enhanced their positions as leaders in their respective categories.

In these times we have positioned the company to consistently deliver excellent financial results by protecting and building the equity and integrity of our 12 lifestyle brands. This means we will continue to offer our consumers great value for the innovation and design our brands deliver all while maintaining our full price status and not participating in the current promotional environment.

Overall, we were pleased with our first half performance and have increased our 2009 earnings per share guidance. I would like to begin my brand review with the Hush Puppies group which now includes the Cushe brand as well as Hush Puppies and Soft Style. Overall, the Hush Puppies group revenue in Q2 exceeded our internal forecast but was still down upper single digits on a constant currency basis.

For the group, continued retail consolidation and lower consumer spending contributed to reduced revenue in the quarter. In spite of the challenge economy, our efforts aimed at moving the Hush Puppies brand up market in North America continues to show progress. Revenue was up low single digits and constant dollars. Product innovation is driving our progress in North America as evidenced by the early and very positive retailer response to our new body shoe concept offering the advanced comfort of athletic shoes in casual footwear.

We have established a global strategy of extending the Hush Puppies brand presence by increasing controlled distribution by ourselves and our global partners. To help move Hush Puppies up market and accelerate growth in North America, we will open our first full price concept store in Montreal in August. A second Montreal store is planned to open in September. These concept stores will enable us to provide a showcase for the brand and present a much broader product offering to the Hush Puppies consumer.

During Q2 we also opened two new Hush Puppies value stores in the UK and both stores are performing significantly above plan and our in the top three of all stores in each center in terms of sales per square foot. We now have four Hush Puppies value stores in the UK. In the quarter new Hush Puppies concept stores were opened in Portugal, Japan, Indonesia and Bangladesh and five new airport shops featuring Hush Puppies apparel and accessories were also opened in China’s major airports including Beijing.

This brings our quarter end global Hush Puppies store count to over 500 mono branded concept stores and over 900 shopping shops. We also extended our agreement with our partner in India with plans to open 50 new Hush Puppies concept stores in this significant emerging market during the next five years.

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