Wolverine World Wide, Inc. (WWW)

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Wolverine World Wide, Inc. (WWW)

Q3 2012 Earnings Call

October 16, 2012 8:30 am ET


Christi Cowdin - Director of Investor Relations and Communications

Blake Krueger - Chairman of the Board, Chief Executive Officer and President

Don Grimes - Senior Vice President, Chief Financial Officer and Treasurer


Kate McShane - Citi Investment Research

Edward Yruma - KeyBanc Capital Markets

Christian Buss - Credit Suisse

Jim Duffy - Stifel Nicolaus

Mitch. Kummetz - Robert Baird

Chris Svezia - Susquehanna Financial Group

Sam Poser - Sterne Agee

Diana Katz - Lazard Capital Markets

Scott Krasik - BB&T



Good morning and welcome to Wolverine World Wide's Third Quarter 2012 Earnings Conference Call. All participants will be in a listen-only mode until the question-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. Ms. Cowdin, you may proceed.

Christi Cowdin

Thank you, Sue. Good morning, everyone, and welcome to our third quarter 2012 conference call. On the call today are, Blake Krueger, our Chairman, CEO and President; and Don Grimes, our Senior Vice President and CFO.

Earlier this morning, we announced our financial results for the third quarter of 2012, and if you did not yet receive a copy of the press release, please call Brad Van Houte 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.

Before I turn the call over to Blake, to comment on our results, I would like to remind 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 laws. As a result, we must 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 also in our press releases.

With all that being said, I would now like to turn the call over to Blake.

Blake Krueger

Good morning, everyone, and thanks for joining us today. Before I talk to you about our third quarter results, I would like to take a few minutes to discuss one of the most significant and exciting events in Wolverine's 130-year history.

The acquisition of the Performance and Lifestyle Group from Collective Brands, we're extremely excited to welcome PLG to the Wolverine World Wide family. Its portfolio of authentic, iconic brand including Sperry Top-Sider, Saucony, Keds and Stride Rite are leaders in their respective market segments and will add significant additional depth and breadth to our already strong brand portfolio.

The inclusion of these brands with a combined brand equity of over 380 years, expands our footprint in the men's and especially women's market, strengthens our athletic and outdoor offering, helps move the company into the younger casual footwear market and provides access to the retail doors and infrastructure of one of the world's most trusted children's footwear brands.

PLG is an excellent, well managed business that has been growing at a solid double-digit rate for over the last several years with fiscal 2012 revenue expected to top the $1.1 billion mark, another record for PLG.

Looking ahead, we will be focused on accelerating PLG's already robust growth pace with a concentrated focus on brand expansion into international market. We also believe, there are opportunities to achieve higher profit performance from the PLG business, as the team has the clear path forward for additional gross margin expansion and operating margin improvement.

In addition, although this acquisition is not based on the realization of significant efficiencies, we now believe that we will deliver ongoing synergies above the high-end of our previously disclosed range.

Now, I would like to provide some background about our newest brand, beginning with Sperry Top-Sider. Founded in 1935, Sperry Top-Sider is the original boat shoe brand. While it still ranks first in the important U.S. boat shoe market, it has expanded into casual and women's footwear category and continues to rank among the fastest growing footwear brands in the U.S. with revenue more than doubling in size every three years since 2002. As a result, Sperry Top-Sider has grown into a true dual-gender year-round brand with one-half of its revenue now coming from the women's offering, and the balance business across season.

In addition to accelerating international growth for Sperry, our strategic growth priorities are focused on continuing to widen its non-boat shoe product offerings, building a stronger owned retail and e-commerce business and accelerating the transition to a true lifestyle brand with a greatly expanded apparel and accessories presentation.

I'd next like to discuss the

I'd now like to discuss the Saucony brand. With roots dating back to 1898, Saucony is a premier running brand committed to inspiring runners with marketing leading innovation and technology. Today, Saucony is a leading brand in the all important U.S. run specialty channel and is poised to accelerate growth and market share with a brand's award-winning design. We will focus on leveraging Saucony and Merrell's performance credentials to create a dynamic one, two punch in running, training, trail and minimalist product.

Now let's move on to Keds. This American icon was founded in 1960 with the launch of the Keds Champion, one of the first widely distributed snickers in the industry. Today, the new Keds' management team is executing its plan to refocus the brand on its primary target consumer. Teenage girls and younger women.

The Keds brand enjoys strong awareness among the target consumers and frankly women of all ages, which should get even stronger as Keds announced just last week, a three-year partnership with multi-platinum, six time Grammy award winning singer, song writer, Taylor Swift. Taylor has become a fashion icon and she has been a fan of Keds for some time. Keds has introduced a limited edition champion snicker to help commemorate the October 22 release of her latest album, Red.

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