Merrell continued to drive the growth of the Wolverine World Wide group in the 4th quarter ended Dec. 31, posting an 18 percent sales increase for the period. Instead the so-called Heritage Group (Harley Davidson, Caterpillar) suffered a 2.1 percent decline due to lower revenues for these brands from Europe. Because of an aggressive inventory reduction program, the gross margin fell by 140 basis points to 36.0 percent during the quarter, and the company ended up with a 2 percent drop in net income to $20,444,000 on 4 percent revenue growth to $321,002,000.

The Wolverine Footwear Group’s revenues grew by 4.7 percent, with sales of the Wolverine and Stanley brands higher and Bates flat. The Wolverine brand raised its market share in the core boot and outdoor sport markets during the quarter, and its average selling prices went up.

For the full financial year, WWW has announced a 13 percent boost in net income to $74,467,000. Revenues grew by 7 percent to $1,060,999,000. The gross margin grew by 50 basis points to 38.2 percent. Also for the full year, Merrell’s sales grew by 18 percent to an implied level of $400 million with over 10 million pairs sold in 140 countries. The brand had over 300 shop-in-shops/concept stores in place at year-end.

With orders up by 11 percent, the management outlines an objective of net earnings of $79.4 million for 2006 on revenues of $1.11-1.13 billion. Operating profit should increase at a double-digit rate excluding expenses for executive stock options and major investments planned to prepare the launch of Patagonia footwear for Spring 2007 and Merrell performance apparel for Fall 2007 at retail (more details in the next issue).