In Europe, Wolverine World Wide’s revenues grew in the mid-single digits during the 1st half, ended June 17, and were impacted by a weak 2nd quarter. The company assumes that European retailers grew more cautious and managed inventories more conservatively during the 12-week period. In a jest, Tim O’Donovan, chief executive, remarked during a conference call earlier this week that everyone in Europe was probably at home watching the World Cup, instead of going to the stores to buy Merrell or Caterpillar shoes. Revenues in the 2nd half are expected to be stronger in the region.

Turnover was down slightly in Europe during the 2nd quarter for the company’s outdoor group, which includes the continually growing Merrell brand, the company’s largest profit contributor. On a global basis, revenues for the outdoor group rose by 15.3 percent in the period, with sales from Merrell up by 17 percent. The Merrell brand enjoyed double-digit sales increases in the USA and Canada as well as with international distributors, showing new strength in the trail running and multi-sport categories. Globally, its order backlog was up by 12 percent at the end of the latest quarter, with increases in all regions.

The bold Merrell apparel project is said to be going as planned, with a launch planned for the end of 2006. The group’s other major initiative is its venture with Patagonia footwear, which now has a range that includes 32 styles set to be launched soon for the Spring 2007 selling season. An international distribution network has already been set up. Most of the Patagonia line will be shipped in the 1st quarter of Wolverine’s next financial year, but some of the deliveries will take place during the 4th quarter of the current year. The Merrell apparel and Patagonia footwear initiatives cost WWW $1.5 million in the 2nd quarter, without any return yet on this investment.

Hush Puppies’ global revenues were off by 3.8 percent in the period, which the company blamed on low sales in the USA, primarily due to discounts and closeout sales for the brand. WWW has been repositioning this brand, growing its presence in the upper-tier independent retail channel. Stores carrying the Hush Puppies banner now total 340 around the globe, and there are also 550 shop-in-shops.

The Heritage group, which includes the licensed Caterpillar and Harley Davidson footwear lines, experienced revenue growth of 13.4 percent, with double-digit gains for both brands. The Caterpillar brand fared better in the USA and was weaker in Europe. The brand’s retro boots and technical footwear continue to be hot sellers. Strong gains for the group have allowed WWW to continue a “high-test” direct distribution network of safety boots. It consists of 20 independent distributors employed by Wolverine to visit factories and other work sites in the USA with 130 trucks and to sell the company’s work boots there. This somewhat special distribution group saw a 20 percent increase in revenues during the period.

For the Bates brand, there were solid revenue increases for the quarter and for the 1st half, but the company is expecting a decline in the 2nd half of the year because of the timing of shipments to the U.S. military. Exports of the brand to the Middle East and Europe grew during the recent 12-week period.

The company made an interesting partnership with an unnamed distribution partner outside of the USA, wherein WWW acts more as a wholesaler and takes the title of the goods sold and records revenues on a wholesale basis. The move added $8.3 million to 2nd quarter revenues, but caused the gross margin to suffer.

Total group revenues in the quarter increased by 10.5 percent to $238.5 million. Gross margin stood at 37.9 percent, a drop of 140 basis points, while net earnings rose by 13.6 percent to $14,234,000. For the 1st half, total revenues were up by 8.8 percent to $501.3 million, while earnings rose to $33,863,000, as compared to $29,389,000 in the year-ago period. WWW has raised its sales projections for the full year to $1.12-1.14 billion from its previous estimate of $1.11-1.13 billion.