Wolverine World Wide continues to report steady progress in its mission to become the world’s premier non-athletic footwear company. The 120-year-old American group raised its total sales by 7.5 percent last year to $827.1 million, with increases in all its divisions except the North American Caterpillar footwear business, but they would have grown by only 5.6 percent if the dollar had remained stable. In the 4th quarter, sales rose by 8.2 percent in dollars and by 6.7 percent in local currencies.
Net earnings grew to $51,716,000 in 2003 from $47,912,000 the year before. The gross margin improved by 1.1 percentage points to 36.7 percent, thanks to the continued growth of WWW’s lifestyle business and fewer inventory markdowns. Debt levels have declined and inventories have been cut back by 7.5 percent, excluding the Sebago business acquired last November. WWW has continued to reduce the number of SKUs in all its divisions and it will continue to do so.
The management is more optimistic than last October. It’s now predicting net income of between $56.6 and $59.1 million in 2004 on sales of $945-965 million. Sebago should contribute sales of about $30 million and a small profit this year, following the layoff of about 100 persons at its headquarters in Maine, which will be closed. The administration will be transferred to the group’s headquarters in Michigan and the remaining production will be moved to the Dominican Republic in the 2nd quarter.
Much of the profit improvement has taken place in Europe, which represented 16.2 percent of total revenues last year. Sales outside the USA still constitute only 24 percent of the global turnover, but including licensing, they contributed 45 percent of the group’s entire operating profit of $79.9 million last year.
The CAT and Merrell operations in Europe delivered solid profits thanks to their new shared services platform and to a doubling in Merrell’s sales on the Continent to about $18 million. The Merrell brand is doing particularly well in leading-edge European sports fashion stores, and orders in hand indicate that its rapid progression will continue. The group is boosting its European management further with the appointment of a manager in charge of Southern Europe, Bruno Foucher, who has spent 6 years as Adidas' sales manager in France.
Merrell’s global sales increased by more than 20 percent in 2003 and the pace quickened during the 4th quarter. Its merchandising program in the USA is progressing very well, with a total of 60 shop-in-shops opened in 2003 and a further 70 in the pipeline for 2004. A pilot program will start in several key European markets this year.
Sales of CAT footwear instead fell by 2 percent last year and by 4 percent in the 4th quarter because of weaker US sales. The line is now profitable in Europe. The range will continue to be expanded into the rugged casual category. Some of the industrial and lifestyle models will incorporate a new technology that was presented at the WSA show in Las Vegas last week.
Hush Puppies, which sold 15 million pairs worldwide last year, had strong results in Canada and the UK. While total sales under the brand increased last year, its wholesale revenues in the USA declined a bit, but the management believes that they will turn around in the 1st half of 2004 thanks to the repositioning of Hush Puppies to appeal to a younger clientele. It’s now featured in more Nordstrom stores and the number of Federated Department Stores carrying the line should nearly double to 132 this coming Spring.
Sustained by hefty military and civilian orders, which contributed to a 4 percent sales increase for the past year, the Wolverine brand of work and military boots is being diversified into the broad outdoor sector. Within that division, the Harley-Davidson line continued to post double-digit growth for the 5th year in a row.