ROCKFORD, Mich., Dec. 21, 2016 /PRNewswire/ -- Wolverine
Worldwide (NYSE: WWW) today announced an update on the progress of
its ongoing strategic initiatives, which includes the divestiture
of its Robeez brand.
Highlights of the update on strategic initiatives include:
- Announcement of the WOLVERINE WAY FORWARD, a comprehensive
strategic platform designed to drive growth and expand
profitability in today's global marketplace
- Progress on expanding adjusted operating margin to a mid-term
target of 12% through a healthier supply chain, omnichannel
transformation, portfolio management, and operational
efficiencies
- Strengthening of the capital structure and improvement of
working capital management, expected to result in a larger
year-over-year reduction in year-end inventory and better cash flow
than previously anticipated
"We've made tremendous progress against our key initiatives in
2016, and I am excited to provide an update as we transition into
the year ahead," said Blake W.
Krueger, Wolverine Worldwide's Chairman, Chief Executive
Officer and President. "As we enter 2017, we have formalized
our most important strategic initiatives into the next evolution of
our strategic platform – the WOLVERINE WAY FORWARD. We are
intent on protecting our brands through responsible brand
stewardship and delivering growth by leveraging our focus on our
consumers, product innovation and speed, all while driving
operational excellence and expanding operating margin. To
help drive this, we will open a new, 14,000-square-foot consumer
and innovation hub next month, co-locating consumer insights,
strategy, advanced concepts, and product development teams in a
modern, collaborative environment." Mr. Krueger added, "At
the same time, our work to position the Company for improved
profitability through our operational excellence initiatives
continues, and we remain on track to deliver against our 2018
adjusted operating margin goal. We believe we have the right
strategies in place, and I am enthused by the opportunity ahead of
us."
The Company has previously outlined the primary components of
its operational excellence initiatives, which are intended to
achieve 12% adjusted operating margin by the end of 2018.
Below is an update on the meaningful progress on these initiatives
to date and current expectations:
- Healthier Supply Chain. During 2016, an assessment of
third-party manufacturing was finalized and resulted in a
tightening of the factory base by nearly one-third. This
rationalization strengthens the Company's position with key
manufacturing partners around the world. While consolidating
manufacturing partners, the geographic sourcing base has been
diversified, with more than half of the Company's products expected
to be produced outside of China by
the end of 2017. Many of these actions have helped drive lower
product costs, which are anticipated to improve by two to three
percent across the portfolio in 2017.
Speed and agility are key elements of the Company's new strategic
platform, with our brands keenly focused on streamlining the
innovation pipeline to allow new products to reach the consumer in
an accelerated timeline. The new consumer and innovation hub aims
to facilitate this, while the supply chain team enables faster
production lead times for core product initiatives. In addition,
the Company plans to open its first distribution center on the West
Coast by mid-2017, which is expected to reduce time to market and
provide logistics cost savings in 2018.
- Omnichannel Transformation. In order to proactively
address changing consumer behaviors, the Company has increased
investment in ecommerce, while addressing unprofitable
brick-and-mortar stores through closures, rent relief negotiations,
and performance improvement initiatives. Based on timing, store
closures are expected to reduce 2017 revenue by $125 million to $175 million. Once completed, the
Company's store rationalization efforts are expected to improve
operating profit by $20 million on an
annualized basis.
- Portfolio Management. An evaluation of the brand
portfolio was completed this fall to allow the Company to focus on
the biggest opportunities. Strategic alternatives for several
brands were considered, including divestiture. Harris Williams & Co. has been exclusively
retained and is currently assisting with the process. Robeez was
the first brand to reach resolution with the completion of a sale
transaction on December 16, 2016.
Additional progress on divestitures and other changes is
anticipated in the first quarter of 2017.
- Operational Efficiencies. Efforts began last year to
streamline the organization, including the restructuring of the
Direct-to-Consumer, Apparel and Accessories, EMEA, and Canadian
operations. Additional initiatives intended to drive greater
efficiency, speed and agility are ongoing.
- Capital Structure and Working Capital Management. The
Company took actions to improve its capital structure in the third
quarter of 2016, which included refinancing its debt and securing
5.000% Senior Notes due 2026. The new structure has added capacity,
is expected to deliver estimated interest savings of $30 million through 2020, and provides more
flexibility for use of cash. A new $300-million share repurchase program was
recently approved, and over two million shares have been
repurchased for over $47 million in
2016. Strong management of working capital has been a key priority
as well. Year-end inventory is now expected to be down high teens,
compared to the previous expectations of a low-teens decline, and
cash flow generation is anticipated to be better than expected. As
a result of a more flexible debt structure and very strong cash
generation, the Company is well positioned for additional share
repurchases and potential future acquisitions.
"We have made significant progress against our plan to position
the organization for improved growth and profitability," said
Mike Stornant, Senior Vice President
and Chief Financial Officer. "Our continued rationalization
of stores and strategic portfolio review are important steps down
this path. Looking ahead, we believe the strong focus of our
team will allow us to deliver at least 150 basis points of adjusted
operating margin expansion in 2017. While the macro
environment remains challenging, we are focused on controlling what
we can control, encouraged by the progress we've made, and excited
about the initiatives we have underway."
ABOUT WOLVERINE WORLDWIDE
With a commitment to
service and product excellence, Wolverine World Wide, Inc. is one
of the world's leading marketers of branded casual, active
lifestyle, work, outdoor sport, athletic, children's and uniform
footwear and apparel. The Company's portfolio of highly
recognized brands includes: Merrell®,
Sperry®, Hush Puppies®, Saucony®,
Wolverine®, Keds®, Stride Rite®,
Sebago®, Chaco®, Bates®,
HYTEST®, and Soft Style®. The Company
also is the global footwear licensee of the popular brands
Cat® and Harley-Davidson®. The
Company's products are carried by leading retailers in the U.S. and
globally in approximately 200 countries and territories. For
additional information, please visit our website,
www.wolverineworldwide.com.
FORWARD-LOOKING STATEMENTS
This press release
contains forward-looking statements, which are statements relating
to future, not past, events. In this context, forward-looking
statements often address management's current beliefs, assumptions,
expectations, estimates and projections about future business and
financial performance, national, regional or global political,
economic and market conditions, and the Company itself. Such
statements often contain words such as words such as "guidance,"
"estimates," "anticipates," "believes," "forecasts," "step,"
"plans," "predicts," "projects," "is likely," "expects," "intends,"
"should," "will," "confident," variations of such words, and
similar expressions. Forward-looking statements include all
matters that are not historical facts, and by their nature, address
matters that are, to varying degrees, uncertain. They appear in a
number of places throughout this press release and include
statements regarding the Company's intentions, beliefs or current
expectations concerning, among other things, the success of
operational excellence initiatives, store closures, our results of
operations, including operating margin, financial condition,
liquidity, prospects, growth, profitability, strategies and the
industry in which we operate. By their nature, forward-looking
statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the
future. Important factors that could cause actual results to differ
materially from those in forward-looking statements include, but
are not limited to, the following: changes in general economic
conditions, employment rates, business conditions, interest rates,
tax policies and other factors affecting consumer spending in the
markets and regions in which the Company's products are sold; the
inability for any reason to effectively compete in global footwear,
apparel and consumer-direct markets; the inability to maintain
positive brand images and anticipate, understand and respond to
changing footwear and apparel trends and consumer preferences; the
inability to effectively manage inventory levels; increases or
changes in duties, tariffs, quotas or applicable assessments in
countries of import and export; currency fluctuations; currency
restrictions; capacity constraints, production disruptions, quality
issues, price increases or other risks associated with foreign
sourcing; the cost and availability of raw materials, inventories,
services and labor for owned and contract manufacturers; labor
disruptions; changes in relationships with, including the loss of,
significant wholesale customers; the failure of the U.S. Department
of Defense to exercise future purchase options or award new
contracts, or the cancellation or modification of existing
contracts by the Department of Defense or other military
purchasers; risks related to the significant investment in, and
performance of, the Company's consumer-direct operations; risks
related to the expanding into new markets and complementary product
categories as well as consumer-direct operations; the impact of
seasonality and unpredictable weather conditions; changes in
general economic conditions and/or the credit markets on the
Company's distributors, suppliers and customers; increase in the
Company's effective tax rates; failure of licensees or distributors
to meet planned annual sales goals or to make timely payments to
the Company; the risks of doing business in developing countries,
and politically or economically volatile areas; the ability to
secure and protect owned intellectual property or use licensed
intellectual property; the impact of regulation, regulatory and
legal proceedings and legal compliance risks; the inability to
attract and retain executive managers and other key employees; the
potential breach of the Company's databases, or those of its
vendors, which contain certain personal information or payment card
data; problems affecting the Company's distribution system,
including service interruptions at shipping and receiving ports;
strategic actions, including new initiatives and ventures,
acquisitions and dispositions, and the Company's success in
integrating acquired businesses, and implementing new initiatives
and ventures; the risk of impairment to goodwill and other acquired
intangibles; the success of the Company's consumer-direct
realignment initiatives; changes in future pension funding
requirements and pension expenses; risks related to our substantial
indebtedness; and additional factors discussed in the Company's
reports filed with the Securities and Exchange Commission and
exhibits thereto.
Although we base these forward-looking statements on assumptions
that we believe are reasonable when made, we caution investors that
forward-looking statements are not guarantees of future performance
and that our actual results of operations, financial condition and
liquidity and the development of the industry in which we operate
may differ materially from those made in or suggested by the
forward-looking statements contained or incorporated by reference
in this press release. In addition, even if our results of
operations, financial condition and liquidity, and the development
of the industry in which we operate are consistent with the
forward-looking statements contained in this press release, those
results or developments may not be indicative of results or
developments in subsequent periods. Given these risks and
uncertainties, investors are cautioned not to place undue reliance
on these forward-looking statements. Any forward-looking statements
that we make in this press release speak only as of the date of
such forward-looking statements, and we undertake no obligation to
update, amend or clarify those statements, whether as a result of
new information, future events or otherwise. Comparisons of
results for current and any prior periods are not intended to
express any future trends or indications of future performance,
unless expressed as such, and should only be viewed as historical
data.
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SOURCE Wolverine Worldwide