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Wolverine Worldwide, Inc. (NYSE: WWW) has announced strategic actions aimed at simplifying its business model and generating $70 million in proceeds. The company has focused on stabilizing the business today while transforming into a consumer-obsessed growth company. The actions include optimizing its successful Merrell and Saucony joint venture in China, selling its Asia-based Wolverine Leathers business, and previously announced transactions involving Keds, Hush Puppies, and U.S. Wolverine Leathers. These actions aim to reduce the cost structure, strengthen the balance sheet, and enhance the ability to invest in brands and platforms, ultimately delivering stronger returns for shareholders.
Positive
Strategic actions to simplify business model and generate $70 million in proceeds
Focus on stabilizing the business today while transforming into a consumer-obsessed growth company
Optimizing Merrell and Saucony joint venture in China
Selling Asia-based Wolverine Leathers business
Negative
The previously-announced strategic alternatives process for the Company’s Sperry brand is ongoing
Actions Simplify Business Model and Generate $70 Million in Proceeds
ROCKFORD, Mich.--(BUSINESS WIRE)--
Wolverine World Wide, Inc. (“Wolverine Worldwide” or the “Company”) (NYSE: WWW) announced strategic actions that further focus the Company’s portfolio and advance its ongoing transformation into a consumer-obsessed growth company.
“We’ve taken fast, bold, and decisive actions to stabilize the Company today, while working to transform Wolverine Worldwide for the future," said Chris Hufnagel, President and Chief Executive Officer. “Our actions over the past four months have served to simplify our business model, reduce our cost structure, and strengthen our balance sheet. While our work isn't done, we enter the new year with a clear vision for the future, enhanced ability to invest in our brands and platforms, and ultimately, a better position to deliver stronger returns for our shareholders.”
New Operating Model for Merrell and Saucony in China
Strategic actions announced today include evolving and optimizing the Company’s successful Merrell and Saucony joint venture in China by entering into agreements for a total amount of $61 million to (a) accelerate an existing option to sell a minority ownership interest in the entity that owns the Saucony intellectual property in China to Xtep, its joint venture partner, and (b) sell the Company’s equity interest in the Merrell and Saucony joint venture entities to Xtep.
Wolverine Worldwide formed a joint venture with Xtep in 2019 to launch the Merrell and Saucony brands in China. Xtep is a powerful vertical player in the fast-growing sportswear market, with over 8,200 stores in Asia-Pacific, North America, and EMEA, and a strong network of distributors and shopping mall operators.
Under the joint venture agreement, Xtep held the option to purchase a 40% minority ownership interest in the entity that owns the Saucony intellectual property in China if the business met certain financial targets. Due to the early success and profitability of Saucony in China, the Company and Xtep have agreed to accelerate the exercise of this purchase option.
The Company and Xtep have also agreed for the Company to sell its equity interest in the Merrell and Saucony joint venture entities to a wholly-owned subsidiary of Xtep, transitioning the business from a joint venture model to a license and distribution rights model under which Xtep will exclusively carry out the development, marketing and distribution of footwear, apparel and accessories for the Saucony and Merrell brands in China. This evolution underscores the growth prospects of these two brands in China, and is the result of the early success and maturity of the joint venture. The new operating model is expected to further leverage Xtep’s expertise and significant resources in China, unleashing the brands’ full potential in this key market while allowing Wolverine Worldwide to focus on brand-building by developing awesome products and telling amazing stories across its global footprint.
Selling Asia-based Leathers Business
Wolverine Worldwide has entered into a definitive agreement to sell its Asia-based Wolverine Leathers business to Interhides Public Company Limited, a current materials vendor of the Company, for approximately $9 million. This completes the Company’s previously announced objective to sell its Wolverine Leathers business – further focusing the Company’s portfolio.
The actions announced today are in addition to the Company’s previously-announced transactions, including:
Selling Keds in February 2023 for over $90 million;
Selling the Hush Puppies intellectual property in China, Hong Kong, and Macau in August 2023 for approximately $58.8 million; and
Selling the U.S. Wolverine Leathers business in August 2023 for approximately $6 million;
The previously-announced strategic alternatives process for the Company’s Sperry brand is ongoing.
Wolverine will provide more detail regarding these actions and other strategic initiatives at the Annual ICR Conference on January 8, 2024.
ABOUT WOLVERINE WORLDWIDE
Founded in 1883 on the belief in the possibility of opportunity, Wolverine World Wide, Inc. (NYSE:WWW) is one of the world’s leading marketers and licensors of branded casual, active lifestyle, work, outdoor sport, athletic, children's and uniform footwear and apparel. Through a diverse portfolio of highly recognized brands, our products are designed to empower, engage and inspire our consumers every step of the way. The Company’s portfolio includes Merrell®, Saucony®, Sperry®, Sweaty Betty®, Hush Puppies®,Wolverine®, Chaco®, Bates®, HYTEST®, and Stride Rite®. Wolverine Worldwide is also the global footwear licensee of the popular brands Cat® and Harley-Davidson®. Based in Rockford, Michigan, for 140 years, the Company's products are carried by leading retailers in the U.S. and globally in approximately 170 countries and territories. For additional information, please visit our website, www.wolverineworldwide.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements, including statements regarding: the Company's strategic transformation, including the expected benefits of the divestiture of non-core assets such as an enhanced ability to invest in the Company’s brands and platforms, and placing the Company in a better position to deliver stronger returns to its shareholders; and growth prospects for the Merrell and Saucony brands in China. In addition, words such as “estimates,” “anticipates,” “believes,” “forecasts,” “step,” “plans,” “predicts,” “focused,” “projects,” “outlook,” “is likely,” “expects,” “intends,” “should,” “will,” “confident,” variations of such words, and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions (“Risk Factors”) that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Risk Factors include, among others: changes in general economic conditions, employment rates, business conditions, interest rates, tax policies, inflationary pressures 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; foreign currency exchange rate fluctuations; currency restrictions; supply chain or other 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 contract manufacturers; the effects of COVID-19 and other health crises, on the Company’s business, operations, financial results and liquidity, including the duration and magnitude of such effects, and numerous factors that the Company cannot accurately predict, including: the duration and scope of the health crisis, the negative impact on global and regional markets, unemployment rates, consumer confidence and discretionary spending, governmental action, and the effects of the health crisis on the Company’s supply chain and customers; labor disruptions; changes in relationships with, including the loss of, significant wholesale customers; risks related to the significant investment in, and performance of, the Company’s consumer-direct operations; risks related to expansion into new markets and complementary product categories; the impact of seasonality and unpredictable weather conditions; increases 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, including compliance with federal, state and local laws and regulations relating to the protection of the environment, environmental remediation and other related costs, and litigation or other legal proceedings relating to the protection of the environment or environmental effects on human health; the potential breach of the Company’s databases or other systems, or those of its vendors, which contain certain personal information, payment card data or proprietary information, due to cyberattack or other similar events; 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 intangibles; changes in future pension funding requirements and pension expenses; and additional factors discussed in the Company’s reports filed with the Securities and Exchange Commission and exhibits thereto. The foregoing Risk Factors, as well as other existing Risk Factors and new Risk Factors that emerge from time to time, may cause actual results to differ materially from those contained in any forward-looking statements. Given these or other risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Furthermore, the Company undertakes no obligation to update, amend, or clarify forward-looking statements.
What strategic actions has Wolverine Worldwide announced?
Wolverine Worldwide has announced strategic actions aimed at simplifying its business model and generating $70 million in proceeds.
What is the purpose of these strategic actions?
The purpose of these actions is to focus on stabilizing the business today while transforming into a consumer-obsessed growth company, reducing the cost structure, strengthening the balance sheet, and enhancing the ability to invest in brands and platforms, ultimately delivering stronger returns for shareholders.
What are the specific strategic actions announced?
The specific actions include optimizing its successful Merrell and Saucony joint venture in China, selling its Asia-based Wolverine Leathers business, and previously announced transactions involving Keds, Hush Puppies, and U.S. Wolverine Leathers.
What is the ticker symbol for Wolverine Worldwide?
The ticker symbol for Wolverine Worldwide is WWW.
What is the ongoing strategic alternatives process for the Company?
The previously-announced strategic alternatives process for the Company’s Sperry brand is ongoing.
When will Wolverine Worldwide provide more detail regarding these actions?
Wolverine will provide more detail regarding these actions and other strategic initiatives at the Annual ICR Conference on January 8, 2024.
