Wolverine World Wide (WWW) 9 May 182018 Q1 Earnings call transcript

Good morning, and welcome to Wolverine World Wide's First Quarter 2018 Conference Call. All participants will be in a listen-only mode until the question-and-answer session of the conference call. This call is being recorded at the request of Wolverine World Wide. If anyone has any objections, you may disconnect at this time. I would now like to introduce Mr. President for Vice World Senior Hufnagel, of Wolverine Strategy Wide. Chris Mr. may proceed. you Hufnagel,

Thank our welcome conference and you. morning, Good to call. first XXXX quarter

viewed Executive it financial and release many Chief our On our at Officer. XXXX. Earlier from Mike are The today we Financial can the our Officer announced news wolverineworldwide.com. first morning, Chief of our Stornant, President the on and for website and sites is Vice Blake Senior be available this or President; results call corporate Chairman, Krueger, quarter

posted the If you release have during document the Comments Deur document a please the Conference these corporate a at wolverineworldwide.com, The attached and GAAP. Call non-GAAP of call is on under our by body tab at earnings to some corporate clicking the copy Tables website, today's link at entitled additional within XXXX non-GAAP that were non-GAAP Tyler included sent you Supplemental There on include the of will would reconcile page. prefer the disclosures the call Investor of is WWW press to news with these to QX release release. top morning's will Relations Webcast disclosures XXX-XXX-XXXX. our This reconciled disclosures. accessible disclosures directly, tables website

additional I the and context some I information. to call to Blake over wanted to Before provide turn results, comment on our

primarily QX quarters underlying the on underlying changes When with of will XXXX. adjusts transition our reminder, the the changes to to to global longer our best revenue in XX-week for license to this in The the of issue marketplace. XXXX quarters a business. businesses the Mike period disclosed are Blake in and in how and XX-week impact foreign and speaking comparable be we which of in of Defense a that model, As XXXX, the XXXX. sale to have better retail Sebago will closures, currency XXXX, isolate revenue, separately no implemented brand performing four Department refer Stride We Beginning impact we'll quarterly growth four for a our revenue, comparative reflects variable. of believe store business directly our was in Rite in have

be In store which non-recurring U.S. of includes organizational impairment we'll impact providing related tax environmental adjusted addition, restructuring closures, markdowns divestitures the and the changes to results, and costs, exclude incremental financial impact in transformation inventory law. foreign recent costs, of costs, and and other exchange, which

release on You securities its I'd and can laws. forward-looking made find earnings and tables regarding Wolverine website. you predictions under statements our are operations that also conference our like corporate to during reconciling Wide in remind World projections these disclosures today's call U.S. and

of to a are projection, number to turn These the over identified results like that, Krueger. I'd company's that in any SEC we said, materially. As prediction or a as that result, cause risk and Blake the there important press differ to releases. could being in caution our call with With must you Blake? factors are filings factors

us. joining currency thanks reported this morning of basis. Earlier X.X% quarter representing Chris. Good of and million, we constant growth a for revenue Thanks, X.X%, everyone on and first $XXX morning, underlying

leverage were in Sperry year. expansion ahead diluted over record and in quarter. were a especially increase margin earnings we gross deliver QX also We operating to the expected, share growth see were These of we XX% per and with and adjusted than margin plan. pleased reported also encouraged $X.XX, last better of earnings strong We results the the

with Merrell for Gym the but toward early new GLOBAL me revenue, the becoming quarter. X% offset made a share improvement excited GROWTH comparison million first results our company. we quarterly some to from activations very a with review of details quarter, meaningful the quarter. growth to and current higher Merrell's of WOLVERINE WAY negative gross transformation consumer-obsessed as year, to the revenue digits, digit year, growing key and on by to closeout which of QX, entered into high, in our revenue XX% Nature's of and and margin digits brands. over ahead progress for drive the higher the Chaco Wolverine relating to and launch XXX-basis-point to & FORWARD for focus program Lifestyle QX a the at-once impact helped growth growth. Life, X new Hush Merrell. of over shifted The posting fewer I'm its strong During acceleration brand a sales, constant X currency, Group, launches, Cat X% let X grew next growth a XXXX, low-single phase Merrell's down sources with of AGENDA flat Outdoor prior strong QX categories in quality was Moab product of quarterly on the for down in success first-quality were our basis business underlying by Merrell Starting stories Outdoor down tougher low-single the was sales plan, low-single Chameleon the Puppies X.X% currency and and Work groups driven was compared key in selling The the constant was partially and in XXXX.

consumer, and for of consumer global this strong the to growth attacks recent model deliver this model. brand implementation now launching our such the on award-winning category well, is My delivered brand XXXX. quarter reflect across introduction, regions spring was of and production conditions now country. is This the on to work single-digit global and opportunities emphasis high-single which growth and brand digit positioned challenging Hike, the e-commerce New focused territories, underlying Rouge low Thermo Merrell model our win product and Chaco Chaco of market QX new business growth the growth Chaco collection. Merrell the five in to in in helping in first product accelerated with categories, continues Hike in new positioning in fall. growth greater of collection speed adopt continues Z/Sandal flow XX%. as performed an accelerated with offerings momentum The certain and expanded a innovative continuous source to introductions. the the driven Nature's custom the of XXXX, cadence growth to weather brand, along Work in Gym, product women's by in growth an growth over new be robust Chaco's a despite program for continued with distinct drive also

QX. we Wolverine performance Boston the this to Boston the Kids Wolverine Group, you formally our during I'll Moving into moved let the for cover we group, know Group that revenue before Group

and from and the around Saucony was Despite strong from low-single were e-commerce product up Stride prospecting. the accelerate meaningful balance to the effective continued Boston of expect Sperry with that but the that impacted to business, Boston in outside general of up full the XXXX. quarter, year. With were also results start in QX, the challenges, licensing Group casual Group, Kids Heritage Bates and brand including brand a year, single in revenue quality mid-single these delivering will strength the revenue than half. Rite Group over an up brand including the this the deliver to double logical was up X.X% We're currency acceptance and kids creation Saucony digits. up constant social the has brand in the headquartered. X.X%, now Keds up digits, Wolverine Given demand vulcanized reads Sperry's they and grew growth and the underlying brand by Early new accelerated was to in on Harley-Davidson related issues from which XX% the strong of the closures continues the and our prior in where store has with the which activities, very new increased region, model, in EMEA drive continued prior growth in mid-teens. in are double fully the women's sell-throughs global accelerated currency, and QX. plan, implemented the allow back carried revenue the for XX% compared of on the in Group styles delivery boots, campus important business. X.X%, year. pleased back XX% the over the digits, Ride will HYTEST good mid-single of saw up positive brand performance closing Underlying business performance up very high digits a been significant growth growth and category. the for accelerated the year were year. to category, in women's digit new basis. And in expected growth on Retail and changes drive have of product new illustrating our leverage the X% Sperry category down growth believe helped market some business and the strong performance digits, benefited nearly XXXX, half down women's and ISO boat very year, growth, better brand We Sperry's X.X% currency strength over help to in Wolverine the the versus close constant The launch drive program down constant for of at digits, in pace, with mid-single the the new to Saucony more the introductions to up quarter, move,

the on Ranchero, of to brand grew this Wolverine brand in product the strength growing I-XX, the The the QX. Contractor introductions, the to performing continues and share quarter, XX% new first Wolverine work well and in U.S. growth segment. in expected, As category market collections. take including apparel also returned in is

are an GLOBAL Now, provide After activation beginning and we GROWTH let an being years reinvested critical behind initiatives, our executing two restructuring aggressive transformation to are, our growth part, in of me set harvest of against AGENDA. new update which opportunities. of benefits on

between $XX in As and expect to $XX a these reminder, range million XXXX. investments we incremental million

the growth. Our a take full and to as now to poised we tools, are advantage capabilities, more and processes, of and pivot new are company agile nimble we brands

in pleased we quarter a company. the consumer-obsessed during the meaningful becoming While first growth with progress our I'm saw stages, some early toward wins we are still and

agenda reminder, of is comprised key a elements. our three As growth

First, and design a powerful product engine. innovation

designed will heavily product follow newly a on more growth process basis. streamlined that brands and introduces game-changing development Our a that relies consumer on model frequent a insight

robust developing planning have intelligence result. earlier product market to adopted the consumer and design product All more the concept-to-market are capabilities, in are more any times. and We go-to-market to now this a on as in approach drive cravable allows strategies much pipelines in consumer-centered gaps process. and investing portfolio our new model lead with more to us new address creative market much bring and continuous and skills basis This expanding brands while shorter insights a new

element. XX% expect to about investments in of XXXX this commit incremental We our to

our is digital-direct AGENDA GROWTH GLOBAL our of enhanced offense. element second The

new plan can new powerful and stories offense and offense. growing digital-direct As the advertising and over brand This with reflected by to owned operate to of our the all last of funnel, like XXXX. We of of we planned product incremental which accelerating flow, has vertical more been consumers. consumer fastest our our all XX% also includes investments our channels customers. wholesale our efforts to toward to greater consumer value our lifetime retailers continue digital-direct to used of to think XXXX need up business, new by to database prospecting, to investment consumer XXXX, QX owners creating unified speed, and our in most two of consumer social stay consumers in environment, and enhance These normal accrue down retention and will growth channel increase the our lockstep be XX% nearly in centricity, in benefit content in and the implementation drive years are retail with digital on distribution customers. which the over our spent Approximately over-index that be across the is eCommerce retail XX% to our

is of international third our agenda on The opportunities. growth element focused

our of our we to brands, around incremental well-established business direct XXXX and global of consumer To investment brands distribution nearly their network growth. Today, of enjoy to insight allocate of over respective in with the our spend are trends Our international expansion XX,XXX benefits whom the support into vertical most controlled retailers broad points fuel preferences world. from XX% global plan international of partners, a markets.

openings, to region, and introductions key we and Asia-Pacific the regional global teams, Specifically, store in add and create service resources strategic product China partners operational systems will new better to and collaborate market-relevant on product with especially our business. global improve and our

the of mid-teens our exciting over for meaningful to global years future, that, global growth position organic by Stornant, growth we QX, through digit insight I'll the and on XXXX insight expect high-single now Chief business business who international developed into Senior into XXX a currency XXXX. performance as our and expect a turn time and expectations us which top-line growth, to In President XXXX. commentary basis, improvement financial we progress This and invest the Mike incredibly organic drive see Financial our the put countries on will new territories, Our our better our XX% network, the to for be the provide call covers over is grew and international is Vice Mike? for capabilities source to Two an team in We've strategic performance, further portfolio. environment constant for in QX Officer, additional tools about in revenue brands us new add drive and advantage the we in effort of Asia-Pacific. to including the the a great year. normal and and retail a company. With to has growth

as Merrell Several Thanks, guidance, joining Blake. tools were as revenue to of you year. high the $XXX.X basis. we in XXXX. growth from earnings delivered for plan we our our revenue closures due Sperry the Both earnings per leverage versus And was and at are of using of currency new in achieved quarters. for plan on declined in part our good resulting us impact and and and first first store of Reported against its developed revenue quarter progress the this off today. constant in to company X.X% very a quarter, and excellent, The share. growth year, expectations X.X% the delivered growth capabilities exceeded XXXX portfolio underlying the is start. million, delivered and Sperry made the changes growth thank and record earnings quarter, for the new X.X%, several transformation of quarter delivered a We Fiscal our now launched end revenue drive initiatives all and ahead to prior

growth course closures. a to gross $XXX.X and expected of our diluted accelerated XX.X% the year, initiatives, key product adjusted year. implement the to basis margin lower adjusted brand improved related in points teams growth better biggest strong benefits impact prior quarter. Gross two our year. million $X.XX the the of $XX.X from of model. certain million XX-basis-point of compared new as store a prior leverage gross expect mix brands declined We businesses, our per the investments expenses earnings to resulted international of million saw to very XX% than over the related our continue basis FORWARD mix in due for store and to and tenets cost Adjusted margin general in driven XXXX, Most negative compared The year's Selling, over compared in XXXX, was higher growth to last was approximately closures. result from eCommerce growth WAY expansion excellent in by of brands year's XXX in includes incremental XX% gross operating compared administrative the sales share prior and last margin QX initiatives points the strong QX margin despite from improved margin growth portfolio closeout and quarter XXX to the QX. mostly meaningful $X to

incremental second that expect double in We roughly investment the quarter. will spending

normalize The discrete XX.X% mix, reserve, first early relatively tax rate items. resolution tax be the tax to positive the the earnings in low of low, XX% Despite a Transitioning of full-year our XX%. and in and due balance tax in still to QX, effective of other to to we QX, expect quarter sheet. range the was rate rate expect to the rate we

XX.X%, speed we attributed million, last changes down and continued to executed focus store million with the or closures, position. better improvement to our initiatives, inventories on As The $XX SKU year. of we drive over inventory focused portfolio discretionary of an $XXX in $XX stock million principal intently remains make locations. were and productivity we At end and company market see to average working repatriated Since We managing of of to $XX.XX. our of capital. from this debt year, a $XXX on million some beginning used the $XX million at repurchased cash successfully the efficiently of price foreign QX, payment

to and also We After dividend our capacity quarter a billion we of quarter. taking actions execute $XXX ended total quarterly increased future shareholder by return. in during $X.X XX% cash, these intended the million to drive actions, the with nearly

related further GROWTH strategy our including Now GLOBAL updated our investment XXXX, for incremental cover let AGENDA. on to me the insight outlook

operating transformation. range Including million growth, incremental of committed million to to legacy We for expected now other expected $X XX% drive $XX net in in XX million $XX We the to approximately Full-year unchanged margin approximately $XX to to million $XX reported The $X.XX for and XX.X% the XXXX $X.XX operating including expect current cost basis manage to by fiscal projections. our interest outlook. our and introductions, to points chain now line of million. our the The billion XX.X%, of quarter environmental of from We second as is reductions, company's with expect the to expenses to supply of is billion, in margin the be current is estimate higher-margin XX.X% our the $XX discipline, of to of is expected original product improvement million future up to other ongoing revenue which margin slightly we further product points, matter. from implemented XX successful revenue margin direct to to gross investments range be in original is basis XXXX result in these outlook. remain reported initiatives range expect investments, Street expand a and gross now expected adjusted XXXX. part pricing cost

XX%. are the projected year this earnings expected earnings of end of of the high tax remains $X.XX, per share are $X.XX. range increase XX% in fiscal $X.XX Our at adjusted in diluted effective rate now an of range Reported range to the the diluted Full-year to to XX% expected per range. last over of XXXX $X.XX share in

a is on to earnings. impact have currency Foreign neutral expected

want last I company that the over Before closing, brief update a environmental the the on matter to has addressing been months. legacy several provide

and on friends, regulators our cost and supporting continued remediation progress have to community, in further quarter. related matter original We the collaboratively future the activities families, committed of We first during The of and and to remain projections. affected made from with work members our neighbors range are unchanged the areas. other estimates this for

do and include from As now Thanks we operator. morning, the a your over estimates turn to back any other the not reminder, time or insurance call responsible this coverage parties. these recovery for will

you. Thank

will begin We session. the now question answer and

Our first with go Robert W. Please question comes Jonathan ahead. from Baird. Komp

acceleration get of see those acceleration, cross-channel what's the to feel you just two. and to outlook on up or top-line could confident for largest of for sight of follow I'm so to about And an the to a balance want year. optimistic, where if I call trends pretty you Merrell for across kind for more changed discussion the sound those wondering you the two for any books more you're the brands that guys. seeing, the clearly the in give expectations on you're either acceleration you especially Thanks, what hi. sense make of brands, the trying seeing, Yeah, Sperry. the and order line color

over book, in key us year. key when and Yeah, the gives think diversification. a at a Jonathan, we has – work here performance, QX a is word the first. bit What for we the us trend order look of when know, Sperry me as the – I for been look you take let process at Sperry,

the business has Gold So, growth Sperry for around Top-Sider I e-commerce strong pickup XX% was had in QX and would a and Cup. casuals, its down in double-digit vulcanized say boat the footwear of Sperry footwear, great business. total in

by growth to year. the performance And Sperry in back We then categories, expect QX the frankly diversify very, half though acceleration product are to our fundamentally looking until this any at and footwear look itself ahead great we its strong into didn't some most growth, plan now and a other brand of of we continues back and come So, year, in the was ahead, when QX driven half in the an of brand. likely very the year.

fewer kind Chameleon and with again XXXX, low side, On growth the strong it That currently year, Moab into We positive fact comparison again, across in the fact was of for X consumer Merrell's building Merrell for in QX. most been we and year. amount performance expect due really of this that about And that's very QX to of the We momentum substantial in of QX flattish, the had their feel Merrell the retailers five that very in marketplace, single-digit was the the closeouts X some the categories. time. of last pulled year Merrell. rest

know, you As built Merrell's over the full performance last year. fiscal year

that, I would to add, Jon. too,

successful really on last for that in half the demand line products I that. ahead but deploying up for down mentioned just of think new performance boots across the were Sperry, benefiting other of great row. very the track Blake really XXXX is need of And from lot shoes the for from on up the strong Sperry QX two from a which if brand on deemphasizing but as the strong. we're The are categories in now, Blake a XX% Retailers category, Sperry XX% it, to even XX%, portfolio Sperry, for benefited said, tactics the is e-com know seasons growth that a and overall other that quarter getting a certainly little bit, we boat expectations momentum, we in or though in we're after is the For quarter year-over-year, business, mix But year, you and the in plan category. first boots business will. deliver of e-com in was was in too back our

wouldn't internationally, Merrell in I their really business the U.S. momentum strong continuing to Europe in to So, of a gain strong Really the foothold, importance the performance I other want too. stronger as at side, well. time growth getting and same regions the think that on underplay is

So second performance new the in half. as just matter of QX some for products strong in not coming of really with a expected Merrell, fact, the

there. hoping great, might just to the Okay, more what view was quick wholesale able and changes just I you're be maybe address your of And don't I of commented you and had. then two up on to want the seeing, across Mike, to on wanted broadly you follow-ups. you brands, comment commented miss just know make of Blake, the you I any environment QX kind I earnings. follow I didn't the Street think that. sure revenue. on

out You call incremental greater did spending.

comment just want any to QX. around earnings So, had if see for the I you

mobile still topline is and significant with environment remains results, We the statistics to geographies. be probably index, brick-and-mortar eCommerce own when the had against to just Latin think the visits for on at FDRA most you U.S. wholesale fall-off. America nicely of respect our the wholesale, and its and on traffic DTC, one the but not see appears some to it's and eCommerce we in for encouraging. Yeah, industry, conversion, continues for entire growing. in challenged growing holding industry. the how and increases, EMEA, outperformed I U.S. quarter International Asia-Pacific look both

and just to transformation going taken time. is States frankly, clearly our climbing the towards sold over all keep addressed sold and consumer the that's initiatives, that in year, United some was of convenience. future. Last in footwear in we've about of for XX% online, So we've tactics the And America migrating

you're to than expansion it's clear, the in in future Jon, maybe quite that had margin second we sure expect on I be first into really the the We'd line say would year-over-year right, not we called the to gross out just better the quarters, the from revenue with QX investments where as at we Street's QX of level at of also much kind the quarter, highest probably QX quarter. make estimating expected where same continuing today. see to spending frankly, two in an incremental in will QX. in activities. and spend on same in there saw More QX. those of double than the SG&A in that going impact quarters level improvement level. Those kind be We're you'll on expansion

Our back XX% super in quarter and tax QX. the up in to going closer low to we're get that see rate, first

So, with all think what maybe than estimate current the of side, what we for projected, those the those quarter, of mentioned. things earnings expecting on higher with a I line for the I little puts we're high right maybe given and timing bit takes, have is some in the just

Thank Okay, you. that's very helpful.

Thanks, Jon.

Our with Stifel. ahead. Please next Jim comes question from Duffy go

Thank morning, guys. you. Good

Good morning, Jim.

me. questions Two from

of you hoping that you're First, I factors the tactical could was to some digital. highlight the in contributing success seeing

I mean fundamentally offense, a it's it's focus, we about digital-direct it's on brand. as really consumer focus about speed, about

world, a you today's in So, continuous continuous more need content, storytelling.

Sperry, And behind have You to implemented the mobile. need and you those tactics. of of both focus a more and initiatives initiatives on of certainly behind and faster pace Merrell flow product, and have have course, we

there's the mobile this to that us think trend in and product for almost see product. need And so especially we're – custom trend we each we I up brand. other the offense, that market on we U.S. digital-direct XX% a for many QX in things don't distribution product, for focus is different really drive other Differentiation, a see was for plan seeing, changing, exclusive different thing channels, strategic retailers. different

our brands brands. for tried we're So, that to in of our other for some biggest address the of addressing and we that process

executing consumer key of in of are leveraging that investment and are driving more on retention. to our Yeah, database we're here, I that also you some prospecting focused tie and maybe investments and, when better. our social that the made back it making say would or strategy components investments stronger We're tactics Jim, better that efforts. We've

start some couple Merrell. the have So, test those those including We brands started our been into But points to think focal to roll we investment put year a last as I with play. out of strategy to wins similar the Keds early that from see seeing first where extra we're the other spend. and results, were to brands, we're and of Sperry starting the examples quarter in prime

Saucony old-fashioned been sites. good right a Sperry some Dunkin creation The that's and the in for our just on Wall amazing traffic with did Donuts Boston drove and it's quarter. had the with traffic an some a drove demand for quarter. And for advertising time of late-quarter into the continued to that's of that the driving there collaboration the second Saucony first significant our to Street Marathon up product amount in that while first Journal performance sites spend

those So, are helping. also some activities of

customers. online say, we're accelerated also would seeing I from retail our growth Jim, that

at and pace, businesses developing benefit, as down it's up a and to all continuous so, storytelling, accruing content we fast So, a really the well. . flow when their chain increasing their see we're product online and

to Great hear.

Next talk momentum much more the the of so about more that question, the and market market the current growth confidence what size international factors in of hearing a particularly about some state little are I'm Asia-Pacific can you the give in there? opportunity seeing, interested bit and you're you

Jim, Well, America been very I you for know, think, strong we've as in Latin decades.

got when but we've those as think, look number great We've probably for at plenty of internationally also think businesses. one, Asia-Pacific to family brands, grow well. rank in I got And you our would we EMEA of key opportunities markets. I room

about the we're there most those going partners that And or We about have great initiatives to probably so. some in China, other But hear other We're opportunities. of in Keds partners couple example. significant in next you'll with markets. do are for of months some directly some talking other

markets. those about positive feel we So,

anticipate couple what their numbers. last their Europe years, macro, actually of from macroeconomic the has might you outperformed Over

our remains very international moment, market brands, for industry. the a but healthy at that the just not entire So,

I'll you, leave guys. at Thank it that.

Jim. Thanks,

ahead. KeyBanc next comes Capital go with Our from question Edward Yruma Please Markets.

you real done acquisitions? me. a your guess, some I factory help some What's those an focused reductions. Or follow-up, is margin, Hey, guys while getting then been have the still you business targets? of consolidating driving good done if Two to primarily see along. as are Obviously, organic kind you've of clicking openness you a of job Thanks. on acquisition. from growth? in ones a doing of cost on guess, sourcing first, Do And it's inning guys. since gross you morning, savings. us understand the base in quick you're and kind great I just what

a I'll say first would take Ed. the margin, on process. constant it's point gross I

at of So, all the the more started possible. best say forward, we've out had, literally we're we different of to chain as to that years, supply and least initiatives initiatives FORWARD in two of there's outcomes two how would improvements, margin ago been make for terms move years sure this still the through this be delivering working at around work. I that came and transformation WAY

at not more going and have of future too, but we into to completely be yet, we benefits there'd us they're look XXXX affect there. line as sight expect implemented they're for seasons would some spring XXXX, and/or good We

it's now. So, how an I and of DNA go operate we a we very think path as the would hesitate we're component in be process, very to along I It's of well to give forward. become going in inning, I'd kind say our exact you but constant our kind of

maybe then on priority remain for Ed, us. And the front, a high acquisition they

bottom has our our very integrating also top a matrix our proven drive helped have and organization. pretty skill acquisitions historically, it know line here distinct assessing The when them in line team comes keeping and brands performance. and to set you As

by plenty to not say trends, categories we've growth to higher could very but strategic. going that we're United So, focused and global some very continue across to have consumer States some to we're target areas have has We be in also of and be that's been channel States And skill obviously be we always the some white looking be or also be the very but geography. It active. we're United powder, a going bags. or the That's sets be talent in whether markets, We're going to use particular not kind brand space might could of portfolio. We're It dry on potential. tied apparel. could the in It what could or would a probably in footwear, I limited at. active.

we're authentic, with we've As brands before, something. said in heritage, that always brands a interested stand that brands are for

guys. much, Great. Thanks so

Ed. you, Thank

comes Svezia go with Wedbush. from question ahead. Chris Please next Our

my Good morning, everyone. Thanks taking for questions.

Chris. Hi,

where what's the I when year? anticipate is the kind And guess guess, I expectation issue give being an resolved? just update Saucony the first of the brands for and furthermore, maybe you, on growth Hi. Saucony, for just you of what this

me address Chris, that. – me let Yeah, let

issues Saucony we know, some some issues, You delivery, with in fit some and frankly, had quality XXXX.

has that of Some hangover XXXX. carried on into

the to of and quality taking just on a been the another Ride point. issues. they've actions of fit so address introductions have accelerated We'll of for going of still some quarters Some half. very those at pipeline this robust looking we're introduced bowl. that of is some address frankly, Saucony, post coming second at It's for the rest to the very a self-inflicted for probably spend digit product take quarter aggressive and we've in the come year, got the of issues, The issues, has feedback They that growth back to this or ISO. so been that, couple to year here year. out growth was the half in year, this low-single most going Saucony growth spectacular They've the this

of Okay. Does most this affect...

have new would I for Saucony I'm next would also week. give a to announcement see say say, we position you – a probably week. an just name also leadership in but next on Chris, announcement not that I brand will you'll today, the

Okay. All right.

U.S. wholesale, was international quarter. Moving international, eCommerce, XX% the at DTC did when in if first you I or look – high-singles, on, of think, revenues, DTC breakout the I grows just XX% and

Right.

that and those words, DTC, U.S. Wholesale, between In the you to your revenue I'm can for U.S. the as other just the we for growth curious, just wholesale think growth? look when do buckets: pertains three out year? wholesale, it I break maybe how about International, at year

American and low-single in is full of or International, think going but sort mid-XX%s. U.S. that high-single in you business growth, wholesale right bundle would one digit we growth for to then the America U.S. Canada our of first the into the year. be digit in North rate North think, sort eCommerce either I quarter, the we bucket, delivered Yeah, about around and Right. way, growth

quarter flat at for had news, think, of level, which slow I be the And schedule U.S. the we good Chameleon for to can Merrell to international, to others, the timing deliver with deliver But that coming and mix certainly start frankly, we going knew deliver in the with of both quarter. a first respect relatively Sperry distribution. with some if and drivers. the that eCom on in and have that Moab there biggest that of challenges So, to terms business year to expected being the we're of expect our start and into would what we growth us is are strong the

just And gross gross curious, just finally you. Thank on the would level... I margin, a has to I'm Okay. just then assume margin high relative eCommerce as very the corporate

Yes.

Those fastest -- international does, the are pieces. as well.

that of of should mix. work probably doing Is mindful more third on go. the there QX then et quarter be cetera. lot maybe is guess, You're because supply opportunity, Just more There's we component? margin of you potentially seems year? still we It a little there the it's based the get about a through why opportunity potentially trajectory go as and chain, gross to the be to I anything big on more more a DTC like and as because could sell-in, a there there's color

we to understated first the be inventories only year, still be right? up, for when rest the done here. look There's how lot a should are It's clean right. at lining that's but of the here not quarter, think I things

were of the a but to lot that heck frankly, profit. Merrell a previous of sales year, gross compared think, first I closeout sales quarter the in missed didn't of those deliver $X million

margin, we're product the level, called only doing maintain little bit. a higher a at itself promotions pipeline of lend which costs international margin, is business, a at our a but necessarily exposure Clean Chris, to business growing, of retail, gross you markdowns operating but and the inventories own, to higher continuing mix gross what are has clean has retail not so not eCom business important the and which at higher that the margin rate, a and out, our then around but inventory, just both all the work So, our reduced too. does

the we We So, were to have the improvement. going like start knew we year here. some to

the cautiously little we around first and the I there for I we think guidance the year, where raised are headed. gross we're balance quarter our planned of we but think, very and in overall, where a a little with happy we're bit margins

the Thanks Okay. and much all best. it. Appreciate very

Thanks, Chris.

Chris. Thanks,

Please Our next Piper Erinn with comes from go ahead. Murphy question Jaffray.

Great. Thanks. couple morning. of A questions. Good

Good morning.

you China? Keds just I process international theme, that. I why a back last have Just think going to the in the markets direct indirect Can update behind which to guess, move? And you direct then in about that started us, convert from you curious year guess to would on I the some thinking markets be you as relationship guys made relationships. strategy

issue first, China. Yeah, great a Keds there's in I the think opportunity addressing Keds for just

You footwear. look at vulcanized – it's

it's You with And of other at we just a it's we're kind doesn't with it's experience. smaller on-the-ground brands mean it it our to look – as respect a to our opportunity mean down other we've – brand around not going when the where distributors to don't China China. the priced brand, leverage And any you in to – at markets great was great have move especially in China, sure look an the the opportunity significant... and world, had then Keds to but I'm chain, businesses move food down doesn't

last you're middle is – talking what last EMEA haven't distributor Erinn, the since to about I wasn't our relationships We the to, from moved referring and we a last – to really changes with that a think, scope we impacting It brands where we and we those just year couple we anything the just have change in made a significant to moved some further that that, markets year year. owned of in that had region realizing we or any that like run a of scale work didn't needed other in top year brands. the of scale of business, like terms distributors the or line wholesale but with, certain

your not other you're in of flipping markets kind brands relationship? assuming kind forecast, then or And any Mike, Okay. specific the of

XXXX. not No, for

No.

then just guess, up wholesale. Okay. following a And question, I on

the seeing digital underlying, being of guys you how versus break underpinning the low-single America. for about partners North talked pure-play wholesale as think that? I you kind it you're seeing an of out kind from year let's brick-and-mortar say, Can digit just what in you're

you as Yeah, thing own United our businesses States, in – consider certainly, have what want two-day I accelerated the said, the and here of to pace. becoming take customers, the they all if just get of shipping all growing and our remain, online are something that at the behavior good you when consumer read you – field. especially an And probably is we the in playing overstored and do convenience to same now business seeing and headlines, eCommerce in I you their on shift mean, and virtually we're their retail still assumed how

had stores our see brick-and-mortar don't We our comp point. and if eCommerce brick-and-mortar XX soon. stores, X.X%. combine our very at I also But a XX, – own increase time like mean, up down our QX. that we we you changing good we're The stores almost to any XX% the stores, So, in quarter, had comps were this but an

was the X% down in think, I or X,XXX stores FDRA QX. X,XXX across index

at win So, you brick-and-mortar win can obviously still it, retail.

whether need the it's operate it's whether you product, it's whether it's mobile, the channels, consumers in customers. across brick-and-mortar, need to – stories, be of wholesale, retail need you all and content. whether the You But smoothly today's your world, has that really, eCommerce,

consistent and and smooth a need the those of presence channels. of across all operation brand You

call but actually you That's that wholesale the guess that you I it the your referencing driving businesses helpful. plan digital into. at what's to I kind partners physical I underpinning, guess you sell stores, I really brick-and-mortar the peer if in like so was understand... not low look is of physical Just wholesale/retail, trying piece growth? their down? the single, digital mean, And then play the of the

separate two it's the retailers. our to I think traditional hard No, for

growth I is slightly But ahead brick-and-mortar grow that think see maybe and of going in to Our we're I online. pure rate. eTail think at to expecting business

Okay.

to the wholesale shifting brick-and-mortar here And guy, too. Blake pointing customers, with is is traditional our is business out online traditional their what

reset fundamentally I is distribution our years focus a some growth others. of decline we stores. brands, that their channel seeing in We've spent that many footprint. particular from a spike one of forget, not of unhealthy out up coming for we major some sure that. were the of to maybe think, making on of couple ourselves, So cleaning the But Don't a we're our and respect in with

growth single-digit sort low kind rate of that so result is cleanup. of the of that And

And on last Merrell. just question my is Okay.

just comparison if last You issue back kind rates, was But, it year. talked over growth QX, last comparison Moab the actually a think, we about low given – single-digit I of year. in it against a was look the up

So, of year. the the easiest

you the more comparisons guess, the So, how difficult about thinking I as two-year kind gives stack such throughout the year? the you launch you're actually of confidence acceleration look at get calendar, product in since what pipeline, a in stark the

the pipeline. Yeah, it's what's big stories, just are stories big The coming pipeline: the simply in a down knowledge product that the idea, of marketing

Moc, never I've just regard, And when look Merrell, a a for, for new the first Moc, categories, so will pipeline. Thermo global growth there'll growth There a Jungle lifestyle, FST. seen (XX:XX), that would and really model leading was has brand our last And full a For you agenda we model modern that Merrell Youngle the be it new instituted at our be year. and hike, brands this Rogue robust. of that Moab our probably in Merrell one be performance

Erinn, to that QX. kick we're expecting in in

or and to of necessarily win the the next launches initiatives also new and product, for flow not see that the And to continuous there of of XXX% the an but can't the of, cadence this see an have have Merrell thing, any is we they it's I our cross out frankly, those two a on of for three one frequency to This business of one think initiatives or of and level, at but number point. about into wait Merrell, flow innovation over fingers. So, key important two and course important win learning a diversification is sort market, the put global continuous reality relying not quarters. and to big Blake's for the

of trade commitments Great lots these their of retail reaction terms in and to confidence from the programs. support, So, good there.

seeing continue. it's year, over it invigorated So, we're last business and the the certainly

Thank you.

thanks I Our - for on Laurent wanted Vasilescu (USA), go next Inc. to question FX. up and taking follow morning comes from Laurent question. Vasilescu Capital ahead. Macquarie with my Good Macquarie. Please

was think it $X topline. the it million quarter it's then, full on And for release back the the think I year think in an for I tables benefit $X says benefit. first the million a guidance press I

us So could possibly reconcile Mike, maybe, that variance? you help

Sure, benefit Capital Inc. - (USA), much expect we FX second should yeah. the Vasilescu How for Laurent Macquarie quarter? of an

back the small, but half year million of dollar in will dollars a quarter the obviously back of year, pretty weakened be half. Second maybe in couple last the

always weaker quarter the going QX be that comparisons. benefit would from sort we We where would knew most we're So, against the positive the dollar. up of see different

back has comparisons already challenging. strengthened certainly since are a half the bit then, dollar So, the more and in

realities here know is currency the for is of we our wrong. One the forecast impact

to Macquarie to Vasilescu way based it right think of the modeling way Capital for don't business accurately, we now, impact. currency but going predict no have We (USA), on the just completely just we're much the is full Inc. have year a big Laurent -

Okay. Very helpful.

through full talking it on And costs. through revenue, same for little said We'll better we're bit to about cycle on the early quarter, we've revenue purchases a to of translation the maybe year well. currency As relates start specifically as contracts in cycle in revenue. our product the product and product EPS XXXX, fourth the and costs and

full of early benefit revenue or Capital our we to don't an side, but see - we on Macquarie earnings currency and Inc. start the year, the So, impact part (USA), the on margin as we side into either Vasilescu could XXXX, earnings. some the flip having for Laurent see on

called from Okay, and million guidance million and I guidance the thoughts the And the between you for year. cash for the $XXX cadence then of think operations the updated this helpful. first to provide $XXX year? any on initial very of half second Can

or break for don't quarter the We year. guidance it half. down really Similar by

tracking Capital Laurent expected. it's Macquarie - So, Vasilescu as (USA), Inc.

like And then in quarter drive forward? that the possibly markdowns terms bps then on effects product gross and color going of will margins, further what costs, low parse the And can out quarter? of great. first maybe second any you Okay, for FX, gross margin, on the

becomes QX. up or as I were really benefit future, going margins will think don't closeout, business won't into same the cleaner to higher not Macquarie company (USA), but same gross the place. channel, of quarter, contributors. say, product are in to pivots may inventory, see the We all break the it that's already. Laurent gross in second that all I similar get closeout benefit upside a bigger as mix are typically of we other help Vasilescu quarter, lower the a is factors from so in QX the from otherwise, that the - benefits. have drive closeouts part Capital our higher QX as business. We some the Inc. in those comments, that And other to mentioned currency from impact than towards is better, lower they small see, Very think our drivers. my eCommerce those it components, I all The Yeah. reductions, down that carries own eCommerce items important a cost meaningful mentioned mix, I in margin

great. kind how much Can I $XXX sheet? wanted down pay balance repatriated in what Okay, to long-term remind you then abroad? Ultimately think voluntary up us some the And recently of you lastly, of is And level do follow you on I million debt. the in of of $XXX cash million debt now on cash. want the

the on exactly debt are we right we question, like Well, where now.

very Our place. leverage good a ratio in is

we balance as options prepared sheet, cash deployment. We've our in lots got think remarks. capacity capital all we plenty at as mentioned of look to about continue on We the of

about cash two-thirds obviously Macquarie - the in in Laurent and kind United businesses, into those it. in flipped if has it operate the Great. flexibility of of Thank very Asia Pac, we've to is you third given locations we of Europe, cash of need Capital is a operations access in I to cash the the and in Inc. much those from still but when luck. we have and (USA), have best cash where that Vasilescu now about to past, need think our States, we and U.S., back that and offshore, repatriate which been

Please from ahead. Telsey Dana question Advisory go next Telsey Our Group. comes with

Good morning, everyone.

Good morning.

the in through distribution? first we of talk of year you innings little in be bit that as Can then obviously cleaning this cadence any about through Thank QX? mindful a takes go terms as quarter, about, solid lastly, where and think you you Hi. are the the the puts performance of you. for inventory you QX should And there up and are

take at I'll your think, first. I very last clean. question Inventories Yeah, retail are

look in QX the brands, general little I a have impact a on portfolio in at negative United and when you sandal think, here our of category the in States. may weather bit the had Chaco

sold category. we're Saltwater out pretty frankly, think pair I in the Sperry hand, other good the Sperry had boot boots, QX to in so the On performance a in

our we know, and million XXXX. exclude inventories another very, we're clean, also executed in when you As $XX the you are even very store closures that down

is the year, But QX brands, Dana, again half far takes in other accelerated the of a lot filling our into of Sperry. and their product about, expect pipeline as in Merrell growth P&L reasons of and strengthening balance I also, as puts of offerings for the think on year the and we and some the would the QX. we the around specifically talked with back the concerned,

in QX We're margin to should see the quarter. a going the spend, But strong going to strongest I be QX's activate, from last in to or to did every it than QX. margin we performance, overall higher spending QX's in kind at in expansion the say, or improvement gross QX I related rate the as quarter we're year QX, and to be, standpoint. maybe gross to probably as and continue margin, going going investment As probably far that think of

would there, end And That unexpectedly higher year. certainly as little closer get the initiatives place. low little be spike expected, for in being a talked relatively our key low, detach we the of of we in bit range QX. see rate to the you'll then up a balance the about So, to have those will

Thank you.

from time Research. question. Pivotal Please last The have go comes Mitch one for We Kummetz more ahead. with question

really and for guess, a this two, questions. what just talked on I is just thanks Sperry. of to taking my I and about you Yeah, kind Blake, have follow-up, Chaco

was Chaco kind order first on sort Chaco impact probably surprised I me? that's that QX light weather I've book, have sandal I thinking the season, your wasn't would how that that been Did weak? could stronger. on guessed reconcile just reorders that of were the of bad. Was guess, that Spring still Chaco's you sell-in sort more So, cancellations? then QX, you for have bigger of mean, so, I'm help Chaco, DTC the to the about have given weather? in I on because follow-up. would I got does of reorder a know start a quarter? slow the And And

the right to would finally, for pick weather. can would I Yeah, QX Chaco up only in in business now, is QX. Michigan going was here grass certainly because think reorder I I the impacted green see by

high have business, not to pretty remember Chaco retailers a that is a chunk with with commerce at-once that have a has high of specialty and but percentage orders. big own it's with fill-in customer, business You its retailers historically My only our percentage specialty business their Chaco's of overall of

on brands, on a weather of So, any our our one order QX. of profit Chaco, one our in from few at I can't best Still and a certainly impact bit standpoint, one more of brand-positioning but be a had not days looked I largest of an best haven't the Chaco. a standpoint specific brands. brands, book really so, on here

Okay.

to reorder finally expect here decent activity in. But getting some now we would we're that weather up pick

Got it.

to I and a for My asked focus the business continues driver the Their it to thing, the other business, that the eCom year. it's be dot through that to Mitch, as very that's a too, and performance quarter. was in hot com by for growth they'll good Chaco very But of popular – The how that's indicator going be Chaco newness an you'd good the a the continues market, to we about brand brand, put more of strong. area be is It consumer response offered the cycle too. think on in strong being

versus on was which is sort out of for quarter, kind kind kind mentioned Is then to any from were follow was I through that encouraging. out of sort saltwater what brand know core Spring any the Okay. of Blake, think in boot bit Sperry you there little there Is of of the terms QX? Sperry, quarter way? in the performance But, good And to a parse a kind to about performance probably up way a the Sperry, really boots of sold of it pair. way that

material any really Not in sense.

uptick strong, in I big up think has over retail so indicated, customer the was Vulcanize reaction new business, and XX%. offerings, uptick Sperry Mike categories, down, big its Cup. online casual new about the a product in was to Gold the Sperry Boat saw been consumer as XX%. a very

So, continuous exciting is on what is market, seeing may consumer of brand success, more historic pace focused product Merrell, to have like at it versus a the the done the flow a perspective. greater and from a

in it the part lot boots, we lot a lot our didn't that they think, rid get quarter, cleanup, to We QX. we a we retail wasn't sell-in didn't so think sold have some but where product think, promote the Mitch, I in of too, of in first of and a that saw sell-through a of that's quarter had I to significant of the it. left-over have of first about when

all mix as and how retail newness for the business at great that QX. up performance the core the a that's for I the very the cleaned and they'd inventories important that that think product emphasize of into as But strong. helpful too. it didn't category between right vulc starting at worked is brand. probably Sperry was, to probably boot demand in beginning category season, that's the we and think a really boat, category for then vulcanized is for key Sperry now I But we're as some of their third support through And and good the strong see the strong coming

Got it.

trends perfectly there isn't diversification, but mix good want it the the where the right and headed we So in yet, direction. are

right, Okay, Good great. All thanks. luck.

Mitch. Thanks,

would now and Mr. the answer over ended. you session may Hufnagel. Hufnagel question proceed. Mr. The like Chris to call now to turn I has

for I'd of behalf thank today. you On Wide, to joining like World Wolverine us

our our As X, until available wolverineworldwide.com. you, The replay good available a June call conference Thank is at will website reminder, day. on be XXXX. and replay

now Thank today's concluded. joining conference The has presentation. you for

disconnect. now You may