Wolverine World Wide (WWW) 22 Apr 202020 Q1 Earnings call transcript

Greetings and welcome to Wolverine World Wide Inc First Quarter Fiscal 2020 Results Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host Paul Feyen. sir. ahead go Please

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

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

you have directly, news call If to release sent Francesca XXX-XXX-XXXX. the prefer copy of would a at to please you Filandro

press comments were call reconciled morning's body during disclosures included tables attached today's release. within the This earnings release and with of These non-GAAP disclosures. the made

I'd results, environmental recoveries, projections cost impacts call which adjust call, our you exchange costs laws. costs, remind COVID-XX During for also U.S. and environmental rate cost to related financial and of costs business and securities development-related World Wolverine forward-looking with regarding the and during pandemic made re-organization operations statements we are associated Wide and adjusted under changes. other the foreign are like its and today's predictions that conference providing

caution Company's projection, SEC as results filings and of the you we any our prediction materially. with These releases. or differ to result, a that could As are factors there in identified must number a actual are that factors cause important press risk in

over turn to call like to Krueger. I'd said, the being that Blake With

people. as to events, global of key our the for unprecedented open leadership, for been proud have morning and their I us. the to collaboration and Thank we our by never and Good you, I would and Paul. address this team I like thank pandemic. to everyone perseverance COVIT-XX joining partners morning like continue thanks more exceptional our would company saying

challenges first express priority as later, take teams gratitude in my talk communities to first to about but we efforts the and shape. more term as this detail position health our the and of whether for and the these been safety normal world. wanted has the company near new Our around I'll sincere the win

business. the trending $X.XX. per and this point, reflect revenue million results we in the crisis, the which quarter first in the $XXX of March, that earnings responses timeframes, expectations and share the and XXXX to business downturn Turning morning, line driven we XXXX the our Earlier These adjusted of and was days, Leading three during plans were pandemic. divided to for the reported our earnings by up of approximately quarter. onset forward. with revenue into of remainder the our very At XX next current our

for and been sets developed here. We've enhance moment, has more in will our that our first. our have for adjust a details position. infrastructure on three, active our very Number organize a sheet balance liquidity us in action. we've Mike communities. of here Number been and maintain but speed consists so far. safety well future. financial lucky of the We this Number and two, strong playbook six teams and quickly served Protect fundamental one, very

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fast action and six us approach has weeks. over our This plans certainly the helped last decisions make guided

and playbook we'll our each and it time. week reassess continue undoubtedly over modify tweak We to

this Our global crisis health ongoing business. team to has the proactive our been and moved navigate quickly of we on impact

unique for many countries. in open We business successfully despite and imposed remained restrictions the have limitations

demand consumer and world including chain fully service is that in open. those remain our we channels distribution centers the supply around continue operational, a Our to

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operational these own of sites and Many third-party sites performing are very currently are our well.

this we represent and XX% U.S. in combined of business that our and As our result, online a expect between XXXX. year XX% would U.S. somewhere will revenue grow

group measures in to also the implemented design lever ability to the uncertain organization a removing bolstered overhead quickly agile further we to our not react times. by after importantly model financial a the Soon comprehensive reduce company's strength. only of help and flatter business to pandemic enhance but hierarchy, created hit, set We costs, our

inventory We expected line flow with of the future have adjusted in demand.

compensation made implemented also XXXX, XX% management significantly have also taking to including a employees. salary compensation company's through reductions remainder range of I'm management broad XX% to over We timeframe. same XX% the the stock director the changes of We've of team reduction and also for reduced awards have a

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challenges team our near-term have expenses, for order, short effectively and the future still significantly We the company's heightened increased In to positioning and while quickly our discipline moved and protect the reduced opportunities. liquidity. inventory we stabilize company

in generating liquidity cash capable again we environments company Stornant of And business Our once our will the of have a model to compromise in XXXX. operating details before. couple cash healthy expect has earnings Mike more deliver flow and minutes. sustainable and position proven on

our is sound our Chaco We out in group the and custom production operations NXX masks to communities. footing, to the XX,XXX of protective for state frontline mass here healthcare to professionals. brand support of repair footwear ensuring a Michigan local it also we hospital to on donated home and converted reached While our company

help Ten responders first support continue those healthcare need Two We and have in industry. of to within our to pairs of and workers the also donated efforts Foundation's thousands to footwear Footwear

stronger brand and the emerge headwinds finally to our efforts our to take due and especially and hard will of strong are our ability our of continue. the share e-commerce, poised portfolio communities, pivot our digital and the advantage events experience in on leadership. subsides plenty adapt to strength strategic focus from of market to and and be We first as these of our we challenges, responders believe and the quickly act business support teams expect to will we other model, flexible pandemic today's and opportunities navigate There these opportunities. even company to to pandemics in efficient a position Our

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but low the Following year. mid-teens digits growth in prior QX, to with Merrell finished started track down QX double expectations, on

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and in For hybrid nearly like sales Wolverine, so brand's the a up digit hiker in and a quarter. expectations outperformed grew sandal Bravada, sneaker respective the performance I-XX spurred seller. and the by are merrell.com Merrell, strong products digit the in businesses e-commerce and Cat total, period DuraShocks Juno Lifestyle On their quarter grew the Chaco became pace its triple the Like category, the segment. XX% new all the in double for four product far collection wolverine.com, top at new

on On the a performed new toughness in Cat’s and brand's top styles core Intruder Cat. CODE catfootwear.com, for strong Excavator the products Work take lifestyle Trending was the like very Superlite, seller, product, styles. outpacing also lightweight well superior

years. biggest sandal in several launch on the the Finally, new chacos.com, Chillos brand's became

to growth revenue the QX, finished XX.X% and QX Boston the year year. on prior to currency double-digits a down Group. to constant was Reported in Moving down XX.X% Sperry basis. mid-teens off Wolverine the down prior Coming

double further evidence and For digit start quarter the deliver brand the brand environment an helped the to growth, QX impressive retail regained Saucony, digit growth high that its double global this has in performance momentum.

technology digits to brand’s brand’s most Sperry both the icon. grew its quarter selling comfort new year. been business well the The in has with high in DTC exceptional and lightweight stores single PLUSHWAVE the and e-commerce prior delivers loved up

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its succeed now company few environment moving moments macroeconomic to the perspective and how the additional forward. discuss our on I'll to on take a leverage details will strength

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need will shopping this models new that to and will landscape. and change behavior consumer expect distribution with We line in shift preferences

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triple-digit the converting it custom with increases Chaco storytelling, operations its sharply to of when chaco.com. focused these example, For masks announced almost product introduced and also repair in new sandal be would actions that and drove production

examples portfolio. and an similar message is rest Saucony for outlook. in and newness looking We brand and have consumer optimistic the Merrell, of The the

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we accessible represents when retail advantage uncertain owners landscape, are being a price brand points. for company, offerings the the at Given believe especially distinct product

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on many We are to and fortunate home have focused wellness, and activities health brands comfort. outdoor, running

that HYTEST and positioned segments and Bates excellent better Merrell, purchases leading as spending Chaco leading consumer need-based work, the perform is activities; responder across brands the tend when professional Wolverine, typically hiking, Merrell, professional be brands categories. tactical and all These in discretionary all Saucony, Cat, offer tight. latter and times tactical are water all in in categories and work, Sperry ideally to running first are more We categories. in and product also

we is incredibly Our have market model cash earnings in times and flow of and to under past conditions, built disruption. as business deliver recession challenging proven

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I how with the Before They urgency team our say mindset as want it am I we and its genuine hand team I again to to to our Mike, tremendous over incredibly have of and people. proud impact. acted have and pandemic responded a

work the to again, cash and even a result company hard once deliver dedication, As emerge flow, of we their in significant positive to stronger. expect and XXXX

With details that, over rest of the provide additional and Officer, President our now performance first our year. in turn I'll the plan more the Financial Mike commentary well our as Stornant, Vice Mike? on to quarter call for provide the who game as Chief will on Senior

we last and forth. them have to of incredible. on current has call the by over for weeks. our has people, extra and This team. Their joining you and like I Thanks, for everyone today. for of echoing to best several regarding the briefly Blake. made comments effort grateful seen committed Blake's very And up the resilient been would the their am commitment of put thanks company start to challenge us very I all the response is

momentum on I the responded down for our $XXX.X how today's quarter update currency On largest including to of in and international COVID-XX. down our quarter QX brands, our XX.X% company to call, over compared XX% growth basis. on the two QX XXXX, year the first DTC from current strong onset Revenue in prior more the share business, situation. will growth XX% has on then constant details or XX.X% and results, was mid-teens from provide growth the first million, of was The a interrupted established of by an

had of initially profit our quarter this Widespread and on shutdown to retail months strongest of book the be of plan stores, of the order pandemic. expected progression significant first on of the based including stores trends impact a Revenue on was the closure month the of key were for revenue. impact our in many normal two DTC before quarter March the owned and businesses. markets, our March the

revenue, March, our e-commerce business earnings the Despite of unexpected showed nicely, declines and our strong over quarter. quarterly late owned rapid March model good gross of resilience the growth Despite XX%, suffered in quarter. business delivered in for recovering for the before starting and and much decline very margin

negative our last was quickly XX.X%, slightly by Gross to than the compared of business. better on the margin had million, than lower quarter unplanned over Adjusted gross reflecting and The adjust a for to expenses impact $XXX.X prior the ability downturn were tariffs planned. first selling, an new impact XX million year. administrative general in basis margin $XX year point of to

the mainly result effective and an low, of Adjusted was of our operating currency earnings just pandemic. adjusted a share X.X%, diluted constant basis, the margin the quarter foreign of despite were The impact was within previous to unusually of of revenue. tax due erosion X.X% negative significant resolution impact tax the abrupt conditions per short $X.XX on rate $X.XX, on this of outstanding of a favorable Adjusted guidance, its matter.

in grew new joint me sheet. China, only compared inventory businesses, Inventory $XXX.X prior Italy improvement to $XX.X inventory our the year. used up venture prior When a shift activities from and Cash Saucony versus Let the excluding balance operating was $XX the new million, only to in million, the in stores was year. X.X% million X%. quarter

strong to operating the the of and on sheet $XXX.X are quarter, of the At the the of $XXX our than of COVID-XX, had more over In cash we liquidity, hand, flow impact last balance focused health nearly generating first response cash the months. million maximum end on million next year. company XX

share several to support taken will priorities, critical have actions these We I which now.

Our XXXX, entering position. was clean strong balance including inventory sheet very a

drew of a important quarter, series action remainder million. the the of we of a our company's the revolving line, first measures. total During increase quick We through $XXX credit took liquidity to down

credit to amounts initiated review our including of available facility. current a financing also We under cash, access other options more

inventory supply million, inventory will flexibility to now excess orders chain products. be future to preservation the enable while expect approximately the by critical planned quick new future core reduced XXXX. underscores exposure We reducing inventory. cash, and action of by the on $XXX This the and receipts least our retaining of most end down at related million We of $XX

We repurchases We've payment share of capital postponed remainder the $XX of until year. the conditions suspended stabilize and business factory million including with terms various extended expenditures our partners. suppliers, for

have uncertain adjusted conservative cash to demand quickly a an based addition view to In future path. with measures, of cost align our structure we preservation recovery on

Within operating infrastructure the $XXX million needs we impact, that took expenses pandemic's new for the of reflects business. a go-forward of by rest XXXX, the the reduce of to creating two decisive weeks future action while approximately

quick our to testament Our cost nature a ability to such low and the fixed is of operating structure business. the and take model relatively meaningful the action flexible of

of the less the company’s semi-fixed After with over $XXX adjustments, cost. would considered XX% of cost structure variable, recent be million than

we’ve the team compensation furloughed recently company's leadership management changes and selected announced some for implemented team members. As and have

flattened have costs organization our the reduce make structure leadership more nimble. also to and We

other reduced long-term continue negotiate lease landlords discretionary with arrangements. costs on We have our and to

the time, and growing During to focus efficiency. sharpened marketing digital activities our to related marketing optimize of revenue-driving tactics we on strength channel and have based this spend this on other

measures million in increased and has weeks. of the excellent our operating Many turn further At in years, cash strengthen beginning of cash liquidity we over borrowing result our cost will of QX, and preservation million liquidity flow measures so e-commerce million are two will approach and QX, under to incremental strong that additional and last reductions other the attention for liquidity the results of $XXX over XXXX. capacity $XXX of business delivered approximately end in demand to $XXX to approximately far taken will $XXX over XXX% actions $X.X This including company's million including the our billion, credit facility. owned was un-committed total cash benefit future also disciplined existing The generation.

ratio the for requirements our on debt required our to below ratio leverage covenants of projections be well the remainder covenant expect Our well we ratio year. of bank-defined Based agreement. end X.X the by at current compliance leverage full was our on in X.XX the times within and times current quarter, the

current recovery There are to pandemic this means outside the specifics and factors for limited. many uncertainty our very a and path global on it beyond. by that outlook to our second quarter remains makes The visibility provide created of control difficult the

for our that As to the and we strong recent a we in proactive say a will position, not put our the full have an when and company year We revisit flow year. stabilize. this approach projected update can guidance result, healthy the with provide for conditions will cash very financial decisions

We XX% full combined nicely recovery of and e-commerce timing perform the is year. for distribution. nature than the will certain expected project in to businesses of U.S. expect between and business And distributor to our the traditional better this grow for and U.S. that third-party markets the our channel this model, on international Also of our QX represent year. based wholesale we and third-party our XX% revenue online company's

product We given of expect and offerings. the Saucony well in relatively to our their Merrell nature this perform brands environment,

our We also work from brands. results good expect relatively

are a on of diversified future environment premium demand our a marketplace. today's company and will volatile The stabilizing both These excellence in and uncertain business greatly model. strengths mitigate operational put risk, factor has our

several relevant this brands lifestyle consumers of that core categories Our are performance and many offer portfolio and product important for serve time. different

in the potential they reach develop given Our impact lessens regional headwinds any market. broad of geographic may

while of healthy reliance market the total. channels to single online well-diversified U.S. grow, penetration channel is the the Within XX% on in wholesale other more with no representing channel our our continues than

is immediate the addition, quarter. enables company's adjust evidenced actions very In relatively in capital structure quickly, flexibility first low and by taken the fixed expense and to as efficient

to without supply demand Our profile. allow is margin risk gross will to chain to our nimble adjust and significant us

inventory on the structure. and and commitments. investment world eCommerce costs, creates synergies efficient retail shared Our owned with enables of matrix around international reach functional in our capital expense and Likewise, operating and business. very and leveraged very Internally, relatively our channels wholesale capital that service lease centers are distribution lower organizational across cultivates footprint model, an of excellence few broad focused network design results limited needs, the inventory and small distributors reduced

with the current for and nothing unique, two been be company I've to response circumstances is incredible new. witnessed The our weather may ability but our have over times. decades difficult

We an our emerge serve coming the and us have to a going foundation operational as ability from And with discipline. toughness in stronger very very sound months. crisis company. This experience, team I to this well am is confident over even

the and the call Thanks for morning now to back your time this will we operator. turn

session. will Thank you. At poll while Instructions] One this time, conducting moment be please question-and-answer questions. a we for [Operator we

line of Stifel. with first Your the Jim Please question comes Duffy from question. your proceed with

business. Thank the Good nice perspective to Blake, the thanks everyone. you of start guys the industry with and wanted morning well? are Crisis structure. job a on picture. all And I you. call. big has change accelerating way for doing Hope thoughtful And

the strengthen in waved hand that your your this to And pandemic? commentary. you backside with will landscape? competitive are the What's how You Wolverine's what to position positioning macro industry vision like a look on for this of

think world. a some trailing regions. month or China U.S. around obviously other a the months, I And and it region really region of is the varies by couple by

an I – think impact see brick-and-mortar sure. on are as the going U.S. you this, out to for market of retail comes retailer

food going a to You're a first, shift delivery slow categories of at essentials, were sort that that for thing. little probably consumer including at-home to the see buying, accelerate paced online

have to brick mortar much going some So this footprint. and emerge retailers smaller from going are I think a that to are

companies e-commerce, so. will world and have digital, scrambled not I – the already embrace will do to that think social

an for the companies will been certainly focused that like here. have this time have of Some on us some advantage

overall But change two and that’s out. a in it’s a to So incur consumer year predict hard the going everything quite few I think have changes there’s in be or ball mortar today. to might a don’t crystal brick behavior I for and sure. environment or going

you more you’re how strategy promotional the near-term balance manage the thanks. managing to to about can How risks thinking newness talk of receipts the levels? you’re year? Okay, balance about inventory for merchandise versus And assortments and focused, planning inventory

situation I unprecedented, here been other Yes. and the current of financial we’ve on the but say, around and Recession dot-com is would some some Great that, things. and so and collapses collapse

first the very on, we So thing we the did March, to shut start early in off spigot. early inventory to decided

to second retail thing in on slightly businesses different is stores a was we largely because in The Most open. customers and did communicate e-commerce still start few a closed weekly have and every United position. basis remain a key open, brick remain with our the of them States, mortar the retailers but one

So we look then the to finish kind what off draw thought take to the they forward might an of need as line the as immediate we tried retailers and year.

retail, hardest sure position line that and the here It quarter items, Qs on the be for our we our working this United inventory increases in So in in be supply moved core to the we they make inventory things have thought on our and probably highest States. where to retailers in keep that in to good But on generally, quickly year. that new a year. orders we’re of quarter for and general, reissuing closely four three will the side, part, QX were with product, that factory the involved will specifically chain, need base minimize impact. our the Probably the shutting off going our

inventory. Jim, in mix strong to add portfolio have too, you most very carryover the that, brands that I of and recall, would core of a our

carryover seasonally market, and to means fringe merchandise now retailers in will business So over quarter started that portfolio healthy summer of season, going I the that to items, that on high probably for right the next spring probably do is fundamentally, on clean or the with, that nature inventory cancellations fairly is for the hang some talked our about we Blake’s of weather- fairly definitely XX% think, the seasons. we’re But our fashion-oriented going fact next spring that and forward. holding some rate, that highly our the board, is summer oriented, make to which valuable for or have inventory even and the really we the across the

cancellations on as be, keep But that. we’ve taken retailers can the inventories for closely with sure low all they with to in now the they’re worked as channel although elevated We’ve right our closures.

we’re the so back think, half the would our of to that anticipating I just actions think and nature and say And we’re some inventory we’re promotions the maybe be the going of markdowns taking in combination might that as you certainly that not although year. of exposed as to of

helpful. good Very and Thank you, guys, luck.

Thanks, Jim.

Thanks.

Your comes with next proceed question your of Please Piper with from Sandler. the Murphy Erinn line question.

is you the Good safe. I question continuation all morning, a and guess first hope staying the just are of last.

promotional you’re relative just you periods then And challenges? the As for on recessions what little bit of a comments throughout current activity, expectation significant it industry the relates to go more or as your just can summer to what in market, about you just QX seeing your the promotional U.S. activity given overall the talk is inventories? in past the

Yes.

inventories high at are – it’s and secret, a products. private both branded label and well, – think for not retail I

enough, that promotional those that’s us that activity continue we’re opposite e-commerce XXXX, XXXX. of a are levels So Interestingly own seeing little today Great we it’s promotional greater for business. during our here. probably saw would today working Recession the than We while to just expect on that for the probably some approach

this the brand. brand full-price messaging on on in a we’ve fundamentally, environment. keen overstocked on pivot we our yes, and few a to newness we’re to consumer on consumer have messaging Yes, taken by focus items the the sale. a approach and So But to things in product

a For us, that degree of is delivering – high success. that’s

see are dealing retailers but feels are issues, with there there us. out retailers as issues, are some the promotion cash it’s time, out panicked won’t again, company. sheet that’s that it So we liquidity I how say there that we flow then But to do that not balance issues

part second we a don’t But owners. we like And frankly, the as it. brand to logic So your from understand was question? standpoint, it, what

Yes. No. – I you it. curious am answered how just

as So I look we down little you if a don’t then P&L, down kind wanted March. guiding would we recognize Jan-Feb but guess just it’s have, know at just in together the not QX as wasn’t decline, can rate unpack of if second more. XX% XX%. to just bit could business run question – QX exiting through on understand that’s I I the have the a you’re versus the March, so if EBIT of expected bad flow I And the we

about. kind I So it expense we for flow maybe rebalance that kind guess, for level of those you, talked we you’ve top Mike, pivots But of is once should the for line assume of just of of kind QX? just QX some through the curious,

Yes.

of of the we first were changes. started point. based that see the my I March, quarter getting those mix, strongest the the it for stores to March to didn’t and trends from and we softness. quarter, started the it’s about answer so. – early the magnify, were question in we as delays maybe I QX to or I close the the – on really cancellations week see – had some until full but the our I wholesale other to of let quarter seeing were was be channel. as We reads first. to me XX% mentioned and us levels, of that mean know at And per be the comments, se, was real mean, in only think e-commerce declines well, everything the middle month it. be would planned started I It we outlook, we traffic going March maybe going

most March had say impact, be to I’d our It month. the obviously. going biggest So was

So we line on sort were expected. what declines with saw there we would of revenue the that have in

flow the on really really of to adjust relates the latter it business only the a flow of just through our the on As our couple margins cash strong. quarter. Obviously, and through, of e-comm are weeks we in managing in managing kind expense had part to and certain business

It’s our on to strong. very vertical profit, business our operating also overall that Our margin margins. delivery is accretive operating

for different. each positive to But for going have us we’ll So quarter are going puts – our that takes, Erinn, continues frankly, – that strengthen, as that forward. a that’s mix to we be and

So – it each that we the quarter different. the costs, actions the expense also March, today, But advertising say compensation-related the are T&E, like relates through through But and as I’d some least, the for be profile and that expenses to those wouldn’t be announced discretionary took those the back flow balance the margin There’ll well our we year the operating as profile year of reductions of year, the will EBITDA the margin redeployment, well. in of of reductions take reductions. flow flow be benefits half on same I to not for the going through QX the at representative in of cost quarter. to rest necessarily as by

mortar in March? of of that not for Okay, April overall about okay. in run last e-comm, And and you’ve Or week talked offsetting that or to fully better of just it the starting triple-digit still the the business clarification. guess or April then given just two – e-comm, it growth is last rate to fully not in uptick at total the the weeks. Is I least, the improve? last is fair is assume brick than

Yes.

good think a entire this start have the our throughout had April rest up the U.S. stimulus open and few we for be of as the April the dividends challenged close to That are will to maybe month. end digital think the as a I continuing have very to have year, at whole, a checks stores will market. continued remain guess, to for whole, market into virtually going the And is for focus we market footwear the us, the month, I I though, the And for on pay on a for that see of encouraging. sector. e-commerce and footwear right? seen and out, impact seem is industry gone pretty the

terms But Definitely benefiting world. that most consumers’ the around want us to is of growth based to clear. on we QX super shift the the revenue markets in we toughest be in shutdown access the to think be a quarter in have We from retail. for fact the going

shift at we benefiting be that most own to quarter, So least, QX this with online out some challenging it’s our mentioned, year. online well, while is our as we’re business third-party business lift going from seeing as on our projected and as

Thanks much. for very the you Thank context.

with [Operator Instructions] Baird. proceed your of question from Komp comes with next question. Your Jonathan the Please line

Maybe, of layer for you. thank Hi, put you’ve is kind follow-up, just seen broad a there just what willing any even Yes. around to brackets total sales.

planning So you’re order far rest of off more out to the thoughts I’m book. give curious holiday just just curious, year, of in fall baseline in the inventory order the a the how of? business And terms you state to April, reacting? how customers And that plan any can book? the adjust of to how just we on assumptions but are make the curious for then thinking

probably fleet remains right obviously, for you and that Yes. April say or we into the that a it’s this and about few are We would with regard can that do farm e-commerce that’s business retail on we two April, give A June. and that planning the accelerate open month. right know, But We all in one players, to May channel that know customers good and to a our insight stores of some And right do at the end and largely difficult what retailers now. open sporting our now. And state-by-state, few some continues of on then guidance you to give mortar will brick hopefully, are few know – have perform. now. we any impossible I that’s open.

overcommunicate we’re get state their our with now of to the order obviously to thing respect right doing I book, flux. trying would business. that to there a say With our customers retail the in remains view we’re on is main

answers searching and this I for think are trying environment. to they navigate also all

than our little So order But might murkier trying inflow. otherwise we’re bit to position it’s adjust chain inventory be. certainly already a there supply and our adjusted it We’ve book.

chain right fully supply is capacity. There’s plenty now of operational. Our

position on begin have some feel their we’re when clarity adjust good to the we business. in a to retailers So quickly additional pretty

you. mix. at follow-up e-commerce? for seeing your When of then, business, in e-commerce just of clarify then And one And Thank look that third-party you third-party see rates e-commerce about e-commerce was similar expecting the just growth of owned you at the partners understood. Okay, maybe could that $X.X how on in revenue the XXXX, types you comments much to are versus billion company U.S. about you're channel? your the

of say business. e-comm would of now, I right outperforming e-commerce our pure or own third-party have businesses e-commerce wholesale been has customers a either our that customers, number our plays the business

to a checks accounts hit U.S. the bank I a a with little bit narrowed consumers. here. been But certainly the leader gap stimulus think standout that business of starting e-commerce has our has and

e-commerce was stories, inventory help And to terms to respect do to our digital million. customers. The With figure that have of traditional we're in domestically $XXX trying business our year the of I e-commerce our customers flow, content what we of can that. that. but business probably of about bigger businesses don't collective have X/X would been bigger would it last me, right in than been than XXXX, front

going So we to going in is that acceleration accelerate, continue. this channel, obviously, is that to environment, think and

luck. and Thanks, Okay. Very best helpful. of

Thank you.

proceed of line the Dana from comes Advisory. your question next with Telsey question. Your Please with Telsey

is everyone, healthy. morning, hope everyone safe Good and and

how believe I increases future? were changing down the component? about expense product style those introductions, break XXXX you variable you sometime then remainder or how do about do get now? about do in in Thank think back that period. you see you pushed versus And of fix do the going And As that the year. price and June the structure, And delayed you the Does your you. speaking introductions into any new how think

the important and think months model I’ll factors, coming the attributes the is the going have guess, be versus to variable. one Obviously, Sure. cover that I fixed of business quarters. we I the it’s of in especially coming

supply highly chain very a structure. have variable We

know, we from parties. third source we factories, own As don't everything you

XX% are to related over really third-party our product costs of inputs. variable costs So

semi-fixed brands about that's been or call the to of within that some we today we So We then operations other our have group costs, in that chain our this and corporate million costs structure, including call reductions reduced the what $XXX to took know. fixed supply the that's after the – all year. would mentioned support in we costs to that the and important in global business

we'd So call $XXX what million costs. of semi-fixed

company, overall, So variable structure be over XX% the that terms in of of would of total cost the costs.

I back we the if And uncertainty structure opportunity We’ve like concerns on So and the very of we can the chain more the deal do adjust with risks said, the quickly. as materializes half the capacity for with a in future, as kind we of feel think the supply we and accessing demand nimble side, year. Blake of can same. in demand now readjusted pretty

structure. nimble very a So

think first a that let important make been kind whether channels focused is bit still obviously, say, focus half carrying do to of I product protect Blake that strong kind quarter on that more of, careful to be to, little And introduce, through the our On able as back I'll brand over be on flowing. speak needs product the to lean distribution channels new styles from newness. as position that, through our their inventory normal we core and of to in online where we sure want has to on will or we've that, us help intently production new there. focus our the very the we have each year, to

our respect earlier there. customers. don't any with were Dana Yes. our much to decisions to from increases, communicated withdrawal those anticipate our big from policy, from price We that,

So to to have I wholesale our right with have need my do a make business? customers stores your now. of newness one extent that’s to current to exciting we’re newness to a businesses prices to newness. large come as originally feed I that certainly, through think Certainly, And my customers our are online going short in we us those do we to to the environment, the online of indented. and What our and flow number probably focused we’ve guess, and introductions, in need in on do continued do style this and "Some to customers midterm, I’m What our retail So in spring/summer stores, XXXX. focus fresh? listen, pure-play few said, going had respect

digest physical only they their much there can on some or in So the in in-flowing stores sitting warehouses, and so stores. they in, are in inventory their

hand, our a experience from to the that responding the now message. in different On we is other consumer know really newness right

So not there. anything going slow down to we’re

partners. of adjust – as continue the from and And – given able to we’ll two business here we going to or to be business chain, our more going to be We’re a to able supply feed e-commerce month the our know e-commerce our we’re now.

And one quick follow-up.

own you operations? channel, of e-commerce think retail doors in resets your how your channels As wholesale e-commerce with for distribution the Is and in do either and wholesale your store terms own the excluding, think for – And your you wholesale of retail you do costs? relocations? of opportunity of other how rent? big on how parties, you. the do you it of third Is service? stores think independents channel, about then department versus think And you occupancy that Thank there

part your latter your first. Maybe question Yes. of

approaching department We’re would XX%, very the maybe business, our digits of in even all mid-single or – our more Probably, for to this our stores set example, channel be the don’t of that revenues. have single year. in But brands online across aside, channel setting diversified. U.S., of overall aside have don’t high XX% revenue. a single digits if of you overall that’s we We is our online XX%

only So balanced. reach X% would at of overall customers we distribution our a handful channels of most And and our evenly wide that sales. X%, have are pretty

we anyway, think puts that in good risk standpoint, our us pretty a position. mitigates from and So

we are We – unique coming retailers challenges for expect know retailers some could of that do leveraged that this will out be with doors. there’s that a crisis some there’ll do do highly retailers. We and that those present fewer be know few

fleet, our reopen next closed state about year. They by XX-plus States. all this into certainly our have for look rest here to may own the the built two. that stores plans we today. United of start we’ve or They’re some So respect we over month as the to retail of With in state ahead,

crisis between relationship traditional the alter the potential current the to and think landlord. I tenant has

together, that a all nine you’re in big here be operators a XX going and growing deals the – But more I and think motor rent not and the you’re we’re obviously, together. mortar going some not landlords or I brick in store right? the to retail, to And going deals. a interesting trend this to see to fixed we’re months. this player, brick in are over regard rent but see percentage dynamics think next There’s all in and

you. Thank

KeyBanc the from with Matthew line Markets. comes question Degulis of next with Please proceed Capital question. your Your

Thank questions. And you you our are morning. for Good all I taking hope well. did

some flow you’re flow, expecting very it’s your I projection On this and talk year. assumptions monthly strong if operating those positive impressive if of obviously, the it’s cash behind wondering numbers through order bracket cash you could to possible cash book was for the burn the and year.

obviously our as to Well, and forward. key lot referenced on seeing There’s market. in to Matthew, we’re mean working a and of monitor already. really we work the also but uncertainty accounts solidify still Blake side, the that I go order demand, closely change we’re with correct that book daily, the there, to

now and less it – recognize so and backlog times. be than book normal in And would order is slightly informative we recognize the in maybe that, we

get we’ll year a the Much QX later driven cash off receipts the from ago. the we that of would As we in to neutral year quarter of in it the we normal that quarters, significantly and When about we crystallize standpoint. use QX. a QX QX it a a start next inventory the than – with was in improvements had talked cash and the had cancellations in sort better QX flow relates first each be as we of was to quarter, in that’s QX. cash think three being a about It of incoming of expect as flow, benefits to in

will will QX be of flow QX cash sort be our quarter, be QX will and neutral. positive, strongest while So very

before you And stores the there are their Thanks. to Okay. mentioned reopening states plan you on that economies, reopen for beginning soon.

a about And talk that a to do after reopen process you reopen So can store? to can decide how so? quickly deciding you you store on

Yes.

the the an fairly a as can just we’ve stores But how single vast in state-by-state. here fairly a in think impact. – it’s And within I really COVID-XX learned or differences had customers, fast whether pace. our depends state our open it stores on of there’s stores quick has Michigan,

got or on a a But going end it’s on stores go guess retail on health a get tattoo, facts, to this U.S. state We I based this sporadic. that. here in data, So at I playbook. Michigan pretty of based thoughtful to based to Georgia haircut will a think weekend reopen be few – the advice. different we a taking to but has approach want I’ve down start slightly the if think Every is to the the month.

hand, months, vaccine know there’s other for that months. likely XX all here the no maybe going to we be On XX

has economy thoughtful manner. to is need the a reopened So in – be to

the I going lot of think when a use see you’re of retail PPE. reopens, to

to see of gloves. a lot You’re going

think You’re to we’re car, few have going have stage to station of to face to put to and around the get do go not can see signed the masks. where countries you go in store a to grocery where pharmacy. – letter fill going lot go world, a the police or you gas a a get your I before to

for think gradual But So I process going open I going be a to little we’re that. to think more this our market. than is be a

are looking or various here month reopen going of – to approaches Those maybe economy. ahead I are been at as the is parts have find more of again, it Europe. to way there’s May two bit think different June. you’re to countries also we to a we build in the starting country country. reopen are world going little But or here a by Europe. operations But Stores But know, you extensive think see pretty I probably a and in in us.

a a they’re needs economy. flip a of bit going But by I are work to be things also because change to the certainly virus, with of it’s the to think being complete world destroyed be to back going going a to It’s by not shutdown lives but that’s to switch not being immediately. gradual. light going destroyed get open It’s bang. the

So whenever I the I think balanced we’re a career, I’ve been going Again, consumer, wrong. my approach. to U.S. against see in bet

this I U.S. of consumer. the against out coming necessarily wouldn’t again, So bet crisis,

you. Thank

of Please Wedbush. question. with proceed Svezia line the from comes question next with Your your Chris

questions. Good taking morning, everyone. for my Thanks

Just some color you're First, color about international in side, distributor specifically, of or guess those what your maybe how European the specifically there? you're their seeing partners cetera? are inventory on seeing et some what just about more some more reacting, I And markets levels, subsidiaries?

Internationally, QX, starting Saucony, Merrell, by Yes. other a was to probably but smaller performance very good by our excellent of Merrell. across we Saucony region say up. driven Europe our some growth a in primarily Markets some standout I to stores performance and brands, are good by up speak. open are as would and lot starting open Italian

As will a you I total. school impacted. shut for the UK, think kids at country, European and I unique already. France, back in severely country. to example, and Germany -- pretty their Italy markets Sweden, is country know unique country a economy they're starting reopen by up. remains that never Denmark. the to go is were moment, starting in and regard, -- lockdown in that's starting that the down to pretty open But Spain differently that tight going are in know, do smaller But population a to really And state. France,

China. looked We also have to

comes of again. a traffic again, the us. in to is a it China. and Online PPE is brick to have that there anyway. to we a is was when mortar are their not The joint the very remains in months, of China certainly, consumer some like also But stores to few And pace know, but venture strong, you China get But China to consumer volumes. delayed the lot for As normal There's a taking a Malls to starting back are gradual bit in it out. the market is back pre-crisis starting in marketplace. levels reopen. little come

this in is markets. overall, international environment. that some part years. to think, tend the for good going them we Our hold distribution very network they're large preeminent have of just challenges question, same Certainly, to them businesses XX partners, answer I our their with be facing in your us XX, been of up are. to many pretty XX, of Most distribution of But

and taken And on overall order inventory sort the just on of cancellations book commitments. Okay. you've the

you've had in your partners, you of fall? talk Just have focused U.S. cutting other result a the just level spring/summer? they them globally, incoming at out when cut your as canceled receipts sit of where on supply on Or point? gone retail with this In product? those receipts words, communication they words, whether a In are to they far and other side, or that, how chain visibility they do into

We're I say, still U.S., Right Yes, be inventory, the the now, little proactive when lot a a on lot middle would – for but goods, it's the know on to don't they're it's them this, to in we our behalf. future, to be April. the And in future every their their soft murky of of market consumer, operational. may They be or other are here fully sitting them. they're week, tried expect in a what in goods. of stores are in going whether learning only is

they're when know a and newness and to So We need of have for keep open. some freshness them we're that. going trying they to

built some of up has hand, inventory the other lot shutdown. On that have to before here going to them are the a clear

a little start. So murky right it's their now bit on

of to any business to chain get QX be plenty have two on Chris. especially used help into side. demand – for for know QX We try point, supply them this certainly time a to month or a lot proactive back additional market. at late our we'll and And on in more the We for to

be the but any own quickly, we for And of a really to exist mean, obviously to that is general, of too settlement enough. on than not downside that months. responsive so production, to much that's our dramatic at period needed greater of be going a so, we appreciate could risk we permanent, moment, of the risks. to And probably the cancellations it is having important but risk have having that took approach In just I to move doesn't

Final general have necessary, question. I'd rather and now No, observation. chase, Right. a if more guess, I you cut

$XXX Just specifically, the about drivers? you can year in other down that's Mike, give on that color inventory I operating think what what obviously, guess, you're increase? drove million? other working plus you more million previously the Working capital the capital, mentioned million, operating cash are talking flow $XXX up, drives some that And cash I of those flow? end, million a $XXX $XX to items about or at Any what

The not Sure. working vendors management. managing Yes. inventory. extending factories working terms into capital, expense reductions to some with way is some just we're our the our capital cost reductions, We're that obviously we've key on and overall play our payment some Obviously, helpful got that. term, other which

the initiatives have projections. been flow a those able We of on, ago, going cash guess weeks when a and we’ve of stabilize crystallize number between to, initially those other we've that I announced outlook couple

couple a more weeks little a we're of we than some were why we've raised of our couple so of ago confident So a – those slightly on years or numbers, outlook there.

year and international around XXXX. business to our more distribution on our in with So was things measures to quickly, we XXXX e-commerce their here our reflected for a now kind us the on number plans positive the to again, cash in second And the on the look, for flow. we and is can news think But to Chris. outlook. capital, XXXX, continue of take in a in have that influenced plan for that fundamentally, pivot starting can our manage it's have we a closely to be that'll stronger also working influence to beginning We're approach, sort good models next management flow into platform this remainder And said is about other multipronged even investment of were impact of Blake the focused our as on his we'll strategies timeframe right? cash obviously of their we, comments, now, us partners which we're work

we'll well be insight to now, it flow the looking and business. kind we're for beyond So as just to health assured XXXX that future able cash obviously into provide positive relates that of more ongoing in rest quarters the right

and much very the Thanks best. all Understood.

Kummetz proceed question. comes from with of the Your next Pivotal your Please line question with Mitch Research.

taking I've a got guess quickly. few. questions. hopefully I've do for this my I we thanks Yes,

you closeouts, receipts and I'm expecting lines canceled this carried are then of over. like you, mean, spring/summer curious, closeouts you've are than the Just canceled you not XX% lot I last? think but Mike, more on I made guys orders on your year a that you've comment

if you of So just that I'm in quarter. expect – an wondering to much don't be maybe as issue this in

also wasn't for would it the most or QX Well, closeouts handle now right our of typical in down QX are right now. that same retailers in the reasons, shut

that's a again, an we'll evaluate something that channel. once typically business online isn't opens that or channel particular So up strong that online

concerned, think the our is The we as inventory managing style We've closely. be that pretty see, might a would and quarter innings it again think but lifecycle merchandise. way, very on far spring/summer clean into So be think as it'll last change a about the wait might little inventories. bit, of about came that I its typically been with we as

some may in little the normally longer would. spring/summer, we So Blake's over product a we that be than carrying to of point,

reduce exposure So there. also that our would

next the than So months all be a expect the wouldn't over it retail year we outlook now, as that's dependent higher right in significantly ago. what very or to three relates were transpires four on channel. obviously to closeouts But they our

base might some And and mean, accounts? of pulling at risk, allowance Got much I it. you for of customer wholesale I in view back any your your on accounts terms last that guys then changes one at quick as are risk And one. have doubtful you

I think on those very the credit conservative way managing risk, side, where we can. we've there, very, thinking the of very terms credit been about we're aggressive very, in terms

expect channels years, we've distribution. we've as very As productive at careful chains. to or maybe on to over last respect aren't risk those in of you additional other yes, have visibility. we those that know, stores the But couple most within We stores been in some focused Even our least, where strong, or some in very, that quarter the cover that, to definitely best reserves with there took we more of be area. first that some the department been, and

channel, wholesale the and it online it's for do stronger will – expect goods family But particular and a channel, such which is relatively in and continue for this of – we categories diverse outdoor environment, have it's just again, Blake doing I a we which market in think, our strongest – the and said business, to be us the distribution well, to U.S. we well; are relatively sporting channel. our mean, retail, before,

that's frankly So risk. those less focused see where or and mostly – less we're exposure

terms stores to department exposure is our mix. XX% Our of below in well overall

to circumstances, – them context. hoping but is maybe just Go of might biggest X, you be the us, given to that to Work. able you your Merrell, sort speak relative revenues. think, and you was I spoke like numbers size around I your typically those individually, the Merrell businesses you Saucony given know size segments. it. then I how would But And to of don't for Number XXXX some helpful, business, Saucony And be I maybe of give those lastly, unusual those more is, just the breakout strength know specific these

Those businesses. our largest are certainly three

relevant order maybe the are sure not a I'm wouldn't detail, be normally XXXX of sure have that numbers year, this bit that little for going we to much correct. so for I'm You level more that not in XXXX. any give and out

three oil say United higher gas Work in has expected gas. the around see of it that's you going Work our Cat world on to and brand, our how and Wolverine had, was here as oil any in So know, and brands. States. Bates and the up, the of Merrell than, held the surprised but and it's and QX, the been staying business given would an the some rural we've pretty largest of better Certainly, additional that – But I they're side, it's held more stores our maybe in number that softness well frankly, is the kind categories. up of businesses. category, situation where some across, And that's pleasantly responder And given darn area business that any thought I demand we to by open. first do frankly, number been

before, XX% revenue our said that category. we've of in Yes. And global as that's particular

as positive like trend, So there. definitely relative category, every signs seeing pressure really it's we're some but a under other

kind think, overall, current based categories very target that with and So consumer happy focus our now the brands the on the on we're right of I situation.

guys. Got it. Thanks right. All

you, Thank Mich.

with Your with next question. question comes Susquehanna. from the Please line your of Will Gaertner proceed

have for squeezing side changes? here made what and staying help leadership you some than I other just safe the as healthy will made we're in how Hi, announced? on give guess more recover that And Thanks. that, think other this changes any to you've all are guess, once you And why I you of you and other crisis? well. you us I on brand leadership can if guys. brands guys then the and – color the connected hope Thanks what

purposeful you since XXXX. benefits Yes. Boston-based of to brands we that. a experiment Will had a the and a I saw as that directly know, was I’ve number from And reporting of June me bit of think, little

time. we've had that the crisis, number it getting closer to just period just something management of So Maybe of not for of mix hierarchy saw but advantages We the team, group was was brands. for of a but senior in in myself, the rid of getting our period some accelerated time. mix that some COVID-XX by the little bit was formal our a

our immediate, forth or senior was was message clear. was clear. it Mike whether back The other more me or direction several The The and of was people.

eliminate decision kind Hufnagel that that be team, structure So of management Joelle most our senior leadership would and our the people elevate our formal of team, three executive group Chris and Tom and our brand to to to Kennedy.

I as made to the to Boston. months, part with dealt eight saw that's I six leaders that, Boston think weekly brands the or most pay and for, and trips directly brand our going for our last benefits I in over certainly,

a Boston; other our out leading we the Gillian Del Group Bornie the formal – company, consumer primary at – press started Intelligence we Group, Keds Insights/Market some the future; did that's reason to intelligence business. be leaving to Tunney the laid leading brand in in addition going departing she's faster, and in out be quick, of And strategies our be over Puppies. both more know, more you to release, us as for year; started Head She's the Greg tremendous we changes who for Consumer out point area, is had speed the of to and that management a structure as of going nimble, is it, That's in going Hush probably in direction. Priore is Pinkham, done Kate Meek have that and here CIMI to Hush be job Kids going some Puppies, clearness Marketing

We up run who's moved many we the Cobb And to Cat Seth Chaco Chip Footwear Todd Bates. with for years. to from many, and somebody Chaco Gordon, Coe brand moved then been elevated

related So that a of about and changes been other of changes, those guess, to we've of occurred we've some bigger I seats, organizational number thinking period for switches have had time. things

over Great. – you're And one you extending other giving you crossed Are terms that guys just about a bit, retail you partners. payment the... just follow-up. the Can I just think but to talk

of they're with partners not have I of key all almost basis will been can. something the with weekly or here as as – not. think other say, least. much very try future at very it that also retail It forward. deliveries a as our that. to opens making with partnered I I customers a with Will. basis, mean, on a that the and marketplace I continue or We we've do approach up. on we all challenges been find things. to one-size-fits-all we we've to working believe key our monitor and to for all of retail case-by-case the it's lot to open will business has that And lot commitments the or say to a whether back a move the has balance do would And we do they're the recipe it's we'll to once right still them change landscape for regular monthly basis we Well,

which account I on guess, customized dealing pretty with. have depending approach we we're So a,

you. Great. Thank

Thanks Will.

of Marotta Your your Steve the next Associates. from proceed Please question with question. line King comes with & CL

partner call. congratulations long I'll From e-commerce direct your global e-commerce e-comm your XXXX? penetration, Again, conversation. a our ask I’ll basis, fiscal number direct one that on wholesale in question. and Mike on and XXXX? and wholesale Blake morning. the balance was only e-comm off-line partner and stamina. Good for a what Nice in keep fiscal penetration

– or of U.S. about – last business U.S. XX% year. total was It U.S. our

So...

Thank off. it you. I’ll Okay. take

Thanks.

gentlemen, closing end session. and the would have turn for we the of call I to Paul like back reached question-and-answer remarks Feyen Ladies the And to

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

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