Wolverine World Wide (WWW) 10 Nov 212021 Q3 Earnings call transcript

Welcome to the Wolverine World Wide, Inc.'s Third Quarter Fiscal 2021 Results Call.

As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Alex Wiseman, Vice President. Please go ahead.

to quarter welcome conference and morning, our XXXX third call. Good

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

net forward-looking the acquired If expectations, Malkin reconciled the describing would release. a release you of This including company’s recoveries, brand. you statements COVID-XX also the XXXX regarding under adjusts, outlook and performance the within are and projections, today’s expected such predictions to for to to like as the U.S. those growth Betty for prefer recently copy and which fiscal securities opportunities costs, related airfreight foreign of of I’d body that directly, References Sweaty affect of attached tables were company’s statements to cost press disclosures, during in for the other disclosures remind These plans, of the company’s reflect exclusion today’s the future call have during the exchange conference you to earnings year please release related the example, XXXX, laws. to trends and performance impacts non-GAAP made related pandemic, costs underlying expenses, environmental call and morning’s severance at sent and and comments changes. costs, rate made costs call include Allison XXX-XXX-XXXX. other

risk turn call actual our that a those are there Blake identified like important the in to caution I’d you Krueger. statements. being SEC could factors As over the company’s press in the materially from described a result, releases. differ to and said, that that These number now forward-looking filings are factors results of to in must we cause With

call morning and and us. thanks Consumer and for Alex. the demand in exceeded for safe is surge everyone on continues brands expectations everyone our Thanks, well. joining QX. to offerings market-leading Good and product I hope our

Our a with and consumers, design innovation, capabilities dividends. and product and on paying digital DTC strategic is deeper connection focus

While that been industries have XX% and XXXX today our our outlook XX% documented over Earlier over so XXXX. the demand across the service we well short reported supply future to our chain never enthusiastic term, this versus have challenges have XXXX. fully I many in limited growth ability about growing been for revenue and

a believe delivered by Groups $XXX Third was deliver despite by closures $X.XX company Boston issues. estimate Wolverine Earnings were supporting enthusiasm. of quarter was well and chain in Both was our factory $XX least Michigan future was We XX%. driven for the XX% We line supply million. revenue Group's driven delays The year-over-year over Wolverine revenue approximately revenue macro with and at is expectations up million. fundamental XXXX. growth QX revenue Adjusted up accelerated our number leverage, shortfall the gross in earnings the very impacted the increases, over to share growth positioned with company logistics per by Group's that margin good. elements

company distribution single category, in the international Our brand region, and any environment, product on not benefit portfolio provide current risk distribution or strategy to is a strategic consumer and geographic group the meaningful base continue dependent channel. reduce as

running, and construction increased in and activations of the category trends hiking, hikers to alone walking and also a to every for additional outdoors and past lifestyle Participation to conditions including and travel new in in work in by attendance showed continue mindset. new reached running has high. the activities, performance they products, supported continue outdoor have also into in XX primary of doubled the focused five running macro as renewed this and over runners the healthy U.S. the especially has has hiking, are Participation are the years, general, an significant in since persist. shattered workers all since consumers more in to again. over demand wear activities outdoors, purchases records than are national and summer, underlying future. future, strong new majority last growth parks hundreds tailwinds. wellness in boating, expected hire jobs This have a The the this work While increased and XX-year year consumer million increased to increasingly expected plan industry exercise nature, health long-term the U.S. expected of is Consumer's of XXXX. are over the coming water companies the with and as fashion XXXX for general category Consumers begin Warehousing bulk and thousands with choices spring affinity serving months. in on

year. brand versus QX to that our business of Sweaty Betty, DTC activewear Including women's to with this to momentum the infrastructure very portfolio, are has consumers adds of than This further trend-right DTC passage all strategic revenue our how meaningful our the of heart DTC and at major a and to product a ahead, and global business. XXXX, e-commerce boost will more Looking acquisition the have Across through changed brands Betty, in generated strategy revenue in focus placed led recent our category. U.S. in channels. bring the doubled and relative over market stores DTC over that Sweaty our of we plan categories, operate a product that we XX% XX% up

efficient wholesale with by the experiences, enhanced wealth online consumer revenue larger is customers more online now data, partners now global nearly of a shopping our of business insights our account channels, of and consumer operated model. generated revenue. brand a and our business XX% direct and the around global over business percentage world, payers of our and owned a distributor the XX% through for businesses of Our enabling DTC Together

out trends capitalize to the continue the We in market. playing on fundamental are that consumer

DTC addition business, in our now are categories. retail portfolio, brand bullish historically over in reflected our that sell-through these of into We and backlog indexes composition outlook performance strength in and by on In continued QX a and lifestyle remain strong trends our extends of of high to order light these XXXX. trends the which trending

work demand, long-term brands in strong especially Merrell, the Betty, launch We Sperry, next active expect line and Sweaty of spring. our a category Saucony, will which sport for consumer products

it will financial to outlook performance quarter. our with today, I'll final detail, some in will and QX and some provide Stornant over I'll call review remarks. our brand on more insight Brendan Brendan? updated now additional during key the Hoffman this, Brendan. For Mike conclude With hand performance

success business in than of on presence In billion. strengths of by acquired Sweaty strong about and and delivers seeing the expanding growth of three technical, than chain The global apparel of front Betty quarter, brand and in powerhouse operational in of Sweaty very The We nearly and internationally. the potential, running over and by Mike. Europe was with welcoming synergies us. months some global leverage product XX% up Sweaty these The all quarter Outside up to delivering our key powerful deploying in delivered our versus third growth. performance grew market collaborations, third significant Betty lifestyle the plan triple and Betty's over expertise products, strategic expectations. XXXX more QX challenges. brand ahead brand portfolio. was XXXX. activewear growth business the supply a market to the XX% strong, Less Saucony.com XX% growing over is in than priorities $XXX Wolverine our more especially even Thanks a across regions contributing a XX% our with XXXX. after that family best Saucony XXXX versus practices XX% U.S. direct-to-consumer excited we operates performance we are addressable our more the industry-leading line despite

perform lifestyle internationally. Saucony well, Our continues Originals to especially business

than joint over in Saucony accelerate, Europe XX% the forward, performing lifestyle consistent brand's brand consistent over This products. performance while deliver trend-right is and the with the as we to generate to opportunity XX% the X. franchise business marketplace for the Saucony's venture new The big Endorphin to momentum. QX. several the well last in way, growth updates, to and delivering heat and delivered powerhouse XXXX. the in growth running to quarter. robust road thanks for of franchise brand The to revenue business of us trail Ride this continues stores biggest to and are the and online brands into China continues Speed by Asia-Pacific continues including for the running the expect Triumph the moving the in continue Saucony grew more also continues region XX, flow the Our X there translated brand has recent substantial product a performance gain quarters collection Shift leads innovative category recent launches the Pro X, in including XX. and

record to great momentum experience Let me to global the demand brand all and continues channels. shift in Merrell,

many single-digit was globe. the closures Merrell's expectations, brand Merrell a doubling to the the digits Despite category promising delivered U.S. Merrell.com business the building share DTC resulted of versus consumer's at leader its and shopping last and these business least with across the growth stores. the million. return which is year. factory of by category missed challenges, $XX indicator mid-single Merrell of market on Merrell in in mid the in QX impacted the the continued Merrell stores During Vietnam still strength revenue in our in to the position XXXX. number markets of quarter in one opportunities in grew quarter nearly also holds hike key outperform

heritage product The the product Flight category. footwear heat and fueled is media the lifestyle. brand trail its the consumer also collections light well-established organic Speed the are and vision lightweight number for and innovative hiking, franchises, performance for momentum new and This on both These driving Moab. and the brand uptick Moab the one styles market-leading build of to energizing success successfully and continues represent bridge that Merrell the in interest. While further core hiker, fresh offerings by placements world's and fast, performance are optimize Moab

issue any shoot For a example, in major style of Vogue the for Leibovitz skirt. and photo the Speed September Louis jacket Vuitton a Annie and used with Moab

showcasing business about have brand's QX, in to the well we Merrell for Merrell's and the new during exceeded growth performed brand's in encouraging increased Show Moab QX. was outdoors. than the Both Today's on our are collections better aligns lifestyle Campaign, excited to the the XXXX. potential featured which Step commitment overall the Speed, Further expectations Additionally, collections performance

increasingly in strategic that brands seeing health into manifesting Cloud, are trends on the strong These incorporating sneaker Recent a and newly brand. positive own focus results are the degree. identity product, Moc at including indicates performance lifestyle We materials. are an the with further Merrell casual collection from research lifestyle are higher seeing made our Hydro we in launched as eco-friendly Merrell elevating consumers their all-day

As call, we demanding XTRL focuses authentic outdoor capsule QX on on mentioned younger Merrell introduced fashion which forward influenced consumers style. on Merrell.com its our collection

category Cat ahead, our is just momentum. beginning has substantial revenue EMEA Looking Wolverine, and category growth smaller boot deliver of in work XX% on total strong and particularly the the to capitalizing from trends the around quarters, QX several increasing the for performance is for business and leader brands. In its in to positioning. with Merrell seen U.S. our Merrell XX%, gain heritage globally, brand nearly and continued nearly possesses up XX% accounted contributions with JV in Asia-Pacific opportunity up where Outdoor growth, momentum are the work which Footwear strong the strong world over and a China and

for No and a Rowing very Banks brand will levels. pair Sperry consumer is with Sider with XXX trend and QX forefront during the strong XX% indicated, on the the launch in pivot Wolverine, women's Sperry and business [indiscernible] From growth Time encouraging categories delivered category key created demand boot boat up also in of are leverage in To with XXXX. the Sperry the As wearing John coming Betty, category. performance-based and recent performance by capsules nearly growth. also a the over for first XX% you significant continued strong other business product by the strong The will double-digit very brands, Cozy Merrell, XX seasonal the during steady business with Netflix in its trend, recovery increases of Blazers The demand of over performance. to Sport there growth McCall. market In the growth the the healthy collection share market quarter. work we from well-positioned DTC Sperry performance and brand Sperry energy I continued product Rebecca iconic was growth, Based trend-right e-commerce gained collaborations retailers Sweaty float fashion third growth boat strong XXXX. brand easy-on/off the with The XXXX Die. more key Legend collections. indications the with showed half Blake towards at Moc shoes months, ongoing quarter. we its shoe Sperry Bond expect of boat we brand's stores XX% QX that and our all as James product Saucony, the macro and new our The current the our with hope new on for developed spring overall trends plans are build inventory work good and saw standpoint, In a driven men's Outer clear water. of in All particularly this in

product Looking brand the forward, are to continues robust our portfolio lines order across strengthen. and demand

We the strong demand increased product, have and the we consumer the coupled are positions macro inventory brand. responded as over navigate flexible will ongoing well quickly We growth nearly in precise to with supply been drive every year. and more challenges as believe chain focused, merchandising next service seeing healthier and

remain opportunity priority business. for a channels a DTC Our source top the of and

improved also functionality to to enable enhancements We us commercial extend dynamic global are e-commerce will a which operating implementation new to pivoted of customers. online online help our wholesale technical model capabilities, faster and more

are to our business, customers. we retail addition wholesale e-commerce our In online meaningful DTC growth seeing global with

the digital brick-and-mortar benefit As marketing our of the a channels. market. including U.S. executing, is seeing About a are to for global product bodes that flow This economies consumers continuous portion spending have model have content operating reopened sold XX% we brand to online shift best-in-class footwear well stores. back of now more important their current we in and all

to to continue profitable I XXXX. financial suspect and our XXXX going in and in off markets and now look am favorable fleet as to outlook to expand starting hand closely we more review to quarter explore We it us detail. results may for store at our be the footprint increased Mike there in our key opportunities third Mike?

Thanks, Brendan.

then outlook company's strong start quarter third performance, I'll revised cover XXXX. by me our the financial and Let reviewing for

the growth Sperry, demand. and heavily by XX% impeded of forma business. company well-documented southern as million includes XX% the to of and delivered the revenue deliver quarter Merrell demand But impacted closures $XXX still Third under quarter basis sweaty yet growth. mid-single-digit from the most across was factory Saucony disruptions compared unprecedented over million XXXX. this approximately consumer to each delivered $XXX just Blake mentioned, revenue. recently was year, over grew other quarter, and track in the the million growth. closures factory to Sweaty supply chain during Vietnam, prior $XX represents Based our on over third ability XX% acquired portfolio these Betty increased strong versus pro headwinds, On in on the Betty experienced service a Despite

of Saucony, quarter, expectations are trends distinctive accretive and airfreight business $X Total products. results. consumer gross robust million months Sperry, Our the adjusted strong margin growth year. higher strong QX. million testament Betty addition well prices, adjusted also and work than full for Adjusted and improved a due mix, Including quarter XXX in trend-right over exceeded to the prior XX.X%, position airfreight yielding gross our all meaningful marketplace margins excluded favourable Sweaty of robust versus points been have XXX still to which points to XX.X% business Betty’s to approximately gross the in premium relevant underlying two gross the the offering selling their the costs and of are $XX the at continued positioning, drive product would nearly product was from the XX%. basis Sweaty average last of basis quarter. in to our year Merrell, margin our in higher margin were which impact, pipeline

continue per by $X earnings of cost and settlement nonrecurring of the savings airfreight We selling, approximately of exceptional year, matters, to a XX% annual interest approximately Betty experience. above historical primarily based to costs $XXX of Adjusted comprised than costs our expectations. future directly administrative include to million the of COVID. future Sweaty million to basis growth earnings share specifically acquisition capital of delays per from $XX related million Approximately and revenue, the million increased general ongoing future structure considered potential Approximately And normalized to $XX costs and related for the significantly well quarter million to were portion an improve last including XXX of where increased due outstanding to on caused in leverage mitigate $XX executed the diluted breakeven Sweaty management. items of Reported or retirements company's $XX on $XX an to legacy and in This Betty. litigation. defence of in quarter. costs of the very nearly million appropriate of revenue environmental levels estimate a number Adjusted including of finally, chain airfreight the share related approximately and supply expense. $X.XX year in bond to of Adjusted million expenses company's or ahead was compared over of liquidity, exceptional be growth points more QX, for in times use marketing X.X improvement margin investments. addition of growth operating our prior our the XX% or a revenue margin gross expansion were resulted diluted $X.XX last balanced and expense year, strong operating

settlement issue. term proposed company on outlining to into a the legacy certain entered individual environmental non-binding and the against During the company related sheet lawsuits filed terms XM our quarter

allow and the While settlement parties step remains proposed matters. to we opt of finalizing potential these resolution out this is believe the contingencies will terms settlement, of important the proposed another towards that any subject to of

inventory to Let XX% sheet. Total and compared me Underlying approximately up year the of to XX balance versus from inventory including Betty. to still XXXX. growth grew now down compared shift points approximately was Sweaty XX% percentage last XXXX

higher through in for factories still on current Vietnam and taken supply factories for macro closed has diversification, inventory manage last The to two quarters Sweaty levels. brands. especially but production continue under Our to acquired from chain have chain the with approximately the addition line August supply has the the X, which combination will This several mid-XXXX, position higher we XXXX, over through actions and placed not that more on was of our other in headwinds. levels Merrell Sperry financed new we improved incremental recovery we work borrowing put continues cash benefit and from the company's Betty Saucony, a $XXX revolver. is of capacity and Based existing to orders inventory purchase demand. visibility, as million. for counterbalance inventory improve pressure

and in executed some credit activities refinancing refinancing new liquidity a important and gives bond optimized We notably, structure, us also added growth our facility flexibility to to most that invest support growth. capital future and a

for we've total $XXX now provide of the these liquidity As with sheet brand I healthy our rest added an a growth powerhouse extremely million. to the of portfolio approximately XXXX. recent update remains outlook and actions, on will our result a balance of

the quarters. First focus growth across a over optimistic signals support for outlook the that the on me of very strength portfolio several next let demand

be limited into XXXX year-to-date for healthy is revenue supply order levels shipment driving now strong and offerings. well and fourth global continues demand work historically Sweaty underlying of committed in largest very at retailers visibility positive is delays to Our clear order industry-leading up and product remains and cancellations the our and year-to-date revenue chain book footwear Retail underlying and been high with our e-commerce our double nearly very strong. Betty our is have DTC recovery. and business remain wholesale to as XXXX. signs show sell-through and now Trends our brand disruption, The Despite brands to up store of our businesses performance distributor momentum portfolio Sperry remained outpaced beginning in a brands mid-teens. growth. provides continues

strength recovering in nicely XXXX, and markets. near our across America Finally, is international spring Latin many as we APAC demand to we and regions transition see term

that continue confidence All indicators offerings to great product supply give the despite headwinds XXXX. four volatile growth of the logistics persist into an The macro chain in the us environment XXXX. will a term, allow months closures future. of will these tactics short well of last factory revenue believe and portfolio to across strength negative the new is improved impact for unplanned the having go-to-market of fuel In on us the impact we

and our we the result, fiscal XX% approximately fiscal shorter-term impact, chain growth of compared we XXXX of basis. growth adjusting XXXX prior underlying on are to still outlook. XX% As growth Despite up nearly in $X.X billion, We the fourth the expect revenue approximately quarter. supply to expect a now deliver to year, XX% an

per key end and and earnings the strong of of earnings XXX% that we diluted expect to lower range. earnings year the range to the of per to cost $X.XX We share margin costs talent. over QX, of are will at adjusted brand now in growth now representing $X.XX expansion fourth expect year to related reported continue adjusted in share the businesses. QX future diluted $X.XX gross including diluted share levels the ongoing $X.XX. to per low There activity and higher enhancing, $X.XX, in full opportunities, expected marketing XXXX high inventory, $X.XX range Full market throughout freight growth of our DTC invest behind continued and pressures will quarter thanks our promotional logistics of continue performance be and to excess in We to

XXXX to we of line brand as great momentum sight year. good for have enthusiasm continued the have and of start pivot into We new the

mid-twenties XXXX. growth quarter to overall the headwinds first deliver will be play, continue we chain underlying certain still growth and supply of While mid-teens expect to known in in

double-digit Blake growth Betty we will underlying back I of remains Our next to to for delivering significantly Sweaty Blake? company. year that very closing and over high the adds some believe the growth confidence profile With in remarks. it hand

Mike. Thanks

Our healthy a testament performance investment. growth QX strong accelerated strategic focus in brand to the financial and company's and are

talent years Over e-commerce the for invested product and as we've which of we design. catalyst behind as important last and technology, and In innovation several consistently be well Betty digital capabilities, across made DTC an our growth will Sweaty brand. performance an QX acquisition important

robust, product brand. and Our is heat consumer is brand demand surging pipeline and ongoing our trends favour

are to The to The We team's as position double-digit marketplace we in and the call by this over like for ourselves of members the thanking and fast and the company. people continues making confident I'll a turn years. plan is find advantageous in couple I'd we expertise With work, and the close growth company this changing, last the XXXX. especially world relentless to today to global for be our credit team dynamic are and their environment. that, back our tremendous pivotal excelling efforts, Operator? operator. our now over year around in for a

ahead. [Operator Murphy Please Piper from Instructions] first Erinn Sandler. question The with go is

downtime, that is to about facilities spring more your a Great, talk after ability little the next that? impacting up period order thank with of the kind start then good now have It the in book ramping questions. of you first wanted third you now for like quarter Vietnam XXXX? XXXX. you. sounds couple bit Good of morning. year. a visibility through of And a with I have to produce I long Could

first respect the the question book. take I'll to Yes, order with

now it's book has recently, Our very really the strong for a been and accelerating. most order couple over year months, been last

I've are increases historically supply visibility at chain career, tried in facing. The as we're which headwinds helpful some the all across mitigate seen of brand portfolio. numbers we all good that have very We my the frankly high of is to never

Vietnam, three reopening. a So the more QX, would as been respect With bit ramp probably say on a future. for been in I QX very getting They're over closed year. and still of the building of on future months. well a capacity, we're orders also here chain reopening in additional near number going but getting to to up factories QX we've the QX book supply supply look we'll two were in out speed. be We've last is orders cost, be a in general, the of proactive the is the and taking some in order costs a certainly South half, ahead. The chain, focused we some

of going a centers. airfreight, have poke timelines, historical to number sister actions, bypassing we're a going but our mix. supply here to issues can directly the well to the a going good about XXXX. that fast a new existing compared factories, our with be macro to Supply bit taken slow as short impact So in been Certainly, factory that of and substantial industry capacity into is factories to to continue new chain We continue we've to industries -- well we've term continue the shipping actions many regard, taken. the as what couple and of control use and boats, dozen added in base again, whole very feel distribution are we the us chain and proactive of added midterm, of we've and the

So we stand feel very the we control. to we today good we've about where control what and actions can taken

follow I Great, you. just up possible. thank for Mike if had a

XX% it you Betty even to margins and that, back $XX that guess XX% year. talked mid range that XX%, Sweaty airfreight. quarter third and about margin, out versus I $XX in would like million sales the do I the excluded gross million if then gross benefit you had, profit, better if gross to the being But been the On have last

on more bit thinking, margin, we're to little a under thinking the costs, it Thanks with through? trying I'm is the not not something is understand much. gross just that I'm So about else that what going input so is that hood

sure. Yes,

benefit on Erinn. Betty the quarter and their in the basis of margin, mixed DTC, points Sweaty the because was strength think there about XXX I just benefit

for year's think above are I even that we still gross So last performance. margin after

margin gross going in our regard. ability So helps a side scarce very on been good, to on, overall, has strong, that obviously and inventory wholesale the kind maintain healthy very of

E-commerce in very on cost Our marketplace over so able as margins our to right the been manage it side, promotional performance to through. the up gross costs, then product expectations store the and et now And flow as relates well. overall cetera. We're we're have really good input we've well, result, getting that to not held a

we So into see quite add strong. forward get we Betty think grow of as Sweaty gross margin overall, still mix that as the certainly mix gross the but DTC and I that in margin to of benefit a expansion line the move overall, the richer. I health We're as continues is getting continuing in our business

Thank you all.

[Operator The next ahead. is question was go from Stifel. Duffy Instructions] Please Jim

you I morning. all Good guys are well? doing Thanks. hope

Good morning.

Hey Jim.

Thank distributor revenue you could that speak are QX then XXXX? curious brand to on and you. great. it more your more I'm I are us think here that timing specific chain you other about Can into you impact ask detailed mechanics to they there the that how out some and impacts? going more, play supply forward Merrell, I how you business. that help QX? looking know from And is to flagged Can get XXXX, between impacts impacted? would international brands be If through

the for been extremely such there some potentially growth maybe all of Yes, the impact I and Merrell most impacted. obviously, QX happened continuing Vietnam, of our year. that QX on in factory order was obviously, strong still say, There'll have book, next yes, be would closures Merrell's into brands Southern of

some the capacity brands, some also have most extent going levels other their several able was would of increase We that but inventory into of Saucony not be those brands shutdowns. one Merrell. severe to Vietnam of Saucony to there, had the

obviously, chain headwinds next but expect all despite of complete basis, provided first organic comes logistics teens year, supply we very, haven't half So well guidance including mid on still these strong we XX%, for an and Sweaty year, it very to and when over in the over, probably headwinds, growth of the Betty.

other diversifying our our sourcing very as just to to going tools whether we as Blake to company. are grow of directly add to think And I I as and serve us Blake just said, think it in now get the we continue base to retailers this the a going well have to shipping side what on be toolbox said, forward,

to hampering the only have us the obviously little on impact there obviously, flexibility the market the the too, deadline. side, getting good certainly of it's don't QX. into deliveries because that hit relates it about we you in on timing quarter if end distributors we more other our That's asked time, to point can bit. But, a even goods international a question, Jim, little as a

Blake referred that our business, of there. the some specific timing that certainly are Merrell of any to we don't shift. international risk So just impacting see but creating a headwinds more It's

want backlog a about to up, it, Got And talk just thanks. little order I the then follow a bit.

I'm expressing visibility and how ordering confidence your these retailers feel are cancellation guys see alone in you for are and are, who those you and orders about can far? so feels presumptions into speak how orders backdrop. solid from deliver strength Can confidence and because and just not rates curious just even and You about, the given then next are solid they'll everybody year. how like it

are Fanny the and also to solid, for think retailers some also goods. time. We'll our about, I competitors brands in right and some have has hungry see to few all of we're in exit goods decisions us. a I shelf retailers provided of for talking And right very space the the know, mean, they're some you hungry the for which weeks made them to talked playing get have as space we've the [ph], to but they're the

I confident will have we we feel that followed through the on. So think be orders extremely

order I year, minimal very far would cancellations. this Jim, say seen we've so

us confidence. additional that gives certainly So some

guys. you thank Okay,

Thanks, Jim.

with from Sole comes ahead. Jay question go UBS. Please next The

you want much. and Thank like Maybe, Great. just Mike, ask year sort the for $XX and airfreight, unusual it's million the airfreight I think, to so you of year-to-date, about, this expenses. I

how get in next year? from other like, need other ocean other areas away that next you to about to So much the rates whether rising whatever, it's to or rates what's presumably would think see think you need year, about, way. company go? container you In the same the where it the costs million, if use product really we $XX words goes in offset won't or airfreight shipping that As margins? cost impact But to inflation, do

where Yes, outlook specific again, a on see the we finalize higher our I or business. input have think on pressure more year, as we'll we insights for higher costs next inflationary

at so say about we're some contracts And, to done So costs on with side, rates I next delays global job very to our spot team to that. has we're in take incredibly our other us our ocean The of increases for But European of manage communicated increases the next mitigate well. will own seeing. American year businesses overall, to as use But on a visibility we're lucky tremendous rate airfreight across into year going of it. product side but there. businesses increases expecting specific have here already for we relative I low operations and the the won't business owned to continue market be that the today. enough and we have to May we're expect North the plan that to factories a to some and obviously, price as And way sourcing

so brands outlook right powers would based our margin that next enhance on have and manage to year pricing And now. our our margin the we expect for

to feel along, we have, a not price of that lot very increases on We we but need those. really reasonable resistance pass

in Betty may opportunities to see portfolio to it going opportunity would, Just brands brands. it talked acquisition got if going one Betty Can that Sweaty entire the I changed Sweaty seems this that of like wasn’t can for and Okay, revenue Sweaty or this there? helped sure, at the the million just revenue some if you kind Thank the it about little the how new of the across more Sweaty I mentioned has press grow what bit. the Betty, all? you're the Betty $XXX impact was year, it. do on to help commentary and that apparel then just based think business on expertise you guidance Maybe was think for for other the apply expertise you. and other year, have be, been presumably Betty And a shifted about apparel and ask give Merrell, creates maybe was I to Sweaty I

brands, the do that have think obviously certainly and of and able Saucony we in are with having board across utilize of Betty bring I I Yes. their how the that our Sweaty website, goes, with and more team Blake members they of time can market the We'll of product have which are I going we to were will a we the top our team with brands areas time chain more many priority. last us supply We now and and some been more start a haven't is start brands, really our spent in to with other spent certainly the our to of off expertise, bring I week. first, her footwear think mean, think on collection enthusiastic even about strength. capabilities as it before. our to in apparel and production about site with to able some these design, Merrell a them gamut to to be because way is and that apparel enhance Julia we to they're

what So that be. very excited about can

come fruition and planning at work started. has until really into the it the and to effort already won't it XXXX point, going Now, the this but

results encouraged Yes, this expecting performance originally anticipated. on Betty's year. slightly year the We're outlook side this better than we Jay, we're by Sweaty really

and be So to no we slightly all anything, at there it better. if declines expect

so you Thank Terrific. much.

next comes go from Vasilescu from BNP Paribas. question Exane ahead. The Please Laurent

prior Mike, a there and lost million quarters, about is really morning XQ? revenues? talked wanted love was about and I that. you the to that to calls, very additional shift my for ask $XX Or first Good color some on between a I'd you've get much taking I think the $XX that million into shift is questions. the in

out the be I the particular, Well a in it it mentioned, measured extent around it be on production have we in some obviously fairly of business the know can lot right? world guess customers as we be seen So logistics that and we then then tends is been way will related, cancellations can't, To side, haven't timing to our the quarter, going high extent Vietnam that future and that of forward also Vietnam Blake some issue. gave Laurent push the very in there's QX. capabilities of the was really with the from our a shift able retail doesn't these distributors and it be number, QX delays. strong maybe replaced, of into today. the To just first that level patient timing logistics that book reiterated a we're to Blake quarters. confidence rely coming on to But see there and any of based have chain the we in timing knowledge which into revenue very not we really revenue of we guidance major It's of kind supply order the today, – for

as despite a the we're the issues. production isn't year month-by-month. of result, and half seeing those we're capabilities looking And something that first each again, shift demand in on. strong of that We're at we're concept reality that growth next seeing the really month's focused really So still

context. up Vietnam. further next on be you say not very release, for is – would to great XQ. the that's as in up year, Any there driven but to but press what back on strong What you hear double or I'd it's South shift audience. color get really see I'd to to it as factories North? helpful well digit, you're like are No, follow hear some encouraged In any you some recent that seeing into see we're for love the what I that as the -- wanted were reopen, closures. by COVID that to just seeing is Vietnam, could percentage picking in the

while Southern -- South and we've Yes. I the seeing still was in untouched factories to it's through countries what north, north, factories. in the responses. not predict latest the react of -- the concentrated largely are and up mean, seen variant several we're right governments the Obviously, got to be well. very a hard The how to in wide now We've going seems COVID variety and Southern got situation. to

certainly, and factories are not things the from to get production ramp-up difficult to up going back But to better there's slide Right But now, that our than closures very fear it's to anyone in, reopen, back better it it's for going we're any and back than was Vietnam think a I think the getting was anticipating ramp factories. respect with getting But that some levels up when anticipated. original factories in into now anticipating challenges. predict. little be workers to that anticipated, – right again, not Southern right place bit hard I back some be now. going the to now, we're there right perspective, and workers really

hear, more you great just you. can then follow-up, maybe to lastly, as Blake a color. Mike, And give That's thank us some

key to you and how do fourth If the in assume, takes right down business and there's it the we Sweaty the Jay's on quarter, million math? implying Betty like right underlying the that that's digits. to Is be about question, the high way single $XX think looks And you're think it? about the case, the I Am puts brands? doing across if of

at I double think here the is double-digit our seeing underlying and QX. while we're it, -- guess, almost math nice still in business we're I'm I in -- looking growth No,

seeing our Blake Betty of we're Sweaty should ramp-up and still great Sperry our to larger and impact mentioned be the in incremental that. fundamentally, Some work on Saucony's, the Vietnam closures there, Merrell's taking brands, brands. growth the and but

for growth XX% about fourth quarter. basis an on the underlying So

Mike much Wonderful. very all Thank you for the color.

Thanks.

The Komp go next Please ahead. Jonathan from comes question Baird. from

Can just follow take this you revenue hit quarter. saw business fourth the you. dollars, for follow-up you're last when Sweaty you thank lower implying out fourth the in Mike, understand. sequentially I underlying of And Hi year, know point Betty. the Yes. especially want years, and on I to, a high the up couple I quarter?

operating you was I maybe potentially understand previously non-GAAP clarify what -- And better? the quarter XX% versus on a achievable maybe just margin now? you you know assumption just could little delta basis. I can And expect thought So a the then fourth

Yes.

potential a I'll that through as kind year, brands. our crystallize The it's we've the the been as mean we've first. it. we've cycling take been I accelerate of question quarter investing think John lot growth -- every I last in and seen

capabilities our business. other in the parts and brands our in e-com invested we've Now in of

shipments. stays here the taking we we're So more meaningful these on and where investment thesis delayed have a QX in quarter of constant, one some pretty hit

you're slowdown a on it's deleverage to the see first really what bit supply a for three of I But the little against as we've de-levered side. QX fundamentally, going Merrell earnings normally relates in chain. the quarters in So think it to

EPS QX, QX continue for embedded going we're still lower flow-through revenue an we've in earnings, to on to incremental investments outlook and sure the that as made So the our well. impact and some has move that then forward of with are

So profile also the now business. with included a but business margins, business different right, for -- gross Sweaty higher higher a the is of that the a little business, mix bit Betty SG&A as DXC

bigger of organic or also and continuing underlying business share take a mix. to is the Our growing DXC

the not I the outlook a remain side in And just taking bit confident we for the on unfortunately, so going of very have of with the operating we're a as think and profile overall, we're well. especially increases feel little year. growth we that next fundamentally, but going bump of of price a QX, that margin little in have And side actions year, the bit But equation, to confident, little bit of in business, all the confident, the that next into delivery. road. the continuing we're kind But planning leverage really the for on there. to remain around we're really margin with the a P&L We shifts

Okay.

sort like shouldn't wanted to early or that it be it's to anchoring tell, maybe of clarify. XX% from operating permanently lower we but margin sounds just So

is indicator at No, think don't all. that that I QX an of

that and I of the at that kind will we've think growth with next level. be the we think you're year, business overall, to the here right that foreshadowed of health comfortable

see that detail share the more sort of then opportunity? of just brand, mix of there strength broader the the the well just just details and of brand the on size multiyear if enhancements there would the size Is the years. could, Saucony, the given last broader of I how of even And the sort one sort growth really you that of up any two-year brand Just to in question, frame couple profile and helpful. on you're seeing Okay. more you as can as to be that today

we to not which Yes. Saucony. sure our first be going Merrell our – brand, I of billion-dollar mean we're or brands is

the product Saucony tailwinds for XX has -- and through A be what the team tremendous of their involved us, months. of of race last obviously for to we've lot it's the lived to some right all them and good result management offerings a it's them, go So now. in.

bullish very the we're So on Saucony opportunity.

uppers remember China Saucony Sweaty well. sitting a of and older the world's in and styles but especially also apparel current markets. business, is lifestyle have three And fashion colors that venture success which lifestyle Betty, there growing. with joint extremely Our top Italy, going an a based There's more for done on to some It's that business in we Saucony. you of is materials, opportunity, a tremendous in have Originals is one

there. And Saucony opportunity so great there's a for

the the success here every marathon -- a it's to number States. So is significant on that's old, The or collection, in United China is brand. virtually brand of run increase continues with approaching in years participants Endorphin the the either two or race now which

a on pace. obviously very and brand it's highly the bullish today accelerated at growing So, we're

might year this growth, the tracking you to in just to the size with revenue? Is towards say what it year finish possible be again,

want quote get is a going but double-digits strong up don't be this year. extremely I to Saucony number, an Saucony think a I on exact mean to I --

Okay, understood. Thanks again.

Thanks.

from Please from The Sam Poser Williams ahead. go Trading. next question comes

putting Hi, Are good morning. presentation I morning? investor this guys housekeeping. have three you questions. just a One, out

go later this will Sam. afternoon, Yes. on That

Okay. Thanks, all right.

we So go. here

So says read I'm I want to it. Laurent's question. -- going just follow to It on up

the closings that are now the in reopening? the seeing now? speaking Or the recent you and We fourth the past is, that ability seeing closings is quarter question that reopen, are will impact are more adjusted recent demand happened incrementally strong we're the the our in that closing, of, to but factories outlook closures and see The encouraged factories here to service you're fully accordingly. closings

that in up. Yes, would few in ramping started now and early end October. the July, reopened, Those factories basically they're happened a what Sam, and those -- past, of the July, maybe are August into closing but continues be the and through September

the airfreight And report in as now adjusted the implied your continued a charge And you $XX million like I the why if this costs come. regarding airfreight is there. then the as you're gross it. quarter? it's Okay. it a -- why that? how And out Thanks. revenue mean the margin? in have assumption the One, it's margin. I not you take to when revenue as gross It's understand you and margin non-GAAP fourth against there you out it to non-GAAP only in why the all cost take in what of were the non-GAAP understand take take I lost doing -- adjusted margin didn't charge, that don't company

which severity we we well But we treatment. would as change as to handle we year we were QX treatment based our And disruption more this exceptional how changed, airfreight incremental well the that in obviously a year been to so had supply the the or would in We'd and Obviously, costs future started and the Sam, that relevant going didn't this it's chain fact length with QX, treatment have or -- the expect million issues. about $XX level airfreight seeing and like. these what not things similar anticipate the felt the about like look and same is give as our similar historical we're this be that. of We take, approach, excluding of from approach, on documented.

of in and it think what treating I the we're it's impact is. clear how terms

we increases, year airfreight, but the for in finish position those some of just costs the to other talked the QX. And we're price same a we'll for that about as into earlier. in with treatment so, we cycle And next year, for not

time and And period normalized, now adjustment won't we non-GAAP that going freight costs treat as other a and that have of we'll are elevated on so and forward. reflect more extended an we'll

how we be So back there's add in I I assume to just airfreight -- need everything... mean, first given the going to quarter then

guidance provide we'll Our we when we've manage guidance when see you'll able – provide all And of we stuff. that... next to year, it been that how reflect the

probably because in be you QX? airfreight providing I $X going to you're put next year. mean, million guidance back especially first in then the quarter, non-GAAP have had going But that's in to you're to an prove incremental the over

do we'll I have going think our have the we'll this apples-to-apples, didn't adjusted we have be increases is -- to that again, a to and to in price year. these guidance opportunity chance

you have another do So question?

very luck the Thank No. much. with holiday you Good season.

Sam. Thanks,

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

Good morning everyone.

Is believe, the Then on you track? Thank in guide we're year? $XXX are seeing of taking period, hear a then the unfold Or through price after just Are for by the have earlier this we division? increases that million, still you vary it As one follow-up And product. are that. how going price I And time companies how e-commerce. on increases? you quick that year follow-up taking on on that I does

the e-commerce. start Yes. with mean I'll I

If our the you obviously, that wasn't we include Sweaty but exceed outlook. in initial million, Betty, will $XXX

I how think short it's out into of back well there mean, So no, I pretty documented we'll stores. been that. fall shifts the

with just I those calendar. havoc of played just think shifted hit was course, it quantity biggest of having the to numbers. marketing not And headwind the the way the for inventory us, the inventory, completely

the So work were team really numbers have almost what The ago. double two done. still years the we has proud of they are

we better customers DTC-focused And much now expose brands. clearly and him. talent we're he's become to do them We've at and as support to of e-commerce are and We've I we to focused Matt find collect brought as become business. the what Blonder we Digital, managing Head starting a shifted an the have our as new think funnel in data So added with to DTC understand to the great talent company.

of be in So the even to short that for number future. us I positives likely most are want though path set that have there to fall on lot we the we'll of think a up

I think is as brand, at we look inventory where – the as reflective it challenged. it by very look levels we are of

in that largely it's reinforces, minds, headwind. inventory-based further that an So our

supply on the documented few Mike as we're the months have industries we have think across going quite all now XXXX we the pricing, what and chain I increases Blake for a to had into are that and cost visibility well be challenges said, into and – inflation.

brand, we so there. strategically to And we it been from I there -- where in to We with able as pushback. us to XXXX, have the product will our merchants, has beginning some think were style, spring. by have price by retailers, did tell accordingly you for market very allows been in elasticity going zero

think going And reduction the as gross further actually some in out margin forward. enthusiasm enhanced opportunity get I talked to there's based you Dana, of promotions there on course, the increased margin have the and retails. has for profile I the about gross

offered, that think well gotten positioned be we little always we're feel but in prices a competition doing I'll we've to retail position curious has value pricing. some strategic bit provide but with a So of see increased it the we still to good there. also I the visibility, be how we'll the goods. mean yet

you then, it. year. is next And that bit launching had about little to offering. be going a Tell Got the activewear Brendan, us mentioned Sperry

anything Betty Sweaty learn you you for how inform from you Or that... to If Sperry? do see

Blake on water. it. just the something footwear Not about in, activewear team new apparel, We're ago the pushed excited. really year is around coming really they jumped This a with

lifestyle really have the the wind that activities to into wear water, surfing, we around cool water so great translates boating, authentic on just surfing, also footwear. And product

how time. with and to our try as shorten really it's we accomplish So how it just quickly priced, excited team was the looks able only how not this lead to but

shoe that month for see the to market this for later you So come guys able you're anxious to show. if to

Thank you.

& Marotta from King The next go ahead. Steve Associates. comes Please from CL question

Brendan, can, Blake, what wanted morning, I one timely ask to versus domestically you here draw see in, of and between that are do Mike Good the deliver in say, how Brett. Vietnam of distinctions acute, I'm port And the analysis. Thanks. how working Can exclude just And ability course, to question. how get you trucking more the out issues than and half to first domestically next you And is much acute are they internationally? at trying internationally? year?

have Vancouver congestion shortages that look about. U.S. are We XXXX some United we unusually other the throughout more it's ports, estimates high has of mean, take that Certainly, our we rail now. little and I to going question. a very that, States, it's time in It's the a accurately of trucks most seeing congestion talked been the when right into in of and have in the regard here Long internationally. built to and we We're in at yards. the Yes. less up see It's you that that good just bit to continuing even the truckers forecast Beach think unclog, here and in not and ports, it's some

country for so supply in business, a more most and be there different, every markets. to our congestion is of issue seems timing but international can it's to capacity seems key our less chain of And issue be pure a when international And obviously, of issue there a they get stuff.

the those is the analysis are many In guidance. internationally future the U.S. also on at of ease being And comparative into your I'm is so built and to a forecast? into that are basis delivered other pairs pairs sold baked ease, assuming which also words, your

customers, this best in but and focused distributors on consumers is unusual mean, That's that of our all obviously, correct. serving we environment, we're as I can correct.

you. Thank helpful. Super,

is question from Susan Riley. from Anderson B. Please go The ahead. next

sounds sound think for that's good for the China question. Hi, it others taking well Thanks talk the about was guys? some you that case you. there for Asia, and then like Asia. going have morning. if like my ask to It I could I also doesn't you Maybe, mentioned China throughout softening, wanted about is but performance

progress say countries at look our in great around China, forward. for as many step moment now. I is success China. would We've that But brand I opportunity of a when got growth having and is APAC Greater the Saucony we say at underpenetrated when APAC. of with businesses lot Yes, look look we Greater major would at some just in We're the a back we're happy us there very right in Asia. you company,

it And top we view brands. Merrell of so for our one portfolio, really of as opportunities across and several especially internally growth but Saucony, our here, the other

you shoe well? then are sneaker that Sperry up boots just in I boat if you're all -- of that confidence? the that Is which the sounds what just or it that Great. could the or talk casual curious, or above And kind the a I'm shoe follow driving it really And of products boat Maybe into we're brand? the selling duck heading is on like trend. performance. confident you're seeing wanted about to It

it the forward. When to market mean, market, share you're were the our boat Well, we're other on there reports seeing I few months I seeing brands. and a for you specific mean, them just ago, boat front was in just the think with shop windows London AO people shoes, merchandise I seeing and of Yes. shoes taking. it I classic as We're we're

we taking boat I hurt. So advantage of there doesn't of also think I the know Sperry that. a James Sperry, at is shoe seeing movie trend clear in it's Bond is think the I forefront going. And mentioned that

position there start we there better as like weather real well. the inventory we're the cold pickup a we've seen in we've boots, the and hit, franchises other to think have, seen I as

not the coming are So the just enthusiasm is Sperry Blake my now. way, is part but on our way of evolved, breaking product which and trends the market that just has to

it's end So we as you seeing benefit guys of come have of retailers of and starting I really at to market And then in end of come show showcased the just it said, month, coming preview able the that we consumer in to of that's XXXX, exciting. to for now. but can those it, and having you a advance the to the shoe you what's to give are our

to in response think but most The category. share United strong the would little But to boat the a we're years. that and of very seeing took new more in encouragingly, new in total strong the recent market positive product category about in seeing a many basis boat reaction the for Obviously, carried the and reaction some QX growth driver in colors, points quarter we're -- a color, we've XXX a materials just I there. States shoe I was shoe core grew product. say Sperry

positive. sounds that really with Great, luck Thanks so holiday. much. Good

Thanks Susan.

Thank you.

question-and-answer Alex turn closing This for to I any remarks. conference back the to session. over Wiseman would concludes the like

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

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This concludes call. today's conference

your and disconnect have Thank a may You lines. participating, you pleasant day. for