Wolverine Worldwide revenue decreases in Q1

Michigan-based Wolverine Worldwide reported financial results

for the first quarter ended March 24, 2012. Revenue for the quarter was $322.8 million, a decrease of 2.4% compared to the prior year's first quarter when revenue grew approximately 16%.

Foreign exchange negatively impacted revenue by $2.2 million. In addition to the comparison to strong growth in the prior year, current year revenue growth was tempered by macroeconomic and financial uncertainty in Europe, which has contributed to a soft retail environment in that important market. Diluted earnings per share in the first quarter were $0.64, a decrease of 11.1% vs. the prior year's earnings per share of $0.72. The decrease in revenue, a modest decline in gross margin and moderate SG&A deleverage were partially offset by a significantly lower effective tax rate.

The gross margin in the quarter decreased 60 basis points to 41% compared to prior-year gross margin of 41.6%. Selling price increases and gains from foreign exchange contracts partially offset product costs increases, higher closeout sales and an unfavorable sales mix shift. Operating expenses in the quarter of $95.2 million were lower than planned, at 29.5% of revenue, compared to 26.7% of revenue in the prior year. Overall spending discipline was offset by increased pension expense and non-recurring employee separation costs, the benefit of which will occur over the balance of the fiscal year.

The quarter benefitted from a favorable ruling related to long-term global tax planning strategies that lowered tax expense by $5.6 million, or $0.12 per share. The company repurchased approximately 65,000 of its own shares in the quarter at an average price of $37.09, or an aggregate cost of $2.4 million. The company continues to have an exceptionally strong balance sheet, with $123.3 million of cash and cash equivalents at the end of the first quarter. While the branded operating groups had revenue declines during the quarter, the other business units (consisting of Wolverine Retail and Wolverine Leathers) delivered revenue growth of 4.8%, driven by solid comp store sales gains, new store locations and continued strong e-commerce growth.

The company is raising its full-year earnings per share guidance to a range of $2.70 to $2.80, representing growth of 8.9% to 12.9%, and revising its full-year revenue guidance to a range of $1.46 billion to $1.50 billion, representing full-year growth of 3.6% to 6.5%. This revised full-year guidance assumes continuing economic challenges in Europe, slight full-year gross margin expansion, modest full-year SG&A deleverage driven primarily by $10.5 million of higher non-cash pension expense, and a full-year effective tax rate of approximately 25%.

Wolverine World Wide, Inc. is a marketer of branded casual, active lifestyle, work, outdoor sport and uniform footwear and apparel. The company's portfolio of highly recognized brands includes Bates, Chaco, Cushe, Hush Puppies, HYTEST, Merrell, Sebago, Soft Style and Wolverine. The company also is the footwear licensee of popular brands including CAT, Harley-Davidson and Patagonia. The company's products are carried by leading retailers in the U.S. and globally in more than 190 countries and territories.