Earnings call transcript: Wolverine Q2 2025 beats EPS forecast, stock surges

Wolverine World Wide Inc. delivered a strong performance in its second-quarter 2025 earnings, surpassing both earnings per share (EPS) and revenue forecasts. The company reported an EPS of $0.35, significantly beating the forecasted $0.23, marking a 52.17% positive surprise. Revenue rose to $474 million, exceeding expectations of $444 million. The market reacted positively, with the stock price climbing 10.64% in pre-market trading, reaching $24.65. According to InvestingPro data, four analysts have recently revised their earnings expectations upward for the upcoming period, suggesting continued momentum. The company maintains an impressive 38-year track record of consistent dividend payments, demonstrating long-term financial stability.

Key Takeaways

• Wolverine’s Q2 EPS of $0.35 surpassed expectations by 52.17%.
• Revenue grew 11.6% year-over-year, reaching $474 million.
• The stock surged 10.64% in pre-market trading following the earnings announcement.
• Saucony and Merrell brands showed significant growth, contributing to overall performance.
• The company reduced its net debt by 15%, improving financial stability.

Company Performance

Wolverine World Wide Inc. demonstrated robust performance in the second quarter of 2025, with revenue increasing by 11.6% compared to the previous year. The company’s focus on innovation and strategic product launches in its Saucony and Merrell brands played a critical role in driving growth. The active footwear market’s stabilization and a rebound in the hiking category further supported Wolverine’s positive results.

Financial Highlights

• Revenue: $474 million, up 11.6% year-over-year.
• Earnings per share: $0.35, up from $0.15 in the previous year.
• Gross margin improved by 410 basis points to 47.2%.
• Net debt reduced by 15% to $568 million.
• Bank-defined leverage decreased from 3.9x to 2.9x.

Earnings vs. Forecast

Wolverine’s actual EPS of $0.35 exceeded the forecast of $0.23, resulting in a 52.17% surprise. Revenue also surpassed expectations, coming in at $474 million against the forecast of $444 million. This strong performance highlights the company’s effective strategies and execution in the competitive footwear market.

Market Reaction

Following the earnings announcement, Wolverine’s stock surged 10.64% in pre-market trading, reaching $24.65. This upward movement reflects investor confidence in the company’s ability to deliver strong results and capitalize on growth opportunities. The stock’s performance is notable, considering its 52-week range of $9.58 to $27.05, indicating a positive market sentiment. With a beta of 1.76, investors should note the stock’s relatively high volatility compared to the market. Based on InvestingPro’s Fair Value analysis, the stock currently appears overvalued, though analyst price targets range from $17 to $30, suggesting diverse market opinions. For a deeper understanding of valuation trends, visit our Most Overvalued Stocks list.

Outlook & Guidance

Looking ahead, Wolverine expects third-quarter revenue to range between $450 million and $460 million. The company anticipates mid-single-digit growth in its active group, despite an estimated $20 million tariff impact for fiscal 2025. Wolverine remains focused on sustainable and profitable growth, with continued emphasis on brand modernization and innovation.

Executive Commentary

CEO Chris Hufnagel emphasized the company’s commitment to becoming "great consumer-obsessed brand builders," reflecting Wolverine’s strategic focus on customer-centric growth. He noted that the company is in the "early innings of Saucony," highlighting the brand’s potential for further expansion. Hufnagel also praised the company’s teams for embracing challenges and striving for continuous improvement.

Risks and Challenges

• Tariff impacts: Estimated at $20 million for fiscal 2025, affecting cost structures.
• Supply chain disruptions: Potential delays or increased costs could impact operations.
• Market saturation: Increasing competition in the footwear industry may pressure margins.
• Macroeconomic pressures: Economic downturns could affect consumer spending.
• Currency fluctuations: Changes in exchange rates may impact international revenue.

Q&A

During the earnings call, analysts inquired about Wolverine’s strategies for mitigating tariff impacts and the company’s brand-specific growth initiatives. Executives highlighted their focus on marketing and product innovation as key drivers for future growth, addressing concerns and providing insights into the company’s strategic direction.

Full transcript - Wolverine World Wide Inc (WWW) Q2 2025:

Conference Operator: Greetings and welcome to the Wolverine Worldwide Second Quarter Fiscal twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Jared Filipone, Head of Investor Relations.

You may begin.

Jared Filipone, Head of Investor Relations, Wolverine Worldwide: Good morning, and welcome to our second quarter fiscal twenty twenty five conference call. On the call today are Chris Hufnagel, President and Chief Executive Officer and Terren Miller, Chief Financial Officer. Earlier this morning, we issued a press release announcing our financial results for the 2025 and guidance for the 2025. The press release is available on many news sites and can be viewed on our corporate website at wolverineworldwide.com. This morning’s press release and comments made during today’s earnings call include non GAAP financial measures.

These non GAAP financial measures, including references to the ongoing business, were reconciled to the most comparable GAAP financial measures in attached tables within the body of the release or on our Investor Relations page on our website, wolverineworldwide.com. I’d also like to remind you that statements describing the company’s expectations, plans, predictions and projections, such as those regarding the company’s outlook for the 2025, growth opportunities and trends expected to affect the company’s future performance made during today’s conference call are forward looking statements under U. S. Securities laws. As a result, we must caution you that there are a number of factors that could cause actual results to differ materially from those described in the forward looking statements.

These important risk factors are identified in the company’s SEC filings and in our press releases. With that, I will now turn the call over to Christoph Nickel.

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Thanks, Jared, and welcome again to Wolverine Worldwide. It’s great to have you on the team. And good morning, everyone. Thanks for joining us on today’s call. In the second quarter, we exceeded our expectations on nearly every financial measure, headlined by double digit revenue growth with increases in every region and strong growth from our two biggest brands.

Saucony was up 42% compared to last year, achieving record revenue for Q2 and Merrell grew 11%. The Workgroup returned to growth, hosting a 2% revenue gain, while Sweaty Betty improved sequentially in the quarter, reflecting important progress in these two divisions. Our teams are intently focused on driving growth, building stronger brands, better managing the marketplace and fueling consumer demand and doing so in a healthy profitable way. In the quarter, we delivered more than 400 basis points of gross margin expansion versus the prior year, once again achieving a quarterly record. Our high quality growth enabled us to more than double earnings at the bottom line compared to last year, a good quarter by most measures.

A new brand building playbook has proven effective and we’ve been able to sequentially improve our year over year revenue trends for five consecutive quarters now, this past quarter posting our best year over year comparison in nearly three years. Our teams have done a tremendous job of embracing a new growth focused mindset, and I’m grateful for their drive and resilience as we continue to build the new Wolverine worldwide. Looking ahead, I’m pleased we’ve built momentum in the business and that the company is on much firmer financial footing. We believe we’re well positioned to navigate today’s volatile macro environment and that the actions we’ve taken to date and can take in the future will enable us to largely mitigate the impact of tariffs going forward. A new reality, however, is uncertainty in the global marketplace.

Due to the ever shifting global trade policies coupled with a downstream effect on the economy and consumers. This reality informs both our outlook and our actions as we move forward into the back half of the year. With that, I’d like to share the progress our brands continue to make around the world before handing the call over to Terren for more detail on the quarter and our outlook. Beginning with Saucony. Saucony delivered very strong broad based revenue growth of 42% coupled with five sixty basis points of gross margin expansion in the quarter.

The brand grew in every region and channel while delivering record second quarter revenue. I believe 2025 will be a pivotal year for the brand, the result of an ambitious strategic reset in 2023 and 2024 and our new growth agenda. We position the brand at the intersection of authentic performance and lifestyle running, given the unique foothold in the competitive landscape opening up a significant addressable market opportunity for the brand. Over the last several months, Saucony executed with excellence on many fronts. It’s Run as One campaign launched earlier this year, continued to position and build the brand with its target consumer.

Brands’ interest is up meaningfully around the world compared to last year and we’re seeing stronger affinity for the brand, specifically among runners and younger consumers. Saucony also continued to advance its key city strategy. Just a few weeks ago, following the recent opening of its store in Harajuku, Tokyo, the brand opened its Pioneer store in London’s Covent Garden, one of the premier shopping destinations in the world. Importantly, the store serves as a valuable hub for brand activations in London. Last month, building on its success in 2024, Saucony was again the title sponsor for the London ten ks, an amazing event with over 17,000 runners this year.

The brand took over the city for the week with an impactful slate of great marketing and brand activations. I was fortunate to run-in the event and couldn’t have been more impressed by the brand’s overwhelming presence around the city and how far the brand has come in such a short time. Saucony will expand its event sponsorship in London with a shortage 10 ks and then to France with the Eiffel Tower 10 ks later this year. In Paris, the brand garnered extensive interest a few weeks ago at Paris Fashion Week, highlighting its disruptive approach to collaborations and taking appointments with a rapidly growing number of highly influential retail partners. I’m also pleased to announce we just signed a lease to open the brand’s third Pioneer store in Paris next year.

Saucony’s activations and compelling retail execution are engaging consumers directly and providing a vision inspiration for our partners around the world. Building on our efforts in Tokyo, for example, we’ve already started opening a host of new stores with our best in class partners in Asia Pacific with plans to open more in the second half of this year. Saucony continued to fuel product innovation as well with its clinical Endorphin franchise. The brand followed up the introduction of the award winning Endorphin Elite two Super Shoe in March with the new Endorphin Speed five, combining a nylon plate with Power Run PB Foam for a fast lightweight design at less than $200 a compelling price point for so much innovation. The brand also continued to push forward its core four franchises squarely into the broader casual run opportunity with the launch of the Triumph 23, its premium neutral runner engineered to deliver plush comfort through innovative geometry and cushioning.

Together, the core four franchises including the Ride, Guide, Triumph and Hurricane grew at a very strong double digit pace at U. S. Retail in the quarter. On the lifestyle side, Saucon continues to leverage its deep product archive to deliver authentic, trend right styles to the marketplace. The brand’s expansion of distribution within lifestyle, athletic specialties channel continues to progress as a result of positive sales performance, adding roughly 400 doors for the back half of this year.

This will raise the brand’s store count in this channel to roughly 1,300 doors. While the opportunity is meaningful, we continue to take a methodical approach to thoughtfully expanding distribution. Saucony has made a remarkable amount of progress, but I maintain that it’s poised to do more. The brand possesses a unique and compelling combination of heritage and authenticity, coupled with best in class innovation and emerging cultural relevance. I believe that Saucony’s vision to do something very special.

Moving to Merrell, our biggest brand, which came to build momentum and delivered another strong performance. The brand grew 11% in the second quarter, its fourth consecutive quarter of growth with increases in most regions and channels and delivered nearly 600 basis points of gross margin expansion versus the prior year. Merrell remains focused on modernizing the trail. The brand’s faster, lighter, more athletic product offerings continue to fuel momentum and drive significant share gains in the hike category. Moab feed two revenue nearly quadrupled year over year at U.

S. Retail, making it the brand’s second largest hike franchise behind the industry leading Moab three, which grew at high single digits in the quarter. The award winning Speedark Mattis, built on the brand’s new visually disruptive Speedark platform for uniquely comfortable ride with exceptional energy return, is now the number four hike franchise of merrell.com after just a few months of selling. Merrell has built good momentum, outpacing the market for 10 of the last 11 quarters in The U. S.

Hike category, which had been under pressure for the better part of two years. But encouragingly, we’ve now begun to see a broader hype trend improve a bit. We believe this is another positive indicator for Merrell, the market leader moving forward. On the trail running side, the Agility Peak five franchise is up double digits at U. S.

Retail and the brand launched the new ProMorph, an all terrain hybrid runner designed with premium Flow Plus foam for superior cushioning. Merrell’s continued progress in modernizing the trail helped strengthen its ability to advance in lifestyle as well. Performance products like the Moab Speed two and Agility Peak five in lifestyle colorations and materials continue to gain traction at certain lifestyle retailers reaching a younger consumer for the brand. In addition, revenue from progressive casual styles like our wrap franchise and the iconic Jumbo Moc grew significantly in the second quarter as well. In The U.

S, Merrell still in the early stages of evolving its distribution has rationalized its points of distribution over the last couple of years. The brand is focused on developing more impactful go to market plans with its key strategic outdoor specialty and sporting goods partners and is establishing a footprint in the healthier lifestyle market. Globally, the brand saw accelerated growth in Asia Pacific in the quarter, thanks in part to its key city strategy, which has initially focused on Tokyo with its partner in Japan. Retail store concepts in Harajuku and Shibuya have continued to perform well and together with compelling marketing and storytelling in the market have effectively helped elevate the brand in one of the most influential cities in the world. Merrell is also now beginning to activate Paris as part of its key city strategy with focused campaign investment.

And in Q2, the brand built on its market share lead in outdoor footwear in France and delivered strong growth in the broader EMEA region. Moving on to Sweaty Betty and Wolverine. The two brands were focused on getting on track. Encouragingly, both brands saw sequential improvement in the second quarter. I’ll start with Sweaty Betty.

As we previously shared, our priority with Sweaty Betty has been to establish a healthy foundation from which to grow. We continue to make steady progress on reestablishing the brand’s premium positioning. In Q2, we again increased the brand’s full price mix and expanded gross margin by more than 500 basis points. Sweaty Betty’s female focused inclusive positioning and storytelling has been effective and our recent Wear the Damn Shorts campaign reinforced the brand’s original rebellious distinctive voice. Brand awareness is up, consumer sentiment is dramatically higher and perception as an inner hot brand is trending positively.

And while consumers already ranked Sweaty Betty at the top of the competitive landscape for product quality, we’re enhancing future product offerings with elevated design and more style innovation, including introducing more newness for the important holiday season this year. Looking ahead with a stronger foundation in place, we’re taking action to drive profitable growth in Sweaty Betty with a multipronged strategy. First, the brand’s direct to consumer business in U. K. Will be the number one priority.

Digitally, plan to deliver a reinvigorated flow of innovative premium products with a keen focus on our Madewell Mover consumer target and deliver enhanced digital experiences for her, including the brand’s recently launched app, which has been among the top downloaded shopping apps in The UK. We’re also taking action to further improve the productivity and profitability of our UK stores, along with a full fleet review of real estate to ensure we’re in the right doors driving strong returns. Second, we’re moving to a more disciplined full price DTC business online in The U. S. Sweaty became too promotional too often which only served to erode the brand’s equity.

Third, we plan to expand the brand into new or nascent international markets, including leveraging Wolverine worldwide’s global network of best in class distributor partners as we began to do in China last year. Finally, we’re integrating the brand’s tools and processes into the Wolverine worldwide ecosystem. We anticipate this will be largely complete later this month. This will be a critical enabler of our strategy and part of our broader technology modernization effort across the portfolio. In addition to these growth strategies for Sweaty Betty, we’re exploring options to better leverage this team’s DTC and broader apparel expertise across the portfolio to drive improved performance and growth in our footwear brands.

One example is the brand’s use of AI to better manage pricing and maximize margins, a solution Sweaty Betty piloted, and we expect to have a wider benefit across the portfolio. Today, Sweaty Betty stands on better footing to scale over time, and I feel good about the recent work we’ve done to hone its strategy. I remain excited about the potential and opportunity Sweaty Betty provides for Wolverine worldwide in the future. And concluding with Wolverine, in the second quarter, the brand’s top line revenue trend improved and gross margin expanded over 400 basis points. We expect the brand to now be on a path of quarterly sequential improvement as new product and marketing initiatives begin to impact performance and the effects of comping elevated discounting in the prior year begin to dissipate.

As we’ve discussed, the brand has been focused on strengthening its Western and premium price collections with products like the Rancher Pro. Over the past year, it has gained well over 100 basis points of market share in The U. S. At prices above $125 To further this effort, in June, the brand launched its new USA built workshop wedge, featuring premium, full grain leather, a Goodyear welt construction and priced at $250 It’s sold out on wolverine.com in less than a day. Just yesterday, on the innovation front, the brand announced its new null System, the pinnacle expression of its performance comfort technology, delivering two times the impact absorption and energy return of the leading work boots in the category, with price points between $175 and $250 As the market leader in The U.

S. Work boots category, the brand continues to elevate product quality and innovation while simultaneously telling better and more compelling stories and investing in the ground game with its wholesale partners. While we’ve made good progress for both Sweaty Betty and Wolverine in the last few months, there’s more work to do to get them growing and contributing as we’d expect. With that, I’d now like to hand the call over to Terren Miller to take you through our second quarter results and how we’re viewing 2025 in greater detail. Terren?

Terren Miller, Chief Financial Officer, Wolverine Worldwide: Thank you, Chris, and welcome everyone. Results in the second quarter exceeded our expectations for both revenue and profitability, reflecting the momentum we built in the business led by our two largest brands, Merrell and Saucony. Our inflection to growth in the 2024, which has accelerated through the 2025 underscores that our growth playbook is working in a dynamic market environment. For today’s call, I will start with a review of our second quarter results, provide an update on the financial impact from tariffs and our mitigation initiatives, and close with our third quarter twenty twenty five outlook. Starting with our results for the second quarter.

Revenue was $474,000,000 which exceeded the high end of our outlook of $450,000,000 The over delivery was driven by stronger than expected performance in both the active and workgroups, highlighting underlying momentum and solid execution by our teams. The quarter also benefited from a timing shift between the second and third quarters and approximately $4,000,000 of favorable foreign currency relative to guidance. As it relates to the timing shift, approximately $10,000,000 of wholesale orders shipped in the second quarter that were originally planned for the third quarter. The shift primarily relates to retailers accelerating orders in advance of planned price increases. Active group orders accounted for approximately $8,000,000 of earlier shipments, split evenly between Saucony and Merrell, and the work group orders made up the remaining $2,000,000 shift.

Ongoing revenue increased 11.6% compared to the prior year. And on a constant currency basis, revenue grew 10.4% as favorable foreign currency provided a $5,000,000 benefit compared to the prior year. Revenue growth compared to the prior year was driven by performance in the active group. Saucony and Merrell continued to deliver strong results reinforcing their momentum, while Sweaty Betty and the work group showed sequential improvement relative to the first quarter. From a channel perspective, global wholesale revenue was the primary driver of our performance with international growth slightly outpacing The U.

S. Direct to consumer declined less than 2% reflecting sequential improvement relative to the first quarter. As a reminder, the 2024 included $2,000,000 of revenue that did not repeat this year related to the Saucony and Merrell kids business model change. Active Group revenue increased 16% compared to the prior year and was ahead of our outlook for high single digit growth. The Active Group’s better than expected performance in the quarter was led by Saucony and Merrell.

Saucony increased revenue by 42% in the quarter and saw broad based growth across regions and channels led by wholesale performance in both The United States and internationally, with direct to consumer up low double digits. Saucony delivered strong results in both performance run and in lifestyle, reinforcing the continued expansion of its lifestyle distribution footprint with leading retailers. Merrell increased revenue 11% in the quarter driven by strong wholesale performance. This growth was supported by steady retail sell through which led to strong replenishment orders. Merrell also benefited from the previously mentioned $4,000,000 timing shift from the third quarter to the second quarter.

Merrill continued to take share as the leader in the height category through its focus on modernizing the trail supported by the continued success in core franchises including Moab three and Moab Speed two. Sweaty Betty revenue declined 6% in the quarter, which was better than our expectations. While there is still more work to do to improve the brand’s performance, this was a sequential improvement compared to the first quarter and reflects early progress in our efforts to reestablish Sweaty Betty’s premium positioning through product and marketing. Gross margin improved significantly, up over 500 basis points year over year driven by a better mix of full price sales. The Workgroup revenue grew 2% compared to the prior year.

Adjusting for the timing shift of wholesale orders into the second quarter from the third quarter, Workgroup revenue would have been approximately flat year over year ahead of our guidance of a low single digit decline and a sequential improvement compared to the first quarter. Gross margin for the company was 47.2% in the second quarter, an increase of four ten basis points compared to last year and was in line with our expectations. The year over year improvement reflects our healthier inventory position, a higher mix of full price sales and the continued benefits of product cost savings across almost the entire portfolio. The impact from incremental tariffs on U. S.

Imports in the second quarter was minimal. Adjusted operating margin in the second quarter was 9.2%, an increase of two ninety basis points compared to last year and includes continued investment in our brands as part of our growth playbook. Adjusted operating margin was 200 basis points higher than our outlook of approximately 7.2%, primarily the result of SG and A leverage from better than expected revenue. The combination of strong revenue growth and gross margin expansion led to adjusted diluted earnings per share of $0.35 compared to $0.15 in the prior year. Turning to the balance sheet.

Net debt at the end of the second quarter was $568,000,000 down $99,000,000 or 15% lower compared to the same time last year. Next, I will provide an update on the financial impact from tariffs and our mitigation initiatives. On our last call in May, we estimated that the incremental tariffs would translate to a fiscal twenty twenty five profit impact of 30,000,000 before any mitigation. This was based on tariff rates of 145% for China and 10% for our other sourcing countries. Based on the tariff rates announced by the US administration on August 1 that go into effect on August 7, we now estimate the 2025 profit impact from incremental tariffs will be approximately $20,000,000 before any mitigation.

The reduced 2025 profit impact versus our prior estimate is primarily due to lower China tariff rates, down from 145% to 30% as of May, partially offset by increases in other sourcing countries rising from 10% to approximately 20% starting execution of our strategy over the past twenty four months has enhanced our brands and our capabilities, strengthened our financial position and prepared us to navigate ongoing changes. We’ve taken strategic steps to mitigate the impact of tariffs and have plans in place that we believe position us to offset the majority of the profit impact this year. That said, we’ll continue to monitor how these plans unfold and how the broader trade environment evolves. Prior to the tariff announcements in April, we had already begun executing targeted initiatives to enhance profitability. While external conditions have evolved, our strategy remains consistent.

We’re accelerating those efforts and actively pursuing new opportunities to strengthen our financial position, preserve flexibility, and support long term growth. Actions we have taken include leveraging our diversified supply chain and dual sourcing capabilities, negotiating cost sharing with our supply chain partners to alleviate the financial impact of tariff changes, reducing products sourced from China to The United States in the mid teens earlier this year to less than 10% by the 2025, implementing strategic price increases on select products across the brand portfolio and capturing discretionary SG and A savings while also continuing to invest in our brands. These efforts are designed to offset tariff related headwinds while maintaining investment in brand building and long term growth drivers. Turning to our outlook for 2025. As it pertains to the full year, while we are not reinstating our formal 2025 annual outlook today due to continued macroeconomic uncertainty from global trade policy, I would like to provide some insights into how we are viewing the second half of the year.

We’re pleased with the year to date performance of the business, delivering 8.6% constant currency revenue growth in the first half, which is at the high end of our long term value creation aspiration. This performance reflects the strong execution of our brand building strategy across product innovation, marketing and distribution expansion, particularly in Saucony and Merrell, as well as some favorable timing shifts. As we look to the second half, while we expect this momentum to continue supported by ongoing execution and sequential improvement in Sweaty Betty and the work group, we anticipate our year over year growth to moderate compared to the first half as the impact of timing shifts normalizes and we lap the initial gains from incremental distribution expansion. In addition, we will be comping a more stabilized 2024 relative to the first half. With respect to the impact of tariffs and our mitigation efforts on gross margin, we expect the majority of the incremental expense to impact cost of goods sold in the fourth quarter, while our mitigation efforts are anticipated to be more balanced between the third and fourth quarters.

With that, I will now provide our outlook for the third quarter. Revenue is expected to be in the range of $450,000,000 to $460,000,000 a year over year increase of approximately 3.3% at the midpoint on a reported basis and 2.6% on a constant currency basis. At the midpoint of the range, we expect active group revenue for the third quarter to grow by a mid single digit percentage year over year and work group revenue is expected to decline by low single digit percentage. Adjusting for the previously mentioned $10,000,000 timing shift from the third quarter into the second quarter, Active Group revenue is expected to grow high single digits and Work Group is expected to be approximately flat compared to the prior year. Gross margin is expected to be approximately 47%, an increase of 170 basis points compared to last year.

Adjusted operating margin is expected to be approximately 8.3%, an increase of 60 basis points compared to last year. And adjusted diluted earnings per share is anticipated to be in the range of $0.28 to $0.32 compared to $0.29 in the prior year. To summarize, our second quarter results and third quarter outlook reflect strong execution of our growth strategy in a dynamic environment. Our brands continued to show meaningful progress. We’re driving healthier sales across the portfolio, and our balance sheet is meaningfully stronger than two years ago.

We believe the improvements we’ve made and the actions we’re taking to navigate the evolving trade landscape position us for a sustainable, profitable growth. With that, let me hand the call back to Chris before we open it up for questions.

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Thanks, Terren. After two years, Wolverine Worldwide is well underway to becoming a new company with a clear vision to make every day better. We aspire to become great consumer obsessed brand builders, focused squarely on creating innovative, trend right products, telling differentiated and amazing stories and driving the business each day as a collective One Wolverine. We’ve elevated talent throughout the organization by bringing in new leaders with exceptional experience and heightened consumer focus, bolstering our capabilities in areas including product design, merchandising, modern demand creation and business planning. I believe our team, this new talent coupled with a solid base of company veterans is the strongest we feel that since I joined the company almost seventeen years ago.

We’ve also made good progress in equipping our teams with the processes, tools and environments they need to win. We’re injecting more consumer and trend insights into our brands with the collective, opened our first ever innovation hub in Boston this past fall, co located our active group brands in a refreshed space this spring, developed new integrated planning processes, and we’ve embarked on the most ambitious tech modernization effort in our company’s history. And finally and importantly, our culture is evolving. Our teams have embraced the challenge to get better every day, to win and work together as one Wolverine. Just last month, I’m proud to say Wolverine Worldwide was officially certified as a great place to work.

Based on an independent formal assessment of our team’s belief in our strategic direction, sense of collaboration and pride in the work we’re doing together, the first time our company has ever received such a recognition. But while Wolverine worldwide is already a much different company, there is much more to do. The next chapter is the most important one as we push to realize the full potential of our brands, team and company, all guided by our vision to make every day better for our consumers, our teams, our partners, our communities and ultimately for our shareholders. With that, thank you to all for taking time to be with us this morning, and we’re happy to take your questions. Operator?

Conference Operator: Thank you. The floor is now open for questions. Your first question comes from the line of Jonathan Komp with Baird. Your line is open.

Jonathan Komp, Analyst, Baird: Yes, morning. Thank you. I want to follow-up on Saucony given the strong performance continuing here and ask about how we should think about the range of outcomes for growth in the second half. And when you think about growth between direct, which obviously had a strong quarter, I think you said low double digit growth, But also then wholesale with the new doors plus sell through and reorders at existing doors you’ve added here. Just any further detail on sort of range of outcomes and some of the key building blocks?

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Thanks, John. Saucony certainly is having a moment, and I’m really pleased with the progress we’ve made since we really worked to reset that business a couple of years ago. And, you know, it is broad based growth, happening in both performance and lifestyle, happening around the world. I think, first and foremost, driven by a reinvigorated product pipeline. Innovation is back at Saucony, whether it’s tip of spear product like the Endorphin collection, whether it’s focusing on the core four, or ability to tap into an archive of lifestyle product.

And that that that is, that is very encouraging. And importantly, it’s healthy growth. It’s responsible growth. We walked away from from from tough distribution from products that had relatively low gross profit, and we took the chance to really reset that business from a strategic standpoint. And then first and foremost, really making sure the product pipeline was firing on all cylinders.

And then importantly, our ability to tell amazing stories. You know, this will be a very large investment year in Sakhin from from a demand creation perspective, really happening around the world. And I think really headline right now about what has happened in EMEA over the past couple of years focused on a key city strategy, activations, the sponsorship key of events, and then just the team really driving the business each and every day. So we’re going to begin to lap opening of that distribution. We continue to methodically think about where we can responsibly open more doors.

At the same time, as we think about growth for the company, you know, we’re in it for the long run. We wanna drive long term sustainable, profitable, healthy growth and and real really have a pull model versus a push model. So we’ll begin to lap some that that new door expansion. And really as a company right now, we are laser focused on sell through, what is happening in real time in the marketplace, and then really build a long term platform, for the company to drive sustainable results for the shareholders in the long term. But make make no mistake, very pleased with the progress Saucony has made in a very short period of time and the the rigorous execution of our new brand building model.

But as I said in the prepared remarks, while I’m very pleased with the results that Saucony has generated in a very short period of time, I’m very optimistic about the potential. This intersection of performance and lifestyle in a culturally relevant brand, driving tip of spear innovation, at the same time pulling on archives, I think is a very powerful combination for us to drive, great growth, in a very attractive market for the long term for the company.

Jonathan Komp, Analyst, Baird: That’s great. And then on gross margin, if you step back, is there anything that’s unsustainable other than maybe the short term disruption from tariffs when you look at operating at the current level of gross margin? And now as you’ve been at 47% for several quarters, which is the high end of your broader target, are you gaining comfort in the longer term opportunity to get back to double digit operating margin? Thanks, again.

Terren Miller, Chief Financial Officer, Wolverine Worldwide: Thanks, John. We you know, as you pointed out, we’re now in the gross margins through the first two quarters at 47.2%, does reflect the progress we’ve made on some of the things Chris just talked about in terms of driving higher mix of full price sales as well as the supply chain initiatives that we’ve talked about in terms of optimizing our cost. We do expect to continue to see the benefits from pricing discipline as well as those cost initiatives, and we’re looking at that q three guide that we gave approximately 47%. And I I think that, yes, in short, we are gaining confidence in that aspiration that we’ve provided in long term of 45% to 47%. While we’re not guiding on the fourth quarter, I would remind you that fourth quarter is generally lower than our quarters just given the nature of the holiday season that we’re seeing in the fourth quarter.

But overall, short answer is yes. Gaining confidence, given more with the product, putting the marketing behind it, and the distribution gains in terms of being able to sustain in that 45 to 47%.

Jonathan Komp, Analyst, Baird: Okay. Thanks again.

Peter MacGeldrick, Analyst, Stifel: Thanks, John. Thank you.

Conference Operator: Your next question comes from the line of Peter MacGeldrick with Stifel. Your line is open.

Jonathan Komp, Analyst, Baird: Hi. Thanks for taking our question. I was curious if you could discuss your go to market strategy and the pathway for returning DTC to growth. How is that channel contribution embedded in your third quarter outlook?

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Yes. Good question. I appreciate asking about our DTC business. We’re pleased by the progress we’re making in DTC, albeit we acknowledge we have more work to go do. We’ve seen sequential improvement in q two over January.

And I would say, by and large, a lot of our brands this year are focusing on becoming less promotional, more consistent in our messaging, and really be a great showcase for our brands as consumers engage engage with us digitally. So we saw a nice gross margin expansion, I think, somewhere approaching 300 basis points of gross margin expansion in total for DTC. And importantly, our biggest brands, I think, sort of outperformed us in total. You know, Saucony saw a nice growth. Sweaty Betty saw some improvement along with Merrell.

We do have some acute pain points that we’re working to address. But I think the the combination of of of lapping some of the promotional from last year, telling more consistent messaging to our consumers, really showing a great innovative flow of fresh product. And then certainly on the modernization side, we have some updating to do on our tools, and and and we’ve begun begun to do that. So DDC is a critically important piece of our business. You know, I think we have to show up when and where consumers want to engage with us, whether it’s on their phones or our social channels, whether it’s in our great wholesale partners here and around the world, or whether it’s in our own stores or own sites, we have to show up consistently great.

So pleased that we made progress in the second in the quarter from the first quarter. Acknowledge though that we still have more work to go do, but the team is laser focused on making that both a great growing and profitable channel for us along with great representations of our brands.

Jonathan Komp, Analyst, Baird: Okay. And then I did want to ask on Saucony, really impressive traction there. Can you help us think of the brand performance within the newly expanded doors? How would you characterize sell through and the level of penetration on shelves today versus where you plan to be at year end?

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Yeah. Good question. I think that that that’s really what we’re focused on. And I think, you know, credit to the product pipeline, credit to the stories, and certainly the fact that, you know, Saucony is a a great authentic heritage brand. You know, our ability to open up that new distribution was critically important last year.

We’re beginning to lap those new door growth. I would say right now, we’re very focused on sell through. Let’s make sure the ground game is in place. There’s great marketing in stores. We’re engaging with the teams, and we’re we’re really working to drive sell through.

I would say we’re in the early innings of opening up that potential distribution if we look at just total door counts and the doors that we’re in. At the same time, like I said earlier, you know, we really wanna make sure that we’re we’re driving a pull model versus the brand versus the push model for the brand. So as we’ve seen that door expansion, we’re very focused on it. We’re encouraged by it. But every single week, we obsess about the sell through rates to make sure that that that we have traction there.

So there’s a lot more doors that we could open. We’re not laser focused on that right now. We’re working to build a platform for long term sustainable growth in a responsible way. And that really is what will get the Wolverine worldwide engine really moving and humming in order.

Jonathan Komp, Analyst, Baird: All right. Very good. Thank you.

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Thanks, Peter.

Conference Operator: Your next question comes from the line of Laurent Vasilescu with BPN Paribas. Your line is open.

Laurent Vasilescu, Analyst, BPN Paribas: Good morning. Thank you very much for taking my questions. I wanted to ask about Saucony as well. I recognize, Chris, that you you will start to lap those 1,300 doors next year. But curious to know what what your conversations are like for the spring twenty twenty six orders.

And second, I I know that you Foot Locker is now offering the lifestyle offering. But is there an opportunity at some point in time for DICK’S Sporting Goods to offer Saucony’s performance offering?

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Yeah. Good question, and I the attention on Saucony. Again, I think that team has been able to generate tremendous momentum in a very short period of time. And and I would take you back a couple of years ago. It really was a full reset of that business.

And I think we we took the time to really think about what the potential Saucony had, what we thought the market opportunity was, where the competition sat, and then the the the the various levers that we could pull. So, we are very focused and and and thankful for the doors that we’ve opened. And, again, I think that the notion of broad based is important. We’re seeing growth in both performance category. Again, whether it’s TipaSphere product like Endorphin, whether it’s the core four, at the same time, what we’ve seen what we’ve seen in lifestyle expansion.

So, you know, we’ll begin to we’re actually beginning to lap that that new door growth last year as we sort of got get into back to school, and into holiday. We’re very focused on the sell through. I would say our teams are staying very close to the wholesale partners in in which we’ve opened, and then also working to build, hopefully, responsible responsible growth plan. But I was out in market in this last quarter. I’ve been able to travel to London, Paris, Tokyo.

I was in Boston, just last week. I was in New York a couple weeks before that, and it’s great to see Saucony showing up on their shelves, showing up in those windows. Then just talking to the store staffs that are wrapping our product, just the enthusiasm that Saucony has has been able able to generate. So, again, I while we’re pleased with the progress and and a record second quarter for the brand, I do think, we remain very optimistic about what the future potential is for Saucony, both what it means to the Wolverine worldwide portfolio, what it means for our shareholders, and certainly what Saucony can mean in the greater landscape of sporting goods.

Laurent Vasilescu, Analyst, BPN Paribas: Very helpful. And then, Merrill, another great quarter, double digit growth here with the modernizing the trail strategy. I recognize, Chris, that you’re you don’t guide, you know, by brand anymore for the quarters out. But why why should we see a deceleration in the back half if there’s momentum in so many different product categories? And then, Terren, I recognize last year you had an operating cash flow number of $180,000,000 I think there was a working capital benefit from the inventory.

But this year, you’re you know, obviously, your operating profit, your net income is going up. Like, is there any reason why we couldn’t see a similar rate of operating cash? And what I mean and what I’m leading to is where do you think leverage goes by the end of this year?

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Yeah. I’ll I’ll have the Merrill Merrill question first and turn it over to Terrence. I appreciate asking about Merrill. I know a lot of headlines are gonna be about Saucony growing 40%, but, you know, Merrill has four consecutive quarters of growth. I think kind of the past 11 quarters, we’ve gained share, and we’ve done it in in a really responsible way while adding gross margin.

And importantly, it’s on the backs of new product introductions. You know, obviously, the Moab three continues to be great. That that is the the original hiking boot. But, you know, what we’ve been able to do around the Moab Speed two, the agility peak five, the speed arc Mattis, all of those new introductions are helping us to make the trail lighter, faster, more modern, and really responding to the consumers and really, really bringing innovation. At the same time, we’ve been very thoughtful in the distribution in The US.

And I give the Merrill team credit, the the Merrill US sales team credit for how they’ve really thought about The US distribution landscape with doors they want to show up in. How do we show up in those doors? Great. I was in I was in one of our best wholesale partners last week, and I’ve and I’ve never thought Merrill has looked better than what I saw last week. So credit to our partners for for getting behind Merrill.

Credit for the growth that we’re driving, the investments we’re making making in the ground game. So at the same time, encouragingly, you know, we’ve seen the hike category under a lot of pressure for the past two years. We actually saw it get get a little bit better last quarter. And if that is a long term trend for us, certainly that bodes well for Merrill’s prospects. Having gained share for the past two years, being the market leader, the retrenchment we’ve done to improve points of distribution, new products we brought, gives us a lot of reasons to be encouraged about, Merrill’s Merrill’s future trajectory.

Terren Miller, Chief Financial Officer, Wolverine Worldwide: Great. And then to answer your question in terms of, in leverage, where are we going? I think, overall, I would I would answer the question in the context that we are really focused on delivering a sustainable long term profitable growth. And you can see that in in the cash flow. You mentioned 2024.

We did say that, we did expect in terms of when we looked at our capital allocation, it remained consistent. We remain focused in terms of investing in the business as well as continuing to pay down debt and maintaining the dividend on in in terms of our priorities of capital allocation. When I speak to investing in the business, we had identified earlier this year that we did expect after getting our inventory to much healthier levels, we expected a modest investment in working capital this year. And and you can see part of that in the second quarter, you saw inventory was a bit higher. That was largely primarily Saucony.

If you recall last year, we said we’d probably leaned in a bit too much on on the inventory as we were chasing demand. And so we are making a very strategic and thoughtful choice about where we’re investing in the inventory to support the growth. Regarding and then the second is on the priority was continuing to pay down debt. Our leverage our bank defined leverage at the end of the second quarter was 2.9 times. That compares to, 3.9 times a year ago.

So, again, continued no change in capital allocation priorities and progress, against both of them so far this year.

Laurent Vasilescu, Analyst, BPN Paribas: Very helpful. Best of luck.

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Thanks, Laurent.

Conference Operator: Next question comes from the line of Sam Poser with Williams Trading. Your line is open.

Sam Poser, Analyst, Williams Trading: Thank you very much. I wanted to talk to you a little bit about the SG and A and your marketing, the bank creation spend. How much is how much is that elevated? It looks like it’s implied to be elevated again. And then how much you’re

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: doing a lot

Sam Poser, Analyst, Williams Trading: of this are you doing most of this spend for long term brand story? And and I’ll ask you that first when I follow-up.

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: I’ll let, Terrence dig dig into some of the SG and A detail, but I’ll answer the last part first. I think absolutely, Sam. I think we we I think, previously, we sort of got caught a in a cycle of sort of lower conversion focused marketing, and and our brand spend at the upper end of the funnel, was was was compressed. And I think we were chasing revenue a a while ago and and really focusing on conversion, to try to help stimulate that and that potentially at a short term benefit, but to the long term cost cost of the brand. So we’re we’re we’re working to reverse that.

We do have a new stable of CMOs in the building, which is great, which bring bring a new perspective that to how how we wanna lead our brands. And, you know, as we sort of emerge from the turnaround and have additional financial wherewithal to invest in our brands, We’re very focused on on spending up and down the funnel and really working on awareness and affinity for our brands. And I think those things are beginning to take hold, I think you’re seeing that, in in Saucony. I think you’re seeing that in sort of all time record sort of Google search interest. You know, we we follow Google search interest as a proxy, and, you know, we’ve seen some positive metrics from Merrill and Saucony, as we thought differently about how we spend.

So definitely a different approach to it. I’m trying to take a longer term horizon to to how we build build and protect our brands, at the same time, how we’re sort of managing responsible growth, for the company as well. I’ll let Terren answer the SG and A question more specifically.

Terren Miller, Chief Financial Officer, Wolverine Worldwide: The yeah. The build I would have is that I think it’s important to note that our if you look at the second quarter, our gross margin increased 410 basis points, and our adjusted operating margin increased 290, basis points year over year. As Chris said and that we have stated as part of our strategy, we are reinvesting a portion of the gross margin gains in key areas of the business that are gonna fuel that growth for this year and as Chris said, long term fueling the growth. And it is you know, you asked a specific question about where it’s investments in marketing and our talent. Chris just mentioned a few of those in in tools such as our integrated business planning as we’re navigating which is has been a benefit as we’re navigating the current macro, environment and processes that are really gonna be able to sustain profitable growth, is the key areas I would call out both in terms of where you’re seeing, a bit of that elevated s g and a.

Sam Poser, Analyst, Williams Trading: Thank you. I mean and and then just to follow-up, Chris. The top of funnel marketing, you know, longer term, did you your you beat your sales your your guidance by quite a lot. Did you see short term results from the you know, was it did you see that opposite impact where you saw short term sales benefits from the top of funnel marketing? I I think so.

And

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Sorry, Sam.

Sam Poser, Analyst, Williams Trading: Oh, go ahead. Sorry.

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: No. I I I I think I think we certainly did. I think, you know, certainly, as we sort of have been thinking about running brands differently, and and you and I have talked about this, you know, how how we lead brands, how we think about the product pipeline, how we think about demand creation, and where we think to spend, how we think about distribution segmentation. I think we certainly think those are the right long term things to do for the company and for our brands at the same time. I I do think we we we are seeing a a short term lift.

And I think, importantly, as we think about managing brands in a portfolio, as we think about capital allocation, where we spend, how we spend, we have to think about, you know, where those brands’ product pipelines are. You know, where do we sit? How is the relationship with Keith’s wholesale partners? So I certainly think that it’s in the long term best interest of our brands and being great brand managers, which we aspire to be. At the same time, certainly, we’re encouraged by the short term results we’re posting this quarter.

Sam Poser, Analyst, Williams Trading: I I I just does that mean, though, that you guide next quarter the same way where it looks like there’s increased s g and a spend, but you didn’t work in the short term the potential short term revenue impacts of that? Because it clearly you didn’t work that into the two q guidance if you

Terren Miller, Chief Financial Officer, Wolverine Worldwide: In the third quarter guidance?

Sam Poser, Analyst, Williams Trading: Yeah.

Terren Miller, Chief Financial Officer, Wolverine Worldwide: So I think at the at the third quarter, at the midpoint, you’re seeing that, you know, SG and would be around that 38.7, and that does reflect a 120 basis point increase relative to prior year. I think in terms of current we absolutely expect in terms of it driving near the combination of near term, but as well as long term growth.

Sam Poser, Analyst, Williams Trading: And then lastly, what are you what are you your interest expense for the balance of the year? I mean, is it is it gonna average around 8,000,000 a quarter? Is that right? Or is it gonna drop down now that you pay your net debt’s coming down?

Terren Miller, Chief Financial Officer, Wolverine Worldwide: I’d say it was largely unchanged. Interest expense was 8 and a half million in the second quarter.

Sam Poser, Analyst, Williams Trading: Thank you very much. Continued success.

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Thank you, Sam.

Conference Operator: Thank you. Your next question comes from the line of Dana Telsey with Telsey Advisory Group. Your line is open.

Dana Telsey, Analyst, Telsey Advisory Group: Hi, good morning everyone and so nice to see the progress. Karen, if you think about the timing shift that you talked about, is there potential for additional timing shift in the fourth quarter to the third quarter? What are you seeing from that wholesale channel? And, Chris, given the focus always on earning the place on the shelf, how are you thinking of new product penetration versus core? And how do you see pricing changing in this new world of care?

Then I just have a quick follow-up.

Terren Miller, Chief Financial Officer, Wolverine Worldwide: Yeah. I think the first I’ll answer the first part of your question. The timing shift that we called out from the in the second quarter from the third quarter to the second quarter, that $10,000,000, At at the current guidance that we’re giving, I wouldn’t call it any other timing shifts in that number, Dana.

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Yeah. And I I did to answer your question about product and and earning yourself, I mean, that’s that’s absolutely right. You know, we we still do three quarter of our business through wholesale partners. And we we do have to earn our way in the shelf, we do have to displace the competition. And I would say, you know, we’re I’m spending a lot of time at retail.

I was walking in retail just last week and, you know, how our brands are showing up, in our important wholesale customers. We look much I feel we feel we look much better today than we did a year ago and certainly two years ago. I spent a a full day walking retail, last week and just how we show up in the shelf, the fact that we’re showing up in the windows again of key partners, I I I think is is very encouraging. Again, it it the onus comes to right product, innovative, trend right, priced right, colored right, placed right product that solves consumers’ problems. And then, importantly, we also have to have brand.

And we we have to have the right brands, with the right messaging, differentiated storytelling. And then we have to invest in our partners too to make sure we’ve got a ground game, make sure we’re helping support them, and then obsess about sell through. So I certainly am encouraged by the progress we’ve made. There is certainly more work to go do. But, but the brand is, the brand our brands and company, I think, are are in a fundamentally different place today than than we were, just just a few short years ago.

Dana Telsey, Analyst, Telsey Advisory Group: Yep. And is pricing changing at all given tariffs, whether in DTC, ecommerce, or wholesale?

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Yeah. I mean, I think you’re you’re hearing a lot about about the price impacts. I think the the clarity around tariffs are are is getting somewhat less murky than it was. At the same time, sort of the downstream effects on the economy, consumer sentiment, and ultimately consumer spending It’s something that that we’re paying attention to. We did selectively take some price increases at the June.

We’re closely monitoring that both on our own sites plus what’s happening, on the shelves, sell throughs, and and and all the data we get. At the same time, looking to see what the competition has done, and and where the competition sits in pricing. I think, we’ll get more clarity as we work through the back to school season and sort of understand how all that shakes out. But, certainly, the price increases we took, the impact on the consumer, the the macro consumer environment, I think that we’re paying very close attention to. With all of that said, I’m very thankful, that we’ve been able to get the work done over the past couple of years to shore up the balance sheet, to get our brands growing again, to do the significant improvement in margin, I think we’re in a much better position to withstand these current challenges and hopefully emerge better brands and better company on the other side.

Dana Telsey, Analyst, Telsey Advisory Group: Thank you.

Peter MacGeldrick, Analyst, Stifel: Thanks, Dana.

Conference Operator: Your next question comes from the line of Mauricio Serno with UBS. Your line is open.

Peter MacGeldrick, Analyst, Stifel: Great. Good morning. Thanks for taking my questions. I guess just to start, could you elaborate on what you’ve seen so far since you’ve selectively raised prices at the June across the business? Any high level commentary of whether you’re seeing like any reaction from the consumer?

And just like taking a step back and seeing all the that you’ve seen in the stock, and it’s very nice. How far along are you, like would you say you are on the turnaround of the other brands, you know, particularly Merrell and Sweaty Betty? Yeah.

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: It’s a good great great great question. I would say we’re still very early days of the price increases. I think the wholesale customers that we went to said that they largely expected brands to to increase price, and that was that was what we’ve heard. I think we’re still too early to sort of render judgment on where the consumer sits and and how those have been adopted. As it relates to the other brands, I would I would contend a little bit that we’re turning around Merrell.

Merrell’s got four consecutive quarters of growth. We’ve got 10 of 11, quarters of market share gains, significant gross margin expansion. So I I would say Merrill Merrill and Saucony have sort of rapidly deployed our new brand building playbook, and I think we’re encouraged by the progress those brands have made made in a short period of time. As it relates to the work group and sweaty Betty, we did see sequential improvement, this, this quarter versus last quarter, albeit self admittedly not generating the results, that that that we that we would expect. I think we’re making progress on the work group product pipeline.

We’ve got a new chief product officer, and I think he’s done a great job thinking about newness and innovation. You know, we had a made in The USA collection that dropped a few weeks ago that sold out in a day. We just launched the the new null collection yesterday onto to really good reaction. I was getting getting some ecommerce sales last night, which is fantastic. And then I’ve been able to spend a lot of time with Swatty Betty over the last last quarter.

I’ve been to London twice. Really thinking about the the strategy and where we sit, what’s most important, in in sort of the the next next couple of years with that brand. So I feel good about the work the strategy work. I feel good about the sequential improvement we’ve seen. The product pipeline and work group is getting better.

And I do think we’re bringing innovation, to Sweaty Betty and the new products we’re dropping, new color ways and the new prints. We dropped some outerwear a couple of weeks ago on our stores in The UK. The the those have all been have been positively received. So certainly more work to go do, but I do think we are on the right path. And I certainly think there are things that we’ve learned from Merrill and Saucony that we can apply to the balance of the brands to get everyone move moving in a in a more positive direction.

Peter MacGeldrick, Analyst, Stifel: Got it. Very helpful. And one quick follow-up. On the tariff impact that you provided, $20,000,000, could you elaborate on how much of that falls in q three and how much in q four?

Terren Miller, Chief Financial Officer, Wolverine Worldwide: Yeah. I didn’t give I didn’t get specific. It’s more than to say that more of it is expected to be in the fourth quarter than in the third quarter just given the time of when the higher rates went in as well as our inventory that we had that would sell through. So the fourth quarter will be our first full quarter of seeing the higher tariffs.

Peter MacGeldrick, Analyst, Stifel: Got it. So that means that third quarter, there’s part of it that doesn’t have a tariff impact?

Terren Miller, Chief Financial Officer, Wolverine Worldwide: Correct. Thank you. So third so again, I didn’t give the specifics. Just more to say it’s more weighted. We will see some and we expect to see some in the third quarter.

We expect to see more of, the 20,000,000 in the fourth quarter.

Peter MacGeldrick, Analyst, Stifel: Very helpful. Thank you. Thanks, Mauricio. Your

Conference Operator: next question comes from the line of Mitch Kummetz with Seaport Research Partners. Your line is open.

Mauricio Serno, Analyst, UBS: Yes. Thanks for taking my questions. I’ve got one on Saucony, one on Merrill. So I’ll start with Saucony. When you look at the second quarter growth, can you say how much of that, either the percentage or the dollars, was new doors versus same store?

And then when you you think about the potential for Saukney growth in the back half, is it fair to kind of assume that the same store momentum is unchanged? It’s just that there’s less benefit from the new doors. Is that how you’re thinking about it?

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Yeah. Good question. I I would say, well less than half of the growth that Saucony generated in the second quarter was was driven by new door expansion. And when we talk about that, that’s why we in the prepared remarks, I talked about broad based, you know, regions and channels, performance and lifestyle, that there there’s not just one thing driving the Saucony engine right now, which gives us a lot of confidence in in where that brand is and certainly what that that that brand can be. And I’d say right now, you know, we’re very focused.

Like I said previously, just really focused on sell through, and then really assessing right now about the product pipeline. You know, how do we follow-up the great work that that that team has done to bring newness and innovation and reinvigorate that product pipeline to make sure we we we can build a a long term a long term model. So encouraged by by the growth. It is broad based regions and channels. Other metrics that we look at, you know, brand search interest is is certainly encouraging.

And then, you know, as we begin to develop an order book for ’26, just visibility in in what that order book looks like, and then as we continue to begin to bring new activations online. You know, I think, you know, early days of the turnaround, we we we we we took a chance with the London ten k as part of our first key city strategy. That those results have been phenomenal. You know, our partner in Japan has done a great job. New partner in Japan.

We moved we moved our Saucony relationship to our Merrill partner in Japan, and then they’ve done a great job opening a Saucony store in Harajuku. And like I said, we’re gonna activate in London with a shortage 10 k, this fall, and then we’ll move to France with the Eiffel Tower 10 k, in December, and really begin to really activate this key city strategy, which, has really generated a lot of momentum, for for our brand.

Mauricio Serno, Analyst, UBS: Maybe before I ask about Merrill, as a quick follow-up, Chris, you you you referenced search again, and you’ve done that a couple times on this call. From what I’ve seen, there’s been an uptick for back to school. Is there anything you can say about Saucony performance for back to school today?

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: I I can’t really comment on intra quarter. I think back to school is is still still relatively early days. You know, I can tell you, you know, every Tuesday here, the company sort of spends the full day, you know, just herniating over our results, you know, sell through what’s happening, shipments, what’s happening at DTC. And and and we’re we’re in the middle of it. You know, I grew up as a retailer, so back to school and Christmas were were the busiest times of the year.

And I’m sort of excite get excitement and energy from us sort of pivoting to the back half of the year. But, certainly, we’re pleased with the momentum we’ve been able to generate in the first half of the year, but eyes wide open to the back half of the year and delivering a solid solid year for the company and then carrying momentum into ’26.

Mauricio Serno, Analyst, UBS: I guess my question on on Merrill is more about the segment, actually. You you you talked about some inflection there, and I’m curious if you could elaborate. Is that more just a function of the the the segment’s been under pressure for so long that, you know, eventually, things kinda just find the bottom, or is there something that’s actually driving more consumer interest in the hike category?

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: That’s a great question. Certainly, hike has been under pressure for for a couple of years, and someone once told me you can’t fall off the floor. But but but hike has been under pressure for for a couple of years. We did see it get better last quarter, which is great. So sort of, like, down down low single digits versus down high single digits or double digits.

You know, whether or not it it’s just sort of comping bad business and and it has found a floor, it should be determined. At the same time, I do think there is a responsibility and onus onus on the market leaders to bring innovation and bring life to categories. And that’s why I think as as Merrill as the clear market share leader, you know, really working to modernize that high category, lighter, faster, more athletic, and then sort of some of the great growth we’ve seen, in the Moab speed too. That’s why I’m encouraged by by the speed arc, as soon as what that can potentially mean. So, I think your question is well noted.

It has been under pressure. It is being sort of, twice anniversarying those tough times, but certainly, that category, finding bottom beginning to grow again, I think, is good for everyone and certainly should be good for the market leader.

Mauricio Serno, Analyst, UBS: Thank you.

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Thanks, Mitch.

Conference Operator: Your next question comes from the line of Anna Andreeva with Piper Sandler. Your line is open.

Jared Filipone, Head of Investor Relations, Wolverine Worldwide0: Great. Thanks so much, and, congrats again. Great results. We had a follow-up on Merrill. Great to see that momentum.

Just any additional color on how international, versus domestic performed for the brand? Chris, I think you mentioned Asia Pac accelerated. How big is international for Merrill, and how do you guys think about the potential there? And to, Terren, a follow-up on gross margins. You’ve called out the supply chain initiative as a benefit, I think, for a few quarters now.

Can you talk about sustainability of these going forward? And just curious, where are the two big brands, in terms of their historic markdown rates, just as we think about additional opportunity, with full price selling ahead? Thanks so much.

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Yeah. I appreciate the question, and thanks for the comments. We’ll attempt to answer those. A couple of couple of things you asked, we we we generally just don’t disclose that at the brand level, so we’ll be sensitive there. International was good for Merrill.

Jonathan Komp, Analyst, Baird: You

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: know, US wholesale was good. We saw improvement in our in our DTC business. Our Merrill stores domestically performed very well, but a couple of regions internationally actually outperformed The US, EMA and APAC specifically, which we’re encouraged by. I was in Tokyo, just last month and spent time with our partner there. And, you know, Merrill looks so much different today than it did just a couple of years ago.

It’s lighter, faster. I was walking the streets of Harajuku. I was in in Shibuya scramble, and, you know, just seeing Merrill show up on on young consumers in Tokyo And I was seeing the right shoes. I was seeing Moab Speed two.

I was seeing Speedark Mattis. I was seeing Barefoot. I was seeing wraps, which is which is encouraging. And the fact that we’ve got, you know, a Meryl Meryl a three story flagship in in in Harajuku. We’ve got a a one TRL store in Shibuya scramble.

It gives us a lot of encouragement. And then let’s not forget about EMA. You know, I think EMA are sort of our strategy following the key cities strategy that we deployed in Saucony has worked. I think Merrell became the the the leader in outdoor performance footwear in France last quarter, which is great overtaking some some some very well known and some other great brands. So I think the the the the contribution internationally from Merrell is great, but at the same time, I don’t wanna dismiss the great progress made here in The US as well.

Terren Miller, Chief Financial Officer, Wolverine Worldwide: And as it relates to gross margin, the I

Dana Telsey, Analyst, Telsey Advisory Group: what the what I would call

Terren Miller, Chief Financial Officer, Wolverine Worldwide: out is we’re not looking at any one area. When we’re looking in that 45 to 47 of our aspiration, it’s really the we’re working with our teams as we’re looking at capabilities across. So the better mix, the more full price sales. And I think there is still more room. There’s more premium products we talked about whether it is in stock and age, whether it’s in Merrill, whether it’s in sweaty bedding.

We’re talking and in the work group, we’re talking about how do we get more premium product, which helps in terms of the gross margin as well. And then on the supply chain piece, I’d say we’re consistently looking for opportunities in supply chain. The exact nature of it has shift over time. Meaning, early on, it was some sourcing work that the team did a great job in terms of executing. So we can then also and I was more recently with the team in Vietnam and how do we look at more how do we look at our design in terms of making sure that that we’re optimizing how we’re building the design as well as we’re building those premium products.

So for gross margins in totality, I would explain it that we are looking at multiple levers in terms of being able to drive long term sustainable gross margin. And the the exact lever in one quarter or one year could shift, but overall looking at sustainable margins. Okay. Terrific. Thank you so much, and best of luck.

Peter MacGeldrick, Analyst, Stifel: Thanks, Anna.

Conference Operator: Your final question comes from the line of Ashley Owens with KeyBanc. Your line is open.

Jared Filipone, Head of Investor Relations, Wolverine Worldwide1: Hi, great. Thanks for taking my questions. Maybe just to round out Saucony and focus higher level, just given the broad based momentum you’ve been observing, could you discuss some of the further capabilities you see within the brand compared to maybe a year, year and a half ago when innovation really started to ramp back up and how that’s influencing your decision to further invest behind the brand? I guess, inning would you say we’re in in terms of innovation and newness and where you see additional white space moving forward? Thanks.

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: That’s a great question. I appreciate you asking that. I mean, I think I I think the Saucony story is a couple years in the making. I think we really took the opportunity in ’23 and ’24 to really reset that business and really think hard about where the brand sat, pulling on a 100 years of history, at the same time, the opportunity in the marketplace, and then think about what we should be focused on. And I think we’ve, historically may have been focused on on smaller niche parts of the business.

And I think, certainly, our product pipeline, hasn’t always has been full as it is today, and then certainly our ability to drive drive demand. So we took the opportunity to really reset that business, a new strategy. We brought in several new team members. And first and foremost, so I I wanna give the product team credit. Really got back to innovation, and really both thinking about tip of spear elite running.

At the same time, take what happened a very sort of broad product range in in in in in a product line architecture and really focus on a a a a few core styles and then democratize innovation. Bring innovation not just for marathon, but bring innovation down down to someone who who’s gonna

Jonathan Komp, Analyst, Baird: go try to try to

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: run their first five k. And so I think that really intense focus on democratizing innovation, maintaining tip of spear innovation around endorphin, focusing on the core four, and then really thinking about color and materials and how we show up. At the same time, really tapping into that lifestyle piece of the business. Unfortunately, for a 100 year old brand, we have a tremendous product archive that that we can pull from. And then really injecting energy and excitement, in in that lifestyle piece, both through collaborations with with some amazing collaborate collaborators that we’ve been able to partner with.

At the same time, how do we then take that and really take that that hot brand heat that we can generate, and really make that a a commercial success, and we’re be beginning to see that. As it relates to sort of what inning we’re in, I still think we’re in the early innings, because I think we’re just we’re just getting momentum now in that business. And I think, certainly, we’re building confidence. And, certainly, to think about the the markets that that our brands can address, One of the biggest markets that that that that that we can go build brands in is is where softening operate. It has a great hundred year history.

We’ve got that product engine moving. I’m really proud of that product team. We have a new CMO in place thinking about how we drive demand, and we brought some good leaders. We brought new leadership into our EMEA region, which helped craft our key city key city strategy, and and that momentum is building. And as I think about where Saucony can play in the future, you know, there’s there’s a lot of opportunities for us to think about that business moving forward beyond just where we sit today.

Other other footwear categories we can plan and certainly apparel and accessory opportunity, beyond because we’re largely a footwear only brand. I will tell you we’ve got a fairly small apparel assortment in our Coven Garden store, and I was there the week of the 10 k. The the penetration of a fairly small apparel assortment was was was amazing, which only gives us more confidence that when we create great products, we packed them the great stories. Consumers wanna participate in our brand. So, I would say that we’re in the early innings of Saucony, but certainly encouraged by an all time record revenue second quarter, phenomenal gross margin expansion, and I’m really proud of what that team has been able to do.

So I I remain I said I said in, I said in February, ’24, I was bullish on softening. And, thankfully, that team, that team has stood and delivered.

Jared Filipone, Head of Investor Relations, Wolverine Worldwide1: Great. That’s super helpful color. Maybe just lastly, now that we’re back to a place of inventory growth, if we could just speak to, you know, how we expect inventory growth to evolve relative to sales growth during the back half of year from a modeling standpoint. Thanks.

Terren Miller, Chief Financial Officer, Wolverine Worldwide: Yeah. I think, you know, we we didn’t give we typically only share cash or inventory objectives on a full year, Ashley. And so I don’t have any specifics other than to say that, you know, again, what I would what I would point to is that the inventory growth that we have seen in the second quarter was primarily behind Saucony as we were getting and being able to support that demand. There to a lesser degree, there’s some currency and tariffs in there as well. But primarily, it’s more really as we had expected to building in the inventory for the demand we saw in Saucony.

So I wouldn’t call anything out on the full year other than just to remind where we’re at in the second quarter.

Jared Filipone, Head of Investor Relations, Wolverine Worldwide1: Okay. Got it. Thanks, and best of luck for the back half.

Chris Hufnagel, President and Chief Executive Officer, Wolverine Worldwide: Thanks, Ashley.

Conference Operator: Are no further questions at this time. This does conclude today’s conference call. You may now disconnect.

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