Q2 2024 Wolverine World Wide Inc Earnings Call
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Operator: Please stand by; your program is about to begin. If you need assistance during your conference today, please press star zero. Good day, everyone, and welcome to today's Wolverine World Wide Inc. second quarter fiscal 2024 earnings call.
Alex Wiseman: 2nd quarter fiscal 2024 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star 1 on your telephone keypad. Please, if this call is being recorded, I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Alex Wiseman, Vice President of Finance. Good morning, and welcome to our 2nd quarter fiscal 2024 conference call. On the call today are Chris Hofnagel, President and Chief Executive Officer, and Terren Miller, Executive Vice President and Chief Financial Officer. Earlier this morning, we issued our press release and announced our financial results for the 2nd quarter 2024. The press release was available on many news sites and can be reviewed on our corporate website at wolverineworldwide.com. This morning's earnings press release and comments made during today's earnings call include non-GAAP financial measures. These non-GAAP financial measures were reconciled to the most comparable GAAP financial measures in attached tables within the body of the release. References made regarding financial results and the outlook for 2024 and comparable results from 2023, in each case for our ongoing business, exclude the impact of Kebs, Wolverine Letters, and Spary. I'd also like to remind you that today it was describing the company's expectations, plans, predictions, and projections, such as those regarding the company's outlook for fiscal 2024, growth opportunities, and trends expected to affect the company's future performance made during today's conference call are forward-looking statements under US 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 forward-looking statements. These important risk factors are identified in the company's SEC filings and in our press releases.
Operator: At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star 1 on your telephone keypad. Please note that this call is being recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Alex Wiseman, Vice President of Finance.
Speaker Change: At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session.
Speaker Change: You may register to ask a question at any time by pressing star 1 on your telephone keypad. Please note that this call is being recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Alex Wiseman, Vice President of Finance.
Alex Wiseman: Good morning, and welcome to our second quarter fiscal 2024 conference call. On the call today are Chris Hufnagel, President and Chief Executive Officer, and Taryn Miller, Executive Vice President and Chief Financial Officer.
Alex Wiseman: Good morning and welcome to our second quarter fiscal 2024 conference call.
Alex Wiseman: Earlier this morning, we issued our press release and announced our financial results for the second quarter of 2024. The press release is available on many news sites and can be viewed on our corporate website at wolverineworldwide.com. This morning's earnings press release and comments made during today's earnings call include non-GAAP financial measures. These non-GAAP financial measures were reconciled to the most comparable GAAP financial measures in attached tables within the body
Speaker Change: The press release is available on many news sites and can be viewed on our corporate website at wolverineworldwide.com
Speaker Change: This morning's earnings press release and comments made during today's earnings call include non-GAAP financial measures.
Speaker Change: These non-GAAP financial measures were reconciled to the most comparable GAAP financial measures in attached tables within the body of the release.
Alex Wiseman: References made regarding financial results in the Outlook for 2024 and comparable results from 2023, in each case, for our ongoing business, exclude the impact of Keds, Wolverine, Leathers, and Sperry. 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 fiscal 2024, 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 Law.
Speaker Change: References made regarding financial results and the outlook for 2024 and comparable results from 2023 in each case for our ongoing business exclude the impact of Keds, Wolverine, Leathers, and Sperry.
Speaker Change: 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 fiscal 2024,
Speaker Change: 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.
Alex Wiseman: 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 statement. These important risk factors are identified in the company's SEC filings and in our press release. With that, I'll now turn the call over to Chris Hufnagel.
Speaker Change: These important risk factors are identified in the company's SEC filings and in our press releases.
Chris Hofnagel: With that, I'll now turn the call over to Chris Huffnagel.
Chris Hufnagel: Thanks, Alex. Good morning, everyone, and thank you for joining us on today's call. For the second quarter, we exceeded our revenue and earnings expectations with broad-based contributions from across the portfolio. We saw a sequential revenue improvement, again drove meaningful gross margin expansion year on year, and further reduced our inventory and debt. Perhaps more importantly, we continue to strengthen our brand's position in the marketplace with improved product pipelines, more effective demand creation initiatives, and better brand management.
Chris Hofnagel: Thanks, Alex.
Chris Hofnagel: Good morning, everyone, and thank you for joining us on today's call. For the second quarter, we exceeded our revenue and earnings expectations with broad-based contributions from across the portfolio. We saw sequential revenue improvement, again, drove meaningful gross margin expansion year on year, and further reduced our inventory and debt. Perhaps more importantly, we continue to strengthen our brand positioning in the marketplace with improved product pipelines, more effective demand creation initiatives, and better brand management. While the macro environment remains dynamic and challenges no doubt remain on the horizon, we've seen key elements of our turnaround effort continue to build momentum, and we encourage that our strategies continue to gain traction.
Chris Hufnagel: While the macroenvironment remains dynamic, and challenges no doubt remain on the horizon, we've seen key elements of our turnaround effort continue to build momentum, and we're encouraged that our strategies continue to gain traction. As a result, we're raising the midpoint of our revenue and earnings guidance for the year. Taryn Miller, our new CFO, will provide more details on our second quarter results and updated outlook for the year in a few minutes.
Speaker Change: While the macroenvironment remains dynamic and challenges no doubt remain on the horizon, we've seen key elements of our turnaround effort continue to build momentum.
Chris Hofnagel: As a result, we're raising the midpoint of our revenue and earnings guidance for the year.
Speaker Change: and we're encouraged that our strategies continue to gain traction.
Chris Hofnagel: Taryn Miller, our new CFO, will provide more details on our second quarter results and update outlook for the year in a few minutes.
Chris Hofnagel: The first I want to provide an update on our turnaround journey. Just on our 365 days ago, on my first earnings call as CEO, I shared a picture of the company of the situation our company faced at the time. Wolverine Worldwide was in a precarious position, and the state of the business was extraordinarily difficult, requiring decisive action. In the weeks following that call, we outlined an ambitious turnaround plan to first stabilize the business and then transform the organization. Ultimately leading to an inflection to growth, all premised on Wolverine Worldwide becoming great global brand builders. While our work is not yet finished, one year in, I'm proud of what our team has accomplished.
Chris Hufnagel: But first, I want to provide an update on our turnaround journey. Just under 365 days ago, on my first earnings call as CEO, I shared a picture of the company and the situation our company faced at the time. Wolverine World Wide was in a precarious position, and to save the business was extraordinarily difficult, requiring decisive action. In the weeks following that call, we outlined an ambitious turnaround plan to first stabilize the business and then transform the organization, ultimately leading to an inflection to growth, all premised on Wolverine becoming great global brand builders. While our work is not yet finished, One year in, I'm proud of what our team has accomplished. We've done exactly what we said we'd plan to do.
Speaker Change: In the weeks following that call, we outlined an ambitious turnaround plan to first stabilize the business and then transform the organization.
Speaker Change: ultimately leading to an inflection to growth, all premised on Wolverine World Wide becoming great global brand builders.
Chris Hufnagel: Our fast and bold actions have stabilized the company, streamlining our cost structure and materially expanding our gross margin, significantly reducing the debt that constrained our ability to invest, and attacking the inventory issues that undermined our brand's position in the market and impeded our pipeline of new product innovation. At the same time, we also made great strides in transforming Wolverine World Wide for the future.
Chris Hofnagel: We've done exactly what we said we planned to do. Our fast and bold actions have stabilized the company. Streamlining our cost structure and material expanding our growth margins. Significantly reducing the debt that constrained our ability to invest. And attacking the inventory issues that undermine our brand's position in the market and impeded our pipeline of new product innovation. At the same time, we were doing this essential work. We also made great strides in transforming Wolverine Worldwide for the future. Building a new culture aligned with our vision of being consumer-obsessed global brand builders. Shaping our portfolio to focus on brands with the unique potential to win and attract performance in lifestyle categories.
Speaker Change: One year in, I'm proud of what our team has accomplished.
Speaker Change: We've done exactly what we said we planned to do.
Speaker Change: Our fast and bold actions have stabilized the company.
Speaker Change: Streamlining our cost structure and materially expanding our gross margins.
Speaker Change: Significantly reducing the debt that constrained our ability to invest.
Speaker Change: At the same time we were doing this essential work, we also made great strides in transforming Wolverine World Wide for the future.
Chris Hufnagel: Building a new culture aligned with our vision of being consumer-obsessed and global brand builders; shaping our portfolio to focus on brands with the unique potential to win in attractive performance and lifestyle categories; developing key capabilities to execute our strategy, including The Collective, a center of excellence specialized in consumer and trend insight, along with new in-house creative and PR resources for today's always-on consumer. Implementing brand protection measures to help clean up the marketplace, fostering stronger relationships with our wholesale and distribution partners here in the U.S. and around the world, fast-tracking a new trend, right?
Chris Hofnagel: Developing key capabilities to execute our strategy, including the Collective, a center of excellence specialized in consumer and trend insights, along with new in-house creative and PR resources for today's always-on consumer. Implementing brand protection measures to help clean up the marketplace, fostering stronger relationships with our wholesale and distribution partners here in the US and around the world. Fast-tracking new trend right innovative products to market well ahead of our traditional development timelines. Investing a greater portion of our dollars in demand creation help drive our brands awareness infinity with consumers. And enhancing our team with new talent, keenly focused on growth and modern brand building skill sets.
Speaker Change: Developing key capabilities to execute our strategy, including The Collective, a center of excellence specialized in consumer and trend insight, along with new in-house creative and PR resources for today's always-on consumer.
Chris Hufnagel: Innovative products to market well ahead of our traditional development timeline. Investing a greater portion of our dollars in demand creation helped drive our brand's awareness and affinity with consumers, and enhancing our team with new talent, keenly focused on growth and modern brand building skills. Thanks to our team's hard work and grit, combined with a clear vision and bold call to action.
Speaker Change: Investing a greater portion of our dollars in demand creation helped drive our brand's awareness and affinity with consumers.
Speaker Change: and enhancing our team with new talent, keenly focused on growth, and modern brand building skill sets.
Chris Hofnagel: Thanks to our team's hard work and grit, combined with a clear vision and bold call to action, we find the company in a much better place today. But be assured, no one is content with where we stand. We've done the work necessary to position the company to turn the page to the next chapter in its 141-year history, driving the business into the inflection phase of our turnaround to begin to generate profitable growth and doing it on a sustained basis, quarter after quarter, year after year. We believe our strongly aligned with consumer trends moving forward. More and more people are seeking to better lives every day, gravity towards activities that help them live healthier, more productive, more fulfilled lives, physically and mentally.
Speaker Change: Thanks to our team's hard work and grit, combined with a clear vision and bold call-to-action, we find the company a much better place today.
Chris Hufnagel: We find the company in Meshberger Place today. But be assured, no one is content with where we stand, driving the business into the inflection phase of its turnaround to begin to generate profitable growth and doing it on a sustained basis, quarter after quarter, year after year. This next chapter in our story begins with our brands. Our brands have tremendous potential, possessing true authenticity in highly desirable categories that represent significant addressable markets today and, we believe, are strongly aligned with consumer trends moving forward. More and more people are seeking to better their lives every day, gravitating towards activities that help them live healthier, more productive, and more fulfilled lives, physically and mentally.
Speaker Change: We've done the work necessary to position the company to turn the page to the next chapter in its 141-year history.
Speaker Change: driving the business into the inflection phase of our turnaround to begin to generate profitable growth.
Speaker Change: and doing it on a sustained basis, quarter after quarter, year after year.
Speaker Change: Our brands have tremendous potential, possessing true authenticity and highly desirable categories that represent significant addressable markets today, and we believe are strongly aligned with consumer trends moving forward.
Chris Hufnagel: Our brands are well-respected for making great, innovative products that enable consumers to run, hike, exercise, move, and work faster and longer and more comfortably; award-winning products that are simply better and have disrupted the market over time. Our brands are recognized as originals, trailblazers, innovators, and leaders in their categories and possess unique and compelling DNA. Their product design credibility provides amazing advantages to both excel in performance categories and build lasting lifestyle businesses.
Chris Hofnagel: Our brands are well-restricted for making great innovative products that enable consumers to run, hike, exercise, move, and work faster and longer and more comfortably. Award-winning products are simply better and have disrupted the market over time. Our brands are recognized as originals, trailblazers, innovators, and leaders in their categories and possess unique and compelling DNA. Their product design credibility presents amazing advantages to both excel in performance categories and build lasting lifestyle businesses. Today, however, the marketplace requires more than well-positioned brands and great products. Brands need to resonate beyond function, and their products need to deliver style and trend, as well as performance and innovation.
Speaker Change: Our brands are well-respected for making great, innovative products that enable consumers to run, hike, exercise, move, and work faster and longer and more comfortably. Award-winning products are simply better and have disrupted the market over time.
Speaker Change: Their product design credibility present amazing advantages to both excel in performance categories and build lasting lifestyle businesses.
Chris Hufnagel: Today, however, the marketplace requires more than well-positioned brands and great products. Brands need to resonate beyond function, and their products need to deliver style and trend, as well as performance and innovation. Brands need to tell differentiated, relevant stories that only they can credibly tell. And those stories need to engage our consumers where and when they want to be engaged. In short, our brands need to build awesome products and tell amazing stories that make every day of our consumers' lives better. Our team is energized by the opportunity we have in front of us to drive for better.
Speaker Change: Brands need to resonate beyond function and their products need to deliver style and trend as well as performance and innovation. Brands need to tell differentiated, relevant stories that only they can credibly tell. And those stories need to engage our consumers where and when they want to be engaged.
Chris Hofnagel: Brands need to tell differentiated, relevant stories that only they can credibly tell, and those stories need to engage our consumers where and when they want to be engaged. In short, our brands need to build awesome products and tell amazing stories that make every day of our consumers' lives better. Our team is energized by the opportunity we have in front of us to drive for better. Better brands, better products, better storytelling, and ultimately better performance, culminating in greater returns for our shareholders. Our brand-building model, focused squarely on the intersection of awesome products, amazing storytelling, and driving the business, is beginning to produce better performance.
Chris Hufnagel: Better brands, better products, better storytelling, and ultimately better performance, culminating in greater returns for our sales. Our brand building model, focused squarely on the intersection of awesome products, amazing storytelling, and driving the business, is beginning to produce better performance. Before I hand it over to Taryn, I'd like to take a few minutes to share some concrete examples from our brands related to each aspect of our model, beginning with building awesome products.
Speaker Change: Our team is energized by the opportunity we have in front of us to drive for better. Better brands. Better products. Better storytelling. And ultimately, better performance.
Speaker Change: Our brand building model, focused squarely on the intersection of awesome products, amazing storytelling, and driving the business, is beginning to produce better performance.
Chris Hofnagel: Before I hand it over to Taren, I'd like to take a few minutes to share some concrete examples from our brands related to each aspect of our model. Beginning with building awesome products. From the very start of our turnaround effort, we prioritize bolstering our brand's product pipelines as quickly as possible to inject newness with compelling innovation and trend-right design. Sock needs to further along on this journey. The accelerated product life cycles in the run category, driving a 900 basis point increase in revenue contribution year over year in the second quarter from new product introductions. On the heels of introducing the Rhyme Guide 17 and Endorphin 4 collections earlier this year, the brand recently launched its award-winning premium runner, the Triumph 22, delivering strong double-digit growth for the collection and run specialty and on Sockney.com.
Speaker Change: And before I hand it over to Taryn, I'd like to take a few minutes to share some concrete examples from our brands related to each aspect of our model.
Chris Hufnagel: From the very start of our turnaround effort, we prioritized bolstering our brand's product pipelines as quickly as possible to inject newness with compelling innovation and trend-right design. Saucony is the furthest along on this journey, with accelerated product life cycles in the run category, driving a 900 basis point increase in revenue contribution year over year in the second quarter from new product introduction. On the heels of introducing the Ride & Guide 17 and Endorphin 4 collections earlier this year, the brand recently launched its award-winning premium runner, the Triumph 22.
Taryn: to inject newness with compelling innovation and trend-right design.
Taryn: Saucony is the furthest along on this journey. With accelerated product life cycles in the run category, driving a 900 basis point increase in revenue contribution year-over-year in the second quarter from new product introductions.
Chris Hufnagel: Delivering strong double-digit growth for the collection and run specialty and on Saucony.com, the brand followed the strong debut with the launch last month of its most premium max cushion franchise, the Hurricane 24. Featuring wearable styling for performance and lifestyle use, sell-through is off to a strong start. Finally, as an early preview of the planned 2025 introduction, in advance of the Olympics, the brand offered a limited release of its pinnacle franchise, the Endorphin Elite 2, a few weeks ago, selling out in just an hour. The Super Shoe, built on a Creta run, the brand's most advanced foam developed through years of lab testing, will be worn by Olympic marathoner Melinda Elmore in Paris this fall.
Chris Hofnagel: The brand followed the strong debut with the launch last month of its most premium max cushion franchise, the Hurricane 24, reaching wearable styling for performance and lifestyle use, and sell-through is off to a strong start. Finally, as an early preview of the planned 2025 introduction in advance of the Olympics, the brand offered a limited release of its pinnacle franchise, the Endorphin Elite 2, a few weeks ago, selling out in just an hour. The Supershoe, built on a credit run, the brand's most advanced foam developed through years of lab testing, will be worn by Olympic marathoner Melinda Elmore in Paris.
Taryn: Featuring wearable styling for performance and lifestyle use, and sell-through is off to a strong start.
Chris Hofnagel: this weekend. On the lifestyle side, Sockeny's authentically leveraged deep product archives, along with influential collaborations, tapped into the fast growing retro tech trend, with styles like the pro-grid omni, pro-grid triumph, and ride millennium driving strong shelters and opening future distribution with the best retailers in tier 0 through tier 2. While Sockeny's building strong momentum here in the US, its best expression today may just be in London. The folks of the companies and brands' new key city approach. Sockeny.com grew 40% in the UK during Q2, contributing to an increase of over 20% in the brand's only commerce channel globally in the quarter.
Chris Hufnagel: On the lifestyle side, Saucony has authentically leveraged its deep product archive, along with influential collaborations, to tap into the fast-growing retro tech trend, with styles like the ProGrid Omni, ProGrid Triumph, and Ride Millennium driving strong sell-throughs and opening future distribution with the best retailers in tier zero through tier two. While Saucony is building strong momentum here in the U.S., its best expression today may just be in London The folks are the company's and brand's new key city approach; stalkinginc.com grew 40% in the UK during Q2, contributing to an increase of over 20% in the brand's only commerce channel globally in the quarter.
Taryn: with styles like the ProGrid Omni, ProGrid Triumph, and Ride Millennium driving strong sell-throughs and opening future distribution with the best retailers in Tier 0 through Tier 2.
Taryn: While Saucony is building strong momentum here in the U.S., its best expression today may just be in London. The folks are the company's and brand's new key city approach.
Chris Hofnagel: In July, Sockeny was the title sponsor for the London 10K, the centerpiece of a host of activations, which collectively propelled the brand to records of interest in the UK. Sockeny's just beginning to hit stride around the world.
Chris Hufnagel: In July, Saucony was the title sponsor for the London 10K, the centerpiece of a host of activations which collectively propelled the brand to record search interest in the UK. Saucony is just beginning to hit its stride around the world.
Taryn: In July , Saucony was the title sponsor for the London 10K, the centerpiece of a host of activations which collectively propelled the brand to record search interest in the UK.
Taryn: Saucony is just beginning to hit stride around the world.
Chris Hofnagel: Moving on to telling amazing stories. As I shared earlier, I believe brands need to do more than just have great products that perform well to win. They also need to engage consumers with timely stories that only they can tell, leveraging their unique DNA. And the second quarter, based on insights from one of its consumers that women at times still insecure about wearing shorts, Sweaty Betty inspired its sister to embrace her bodies with the Where the Damn Shorts campaign. The campaign featured full funnel messaging and activations nearly doubled the sale of shorts versus last year and helped the brand deepen its emotional connections with its consumers.
Chris Hufnagel: Moving on to telling amazing stories, as I shared earlier, I believe brands need to do more than just have great products that perform well to win. They also need to engage consumers with timely stories that only they can tell, leveraging their unique DNA. And the second quarter, based on insights from one of its consumers that women at times feel insecure about wearing shorts, Sweaty Bedding inspired its sisterhood to embrace their bodies with its Wear the Damn Shorts campaign.
Speaker Change: Moving on to telling amazing stories. As I shared earlier, I believe brands need to do more than just have great products that perform well to win.
Speaker Change: Sweaty Bedding inspired its sisterhood to embrace their bodies with its Wear the Damn Shorts campaign.
Chris Hufnagel: The campaign featured full-funnel messaging and activations, nearly doubled the sale of shorts versus last year, and helped the brand deepen its emotional connections with its customers. During the second quarter, Sweaty Betty saw double-digit growth in its important leggings category, driven by its hero franchise power. Earlier this year, the brand expanded its Trenrite Explorer Collection, a light and wrinkle-free casual collection for warm weather and travel that allows the brand to further diversify its assortment, resulting in very strong double-digit growth year-to-date.
Speaker Change: The campaign featured full funnel messaging and activations, nearly double the sale of shorts versus last year, and helped the brand deepen its emotional connections with its consumers.
Chris Hofnagel: During the second quarter, Sweaty Betty saw double-digit growth of its important leggings category driven by a two of franchise power. Earlier this year, the brand expanded to try and write Explorer collection, a light and wrinkle free casual collection for warm weather and travel that allows the brand to further diversify its sortment, resulting in very strong double digit growth here today. The Sweaty Betty team remains intensely focused on its consumer and is beginning to influence our broader portfolio's thinking in this critical way.
Chris Hufnagel: The Sweaty Betty team remains intensely focused on its consumer and is beginning to influence our broader portfolio's thinking in this critical way. An intense focus on the health of the marketplace and driving sales and performance every day has been a critical component of our turnaround as well. We've taken action to shut down rogue selling, optimize distribution, and elevate the branded shopping experience.
Chris Hofnagel: And finishing with driving the business. An intense focus on the health of the marketplace and driving sales through performance every day has been a critical component of our turnaround as well. We've taken action to shut down rogue selling, optimized distribution, and elevate branded shopping experiences. Merrill, for example, has cultivated a much cleaner selling environment this past season and successfully reset several of its key accounts in the US with more modern assortments to position the brand more appropriately. As a result, in the second quarter, Merrill drove growth at retail and hike despite the category headwinds and achieved its third straight quarter of acceleration in market share gains.
Chris Hufnagel: Merrill, for example, has cultivated a much cleaner selling environment this past season and successfully reset several of its key accounts in the U.S. with more modern assortments to position the brand more appropriately. As a result, in the second quarter, Merrill drove growth at retail and increased prices, despite the category headwinds, and achieved its third straight quarter of acceleration in market share gains. Merrill's push to modernize the trail through key award-winning product franchises like the Moab Speed 2 and Agility Peak 5, faster and lighter styles at elevated prices, continues to drive sell-through and create momentum.
Speaker Change: Merrill, for example, has cultivated a much cleaner selling environment this past season and successfully reset several of its key accounts in the U.S. with more modern assortments to position the brand more appropriately.
Chris Hofnagel: Merrill has pushed a modernized trail through key award-winning proc franchises like the Moab Speed 2 and Agility Peak 5, faster and lighter style that elevated price points, continues to drive sell through and create momentum. The brand fueled energy and reached new consumers with several collaborations, same quarter as well, including with Grayson, a very cool premium golf brand, which quickly sold out and generated 500 million earned media impressions in the process. Internationally, Merrill, together with his partner in Japan, opened several key stores in Tokyo over the last year. The stores are performing well ahead of their plan while also helping position Merrill as a relevant outdoor lifestyle brand with the younger consumers in a highly influential city.
Speaker Change: Merrill's pushed to modernize the trail through key award-winning product franchises like the Moab Speed 2 and Agility Peak 5. Faster and lighter styles at elevated price points.
Chris Hufnagel: The brand fueled energy and reached new consumers with several collaborations in the second quarter as well, including with Grayson, a very cool premium golf brand, which quickly sold out and generated $500 million in earned media impressions in the process. Internationally, Merrill, together with its partner, Japan, opened several key stores in Tokyo over the last year. The stores are performing well ahead of their plan, while also helping position Merrill as a relevant outdoor lifestyle brand with younger consumers in a highly influential city. As a leader in outdoor footwear, Merrill is stepping into the opportunity it has to reinvigorate the category through innovative and trend-right products and building the brand in key markets around the world.
Chris Hofnagel: As a later not-door footwear, Merrill is stepping into the opportunity to reinvigorate the category through innovative and trend-right product and building the brand in key markets around the world.
Taryn Miller: With that, I'm very pleased to hand a call over to Taren Miller, our new CFO. Today's our 90th day with the company. So, I'll shake you through our second quarter results and update guidance in much more detail. Taren.
Taryn Miller: With that, I'm very pleased to hand the call over to Taryn Miller, our new CFO. Today is her 90th day with the company. She'll take you through our second quarter results and update guidance in much more detail.
Taryn Miller: With that, I'm very pleased to hand the call over to Taryn Miller, our new CFO . Today's her 90th day with the company. She'll take you through our second quarter results and update guidance in much more detail. Taryn?
Taryn Miller: Thank you, Chris, and welcome, everyone. I joined Wolverine World Wide three months ago with a strong belief in the potential of our brands, our strategy to drive profitable growth, and our commitment to improve the financial health of the business and ultimately deliver greater and more consistent value to our shareholders. We are beginning to see traction from the actions taken to become a new and better company and are pleased with how we are performing at this stage of our transformation.
Taryn Miller: Thank you, Chris, and welcome everyone. I joined Wolverine World Wide three months ago with a strong belief in the potential of our brands, our strategy to drive profitable growth, and our commitment to improve the financial health of the business and ultimately deliver greater and more consistent value to our shareholders. We are beginning to see traction from the actions taken to become a new and better company and are pleased with how we are performing at this stage of our transformation. Turning to our financial results this quarter in the outlook for 2024, we are encouraged by the sequential revenue and earnings growth our teams delivered in the second quarter, and we made further progress towards building the foundation to drive sustained profitable growth.
Taryn Miller: Turning to our financial results this quarter and the outlook for 2024, we are encouraged by the sequential revenue and earnings growth our teams delivered in the second quarter, and we made further progress towards building the foundation to drive sustained profitable growth. Second quarter revenue for our ongoing business of $424.8 million was above our outlook of approximately $410 million due to demand trends, supply chain, and many more. Approximately $10 million of the overdelivery was a timing shift between the second and third quarters. The transition of our Saucony inventory from our Louisville distribution center to our California center was completed with minimal disruption, therefore avoiding the previously expected shift of approximately five million dollars to the third quarter.
Taryn Miller: Second quarter revenue for our ongoing business of $424.8 million was above our outlook of approximately $410 million, as demand trends and supply chain execution continue to improve. Approximately $10 million of the over delivery was a timing shift between the second and third quarters. The transition of our sockety inventory from our Louisville Distribution Center to our California Center was completed with minimal disruption, therefore avoiding the previously expected shift of approximately $5 million to the third quarter. In addition, there was approximately $5 million of wholesale orders that shipped earlier than originally expected. Revenue trends for our ongoing business improves sequentially from a year-over-year decline of 24.5% in the first quarter to a decline of 18.4% in the second quarter.
Taryn Miller: In addition, there were approximately $5 million of wholesale orders that shipped earlier than originally expected. Revenue trends for our ongoing business improved sequentially from a year-over-year decline of 24.5% in the first quarter to a decline of 18.4% in the second quarter. We're seeing increased demand for our brands and products as we execute our consumer-focused strategy. The year-over-year comparison includes more than $55 million of revenue in the second quarter of 2023 that did not repeat in the second quarter of this year, including excess end-of-life inventory liquidation and business model changes. Adjusted gross margin of 43.1% increased 400 basis points versus last year. Gross margins were in line with our expectations and reflect a healthier sales mix, lower promotional activity, and the benefit of supply chain cost initiatives.
Taryn Miller: Second quarter revenue for our ongoing business of $424.8 million was above our outlook of approximately $410 million. As demand trends and supply chain execution
Taryn Miller: continue to improve.
Taryn Miller: The transition of our Saucony inventory from our Louisville Distribution Center to our California Center was completed with minimal disruption, therefore avoiding the previously expected shift of approximately $5 million to the third quarter.
Taryn Miller: In addition, there was approximately $5 million of wholesale orders that shipped earlier than originally expected.
Taryn Miller: Revenue trends for our ongoing business improved sequentially from a year-over-year decline of 24.5% in the first quarter to a decline of 18.4% in the second quarter.
Taryn Miller: We are seeing increased demand for our brands and products as we execute our consumer focus strategy. The year-over-year comparison includes more than $55 million of revenue in the second quarter of 2023 that did not repeat in the second quarter this year, including excess end-of-life inventory liquidation and business model changes. Adjust the gross margin of 43.1% increased 400 basis points versus last year. Gross margins were in line with our expectations and reflect a healthier sales mix, lower promotional activity, and the benefit of supply chain cost initiatives. Adjusted operating margin of 6.3% exceeded our outlook for the quarter, driven by operating cost leverage on the stronger revenue performance.
Taryn Miller: We are seeing increased demand for our brands and products as we execute our consumer-focused strategy.
Taryn Miller: The year-over-year comparison includes more than $55 million of revenue in the second quarter of 2023 that did not repeat in the second quarter this year, including excess end-of-life inventory liquidation and business model changes.
Taryn Miller: Adjusted gross margin of 43.1 percent increased 400 basis points versus last year. Gross margins were in line with our expectations and reflect a healthier sales mix, lower promotional activity, and the benefit of supply chain cost initiatives.
Taryn Miller: Adjusted operating margin of 6.3% exceeded our outlook for the quarter, driven by operating cost leverage on the stronger revenue performance. As a result of the improvement in revenue and operating margin, adjusted diluted earnings per share improved from 5 cents in the first quarter to 15 cents in the second quarter. Adjusted diluted earnings per share was 19 cents in the second quarter of last year. We continue to make progress on strengthening the balance.
Taryn Miller: Adjusted operating margin of 6.3% exceeded our outlook for the quarter driven by operating cost leverage on the stronger revenue performance.
Taryn Miller: As a result of the improvement in revenue and operating margin, adjusted diluted earnings per share improved from 5 cents in the first quarter to 15 cents in the second quarter. Adjusted deluded earnings per share was 19 cents in the second quarter of last year. We continue to make progress on strengthening the balance sheet. Inventory was $297 million, down 44% from last year for the ongoing business as we further optimize inventory levels and benefit from improved planning and execution. Net debt was $666 million, down approximately $270 million versus last year.
Taryn Miller: As a result of the improvement in revenue and operating margin, adjusted diluted earnings per share improved from 5 cents in the first quarter to 15 cents in the second quarter.
Taryn Miller: Adjusted diluted earnings per share was $0.19 in the second quarter of last year.
Taryn Miller: Inventory was $297 million, down 44% from last year for the ongoing business as we further optimize inventory levels and benefit from improved planning and execution. Net debt was $666 million, down approximately $270 million versus last year.
Taryn Miller: We continue to make progress on strengthening the balance sheet.
Taryn Miller: Now, turning to our updated outlook for 2024. We are raising the midpoint of our revenue and earning sky. While we continue to operate in a dynamic environment, our solid first half results combined with the development of the order book for our global wholesale and distributor business have strengths in our confidence in our outlook. This compares to 2023 revenue from our ongoing business of $1.99 billion and represents a decline of 13.7% at the midpoint of the range. As we shared in our first quarter call, there were discrete items in 2023 that will not recur in 2024 related to end-of-life inventory liquidation, business model changes, and a timing shift of international distributors' shipment.
Taryn Miller: Now, turning to our updated outlook for 2024. We are raising the midpoint of our Revenue and Earnings Guide. While we continue to operate in a dynamic environment, our solid first half results combined with the development of the order book for our global wholesale and distributor business have strengthened our confidence in our outlook. Fiscal 2024 revenue from our ongoing business is now expected in the range of $1.71 billion to $1.73 billion, an increase of $15 million at the midpoint versus our May outlook.
Taryn Miller: This compares to 2023 revenue from our ongoing business of $1.99 billion and represents a decline of 13.7% at the midpoint of the range. As we shared in our first quarter call, there were discrete items in 2023 that will not recur in 2024 related to end-of-life inventory liquidation, business model changes, and a timing shift of international distributorship. The total revenue generated by these items was $185 million, which was heavily weighted to the first half of the year.
Taryn Miller: The total revenue generated by these items was $185 million, which was heavily weighted to the first half of the year. Excluding the discrete items, full-year 2024 revenue at the midpoint is expected to decline approximately 4.8%. We expect revenue to improve sequentially throughout the second half as our brands continue to build momentum behind new products and strengthening market activations. In addition, the discrete headwinds that I shared earlier will bait in the second half. We continue to expect full-year 2024 active group revenue to decline by a mid-teens percentage year-over-year and work group revenue to decline by a percentage in the high single digits year-over-year.
Taryn Miller: Excluding the discrete items, full year 2024 revenue at the midpoint is expected to decline approximately 4.8%. We expect revenue to improve sequentially throughout the second half as our brands continue to build momentum behind new products. Strengthening Market Activation. In addition, the discrete headwinds that I shared earlier will be mitigated in the second half.
Taryn Miller: Excluding the discrete items full year 2024 revenue at the midpoint is expected to decline approximately four 8%.
Taryn Miller: We expect revenue to improve sequentially throughout the second half as our brands continued to build momentum behind new products and strengthening market activations.
Taryn Miller: In addition, the discrete headwinds that I shared earlier well bet in the second half.
Taryn Miller: We continue to expect full-year 2024 active group revenue to decline by a mid-teens percentage year over year and work group revenue to decline by a percentage in the high single digits year over year. Brand performance expectations are consistent with what we shared in May and can be found in our investor presentation on our website. Pernilla Gross Margin, as a result of the actions we've taken over the last year, we continue to expect strong expansion compared to 2023. These include supply chain and product cost savings as well as brand protection actions, the benefit of healthier inventory levels, and a better mix of full price sales.
Taryn Miller: Brand performance expectations are consistent with what we shared in May and can be found in our investor presentation on our website.
Taryn Miller: Turning to gross margin. As a result of the actions we've taken over the last year, we continue to expect strong expansion compared to 2023. These include supply chain and product cost savings, as well as brand protection actions, the benefit of healthier inventory levels, and better mix of full-price sales. Adjusted gross margin is expected to be approximately 44.5% at the midpoint of the outlook range, a record for our company, up approximately 460 basis points compared to 2023. Adjusted selling, general, and administrative expenses are expected to be approximately $640 million at the midpoint of the outlook range, or approximately 37% of revenue, compared to $716 million in 2023, or 36% of revenue.
Taryn Miller: Adjusted gross margin is expected to be approximately 44.5 percent at the midpoint of the outlook range, a record for our company, up approximately 460 basis points compared to 2023. Adjusted selling, general, and administrative expenses are expected to be approximately $640 million at the midpoint of the outlook range, or approximately 37% of revenue, compared to $716 million in 2023, or 36% of revenue. The lower operating cost structure includes restructuring savings partially offset by incremental investment in our business, normalized incentive compensation, and inflation.
Taryn Miller: The lower operating cost structure includes restructuring savings, partially offset by incremental investment in our business, normalized incentive compensation, and inflation. Adjusted operating margin is expected to be approximately 7.4% at the midpoint of the outlook range, compared to 3.9% in 2023. Interests and other expenses are projected to be approximately $40 million, down from $63 million in 2023, which reflects the benefit from the significant debt reduction over the last last year. The effective tax rate is projected to be approximately 18.5%. Adjusted deluded earnings per share is now expected to be in the range of 75 cents to 85 cents, including a 10 cent negative impact from foreign currency exchange.
Taryn Miller: Adjusted operating margin is expected to be approximately 7.4% at the midpoint of the outlook range, compared to 3.9% in 2023. Interests and other expenses are projected to be approximately $40 million, down from $63 million in 2023, which reflects the benefit from the significant debt reduction over the last year. The effective tax rate is projected to be approximately 18.5%.
Taryn Miller: Adjusted diluted earnings per share is now expected to be in the range of $0.75 to $0.85, including a $0.10 negative impact from foreign currency exchange. This compares to adjusted diluted earnings per share of 15 cents in 2023. Working capital and cash flow optimization remain a priority in 2024. We expect inventory to decline by at least $75 million during the year as we continue to work through specific areas of excess inventory.
Taryn Miller: This compares to adjusted deluded earnings per share of 15 cents in 2023.
Taryn Miller: Working capital and cash flow optimization remains a priority in 2024. We expect inventory to decline by at least $75 million during the year as we continue to work through specific areas of excess inventory. Operating free cash flow is expected in the range of $110 million to $130 million, but the approximately $35 million of capital expenditures. We expect net debt to improve by nearly $175 million to $565 million at year end.
Taryn Miller: Operating free cash flow is expected in the range of $110 million to $130 million with approximately $35 million of capital expenditures. We expect net debt to improve by nearly $175 million to $565 million at year-end. Shifting to our outlook for the third quarter, we expect third-quarter revenue of approximately $420 million, a year-over-year decline of approximately 11%, reflecting continued improvement in revenue performance compared to the prior two quarters. Third quarter gross margin is expected to be approximately 45 percent, an increase of 300 basis points from last year and in line with our first half performance.
Taryn Miller: Chifting to our outlooks of the third quarter. We expect third quarter revenue of approximately $420 million, a year-over-year decline of approximately 11%. Reflecting continued improvement in revenue performance compared to the prior two quarters. Third quarter gross margin is expected to be approximately 45%, an increase of 300 basis points from last year and in line with our first half performance. We expect improvements in operating margin and earnings, with third quarter adjusted operating margins of approximately 7% and adjusted diluted earnings per share of approximately 20 cents.
Taryn Miller: We expect improvements in operating margin and earnings, with third-quarter adjusted operating margins of approximately 7% and adjusted diluted earnings per share of approximately 20 cents. In summary. The clarity and execution of our strategy is strengthening our brands and driving improvements in Wolverine's financial position. The transformation to more consistent and profitable revenue growth, coupled with strong cash flow, will enable us to invest in our brands and new capabilities to become consumer-obsessed global brand builders. And with that, let me hand the call back to Chris before we open it up for questions. Thanks, Taryn.
Taryn Miller: In summary, the clarity and execution of our strategy is strengthening our brands and driving improvements in Wolverine's financial position. The transformation to more consistent and profitable revenue growth, coupled with strong cash flow, will enable us to invest in our brands and new capabilities to become consumer-obsessed global brand builders.
Chris Hofnagel: And with that, let me hand the call back to Chris before we open it up for questions. Thanks, Teran.
Darren: Thanks Darren.
Chris Hofnagel: For concluding our prepared remarks, and as I reflect on my one-year anniversary in this role tomorrow, I want to extend a sincere and heartfelt thank you to our global teams. I've asked a lot of you, and you've delivered. You've been simply great. Thanks for your work and your support this past year. You've helped write the first chapter in what I believe will be a great turnaround story. Over the last 364 days, our team has executed an extensive list of initiatives as a part of a comprehensive plan to stabilize and begin to transform the company. I'm inspired by what we've accomplished as one Wolverine, but I believe there's so much more in front of us.
Chris Hufnagel: For concluding our prepared remarks, and as I reflect on my one-year anniversary in this role tomorrow, I want to extend a sincere and heartfelt thank you to our global team. I've asked a lot of you, and you've delivered. You've been simply great.
Speaker Change: Before concluding our prepared remarks, and as I reflect on my one year anniversary in this role tomorrow.
Speaker Change: I wanted to extend a sincere and heartfelt thank you to our global teams.
Speaker Change: I've asked a lot of you and you've delivered you've been simply great. Thanks for your work and your support this past year, you've helped write the first chapter and what I believe will be a great turnaround story.
Chris Hufnagel: Thanks for your work and your support this past year. You've helped write the first chapter in what I believe will be a great turnaround story. Over the last 364 days, our team has executed an extensive list of initiatives as a part of a comprehensive plan to stabilize and begin to transform the company. I'm inspired by what we've accomplished as one Wolverine, but I believe there's so much more in front of us.
Speaker Change: Over the last 364 days our team has executed an extensive list of initiatives as a part of a comprehensive plan to stabilize and begin to transform the company.
Speaker Change: I'm inspired by what we've accomplished as one Wolverine, but I believe there is so much more in front of us.
Chris Hofnagel: While we're excited by our brand's positioning and potential and motivated by the early proofpoints we've seen that give us confidence in our strategy, we know we must drive for better: better brands, better products and storytelling, and better performance, all leading to greater returns for our shareholders.
Chris Hufnagel: While we're excited by our brand's positioning and potential and motivated by the early proof points we've seen that give us confidence in our strategy, we know we must strive for better, better brands, better products, and storytelling, and better performance, all leading to greater returns for our shareholders. That's our next chapter, and it's time for us to turn the page. Thank you for taking the time to be with us.
While we are excited by our brand's positioning and potential and motivated by the early proof points, we have seen that gives us confidence in our strategy.
Speaker Change: We know we must drive for better better brands, better products and storytelling and better performance.
Speaker Change: All leading to greater returns for our shareholders.
Chris Hofnagel: That's our next chapter, and time for us to turn the page.
Speaker Change: Our next chapter and time for us to turn the page.
Chris Hofnagel: Thank you for taking time to be with us this morning.
Speaker Change: Thank you for taking time to be with us This morning.
Operator: At this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two.
Operator: At this time, if you would like to ask a question, please press star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2.
Speaker Change: At this time, if you would like to ask a question. Please press star one on your telephone keypad you.
Speaker Change: You may remove yourself from the queue at any time by pressing star two.
Operator: We ask that you please limit yourself to one question and one follow-up. You may rejoin the queue for any additional questions.
Speaker Change: We ask that you please limit yourself to one question and one follow up.
Speaker Change: You may rejoin the queue for any additional questions.
Operator: We ask that you please limit yourself to one question and one follow-up. You may rejoin the queue for any additional questions. We'll take our first question from Jim Duffy with Stiefel. Please go ahead. Thank you. Good morning, Chris, Taryn, and Alex.
Chris Hufnagel: Yeah, for sure. Thanks.
Chris Hofnagel: I'll prove points of brand elevation in the marketplace. I guess firstly, is the marketplace reset complete. And then secondly, can you give us an update on the dialogue you're having with channel partners and speak to how your efforts are translating to a forward visibility. Yeah, for sure. Thanks for the question. I would not say that the reset is fully complete. I think we are still working hard as part of the transformation phase of our turnaround plan. So I think I don't want to get out ahead of ourselves and say that it's done and that there is still certainly more work to do.
Chris Hufnagel: Thanks for the question. I would not say that the reset is fully complete. I mean, I think we are still working hard as part of the transformation phase of our turnaround plan. So, I don't want to get ahead of ourselves and say that it's done, that there is still certainly more work to do at the same time. I think we've accomplished a tremendous amount in a very short period of time.
Chris Hofnagel: At the same time, I think we've accomplished a tremendous amount in a very short period of time. I mean, it's efforts from just re-engaging our wholesale partners both domestically and our dispute partners around the world in a very constructive manner over the past year. I think it's becoming more thoughtful about segmentation and distribution. I think it's about attacking rogue selling and really working to bring our inventory levels down and really not work so hard to push product out but really begin to pivot to a stronger, stronger pull model. And I think the feedback and the results are early proof points that we're doing the right things at the same time.
Chris Hufnagel: Efforts to just reengaging our wholesale partners, both domestically and our distributed partners around the world in a very constructive manner over the past year. I think it's becoming more thoughtful about segmentation and distribution. I think it's about attacking rogue selling and really working to bring our inventory levels down and not work so hard to push product out but really begin to pivot to a stronger pull model. And I think the feedback and the results are early proof points that we're doing the right things. At the same time, no one here is declaring victory or saying that we're all the way through.
Chris Hofnagel: No one here is declaring victory, or they were all the way through. I think the feedback from sort of key partners on where the product pipeline is in the demand creation is certainly positive. I think Sockney is certainly out in front of that. We made a pretty hard pivot as we think about Sockney strategy, the product line, where we want to sell and how we want to talk about those products. And I'm really encouraged by the reception that Sockney has had in the marketplace, and we're doing the same thing with Merrill, really modernizing that hike lighter and faster away from that traditional hike business, which you know that outdoor category has been challenged.
Chris Hufnagel: I think the feedback from sort of key partners on where the product pipeline is in terms of demand creation is certainly positive, and I think Saucony is certainly ahead of that. We've made a pretty hard pivot as we think about Saucony's strategy, the product line, where we want to sell, and how we want to talk about those products. And I'm really encouraged by the reception that Saucony has received in the marketplace. And we're doing the same thing with Merrill, you know, really modernizing that hike lighter and faster away from that traditional hike business, which, you know, the outdoor category has been challenged by.
Chris Hofnagel: The same time I encourage that that Merrill is leading from a market share gain perspective and really accelerating its market share gains in what continues to be a pretty, pretty volatile market. And then from a work standpoint, you know, I'm encouraged by the progress our work group has made, really getting more product from a trend right standpoint, really working with the wholesale partners on what that distribution looks like.
Chris Hufnagel: At the same time, I'm encouraged that Merrill is leading from a market share gain perspective and really accelerating its market share gains in what continues to be a pretty volatile market. And then from a work standpoint, you know, I'm encouraged by the progress our work group has made, really getting more product from a trend right standpoint, really working with the wholesale partners on what that distribution looks like. So, I would not say the reset is complete, but I think the early actions we've taken have proven successful, and we're going to keep driving that business forward each day.
Chris Hofnagel: So I would not say the resets complete, but I think the early actions we've taken have proven successful, and we're going to keep driving that business forward each day.
Operator: Thank you. I'll jump back in the queue. Thanks, Jim.
Mauricio Cerna: Our next question comes from Mauricio Cerna with UBS. Please go ahead. Great morning, and thanks for taking my questions. Congratulations on the results. You know, nice to see also the progress on the overall DTC growth of the company flat year over year on a recurring basis.
Operator: Our next question comes from Mauricio Serna with UBS. Please go ahead.
Mauricio Serna: Greg, good morning and thanks for taking my questions. Congratulations on the results.
Mauricio Serna: You know, nice to see the progress on the overall DTC growth of the company flat year-over-year on a recurring basis. Maybe you could talk a little bit more about the DTC trends by brands and maybe also could you help us out, maybe bridge out the EPS implications for the second half. I'm just looking at the guidance. I think it implies for the fourth quarter you will be making more than at the higher end. You would be making more earnings there than in all the three previous quarters combined. We just want to understand what the drivers behind that are.
Chris Hofnagel: Maybe could you talk a little bit more about the DTC trends by brands and maybe also could you help us out maybe bridge out the EPS implications for the second half? I'm just looking at the guidance. I think it implies for the fourth quarter, you will be making like, like more than at the higher end you would be making more earnings there than in all the three previous quarters combined. So just want to understand what are the drivers behind that. Thank you.
Mauricio Serna: Thank you.
Chris Hofnagel: Sure. I'll take the first DTC question, and then I hand it over to Taryn that touched on the EPS. We did see a nice inflection in the second quarter from an e-commerce perspective. And in both, both, an inflection to growth from where we were in the first quarter, which we talked about, which is encouraging. Also working to be more thoughtful in how we manage those sites in the promotional cadence. So I think we have seen a nice pivot in that business. Obviously, we have a big couple of quarters ahead of us from a DTC perspective.
Chris Hufnagel: Sure, I'll take the first DTC question, and then I'll hand it over to Taryn to touch on the EPS. We did see a nice inflection in the second quarter from an e-commerce perspective, and both an inflection to growth from where we were in the first quarter, which we talked about, which is encouraging. Also, we are working to be more thoughtful in how we manage those sites during the promotional cadence. So, I think we have seen a nice pivot in that business. Obviously, we have a busy couple of quarters ahead of us from a DTC perspective.
Chris Hufnagel: But specifically, Stockney's e-commerce business was up over 20% in the quarter, which we were certainly encouraged by, and we've seen other businesses make improvements as well. So, it's a business we spend a lot of time on. It's a business that is near and dear to our hearts. It's important, and we think it's a very good expression of the brand. And certainly, us, as we think about proof points for the broader wholesale business, it's important that we get traction there.
Taryn Miller: But you know, specifically, you know, Sockney's e-commerce business was up over 20% in the quarter, which we were certainly encouraged by. And we've seen other businesses take improvement as well. So it's a business. We're spending a lot of time on. It's a business that is near and dear to our hearts. It's important. We think it's a very good expression of the brand. And certainly us as we think about proof points for the broader wholesale business. It's important that we get traction there. So encouraged by the DTC work, although the two big quarters ahead of us, but certainly progress from where we had been in the first quarter.
Chris Hufnagel: So, encouraged by the DTC work, although we have two big quarters ahead of us, but certainly progress from where we were in the first quarter and certainly the latter part of last year. And over to Taryn to talk about the EPS expectations.
Taryn Miller: And certainly at the latter part of last year.
Taryn Miller: And over the time to talk about the EPS expectations. Yeah. Thank you. You're right at the midpoint; earnings per share will increase from 20 cents in the first half to 60 cents in the second half of the year. And this is really the higher revenue that we're expected to be the primary driver of that step up in the second half. Supply chain cost savings and SNA reductions are also driving a step up. Those are already in place, and we're starting to see them. But we see a bigger impact from those in the back half. The revenue.
Taryn Miller: Great. Yeah, thank you. You're right.
Taryn Miller: At the midpoint, earnings per share will increase from 20 cents in the first half to 60 cents in the second half of the year, and this is really higher revenue that we're expected to be the primary driver of that step up in the second half. Supply chain cost savings and SG&A reductions are also driving the step up. Those are already in place, and we're starting to see them, but we will see a bigger impact from those in the back half.
Taryn Miller: The revenue, we're executing our plan, and we're seeing momentum in the brands from the increased new product introductions that we have in the market, improvements in our product design, and a cleaner and lower inventory at retail, and that momentum that we're seeing is showing up in our wholesale and international order book as expected. So, I think that that revenue is the primary driver of that step-up in earnings in the second half of the year, and it's augmented by supply chain cost savings and SG&A reductions.
Taryn Miller: We were executing our plan, and we're seeing the momentum and the brands from the increased new product introductions that we have in the market, improvements in our product design, and a cleaner and lower inventory that retail. And that momentum that we're seeing is showing up in our wholesale and international order book. As expected. So I think that that revenue is the primary driver of that step up in the earnings in the second half of the year. And it's augmented by the supply chain cost savings and SNA reductions.
Operator: Not super helpful.
Taryn Miller: Not super helpful. And then there is one last one.
Operator: And then one last one. Maybe do you have any thoughts or any commentaries that you can give us on, you know, preliminary reviews on the Spring 2025 order books. Thank you. Appreciate that question. Obviously, it's still very, very early in those order windows for the first half of 25. But I can say we're really encouraged by where the product pipelines are. The innovation we brought specifically in Sockney. I think is very strong reactions have been positive there. And the same things, same things can be said in Maryland around the evolution of that brand from a traditional outdoor brand to a modern, modern outdoor brand.
Mauricio Serna: Maybe do you have any thoughts or any comments that you can give us on, you know, preliminary reviews of the spring 2025 voter book?
Chris Hufnagel: Yeah, I appreciate that question. Obviously, it's still very, very early in those order windows for the first half of 25, but I can say we're really encouraged by where the product pipelines are. The innovation we brought specifically to Saucony, I think is very strong. Reactions have been positive there. And the same things can be said in Merrill around the evolution of that brand from a traditional outdoor brand to a modern outdoor brand.
Speaker Change: Very strong reactions have been positive there and the same things same things can be said in merrell around the evolution of that brand from our traditional outdoor brand through to a modern modern outdoor brand and then even some of the pivots. We've made in the work groups. So too early to provide any color on the first half order book other than to say that I'm encouraged by the pipeline.
Chris Hofnagel: And then even some of the pivots we've made in the workgroup. So too early to provide any color on the first half of order book, other than to say that I am encouraged by where the pipeline sits. And then the early reads we've gotten from how we've shown that product of the wholesale partners is encouraging.
Chris Hufnagel: And then even some of the pivots we've made in the work group. So, too early to provide any color on the first half order book other than to say that I'm encouraged by where the pipeline sits. And then the early reads we've gotten from how we've shown that product to the wholesale partners are encouraging. But we'll see that order book develop more over the next handful of months, and we'll have a much clearer picture when we speak to you in November.
Speaker Change: And then the early reads, we have gotten from how we've shown that product to the wholesale partners.
Speaker Change: Is is encouraging but we will see that we'll see that order book develop more over the next handful of months and we'll have a much clearer picture when we speak to you in November.
Chris Hofnagel: But we'll see that we'll see that order book develop more over the next handful of months, and we'll have a much clearer picture when we speak to in November.
Operator: Administrator, thank you very much and congratulations on the results again.
Speaker Change: Understood. Thank you very much and congrats on the results again.
Dana Telsey: The next question comes from Dana Telsey with Telsey Group. Please go ahead. Hi, good morning, everyone. Welcome, Karen, and nice to see the progress. As you think of the talk, Chris, you too.
Operator: The next question comes from Dana Telsey with the Telsey Group. Please go ahead.
Speaker Change: The next question comes from Dana Telsey with Telsey Group. Please go ahead.
Dana Telsey: Hi. Good morning, everyone. Welcome, Taryn, and nice to see the progress. You too.
Dana Telsey: Hi, Good morning, everyone, welcome Carin and nice to see the progress.
Dana Telsey: As you think about the wholesale channel distribution, what did you see domestically? What did you see internationally? Does it break down differently by types of wholesale account? And then, with inventory levels coming down as they have, how do you think about inventories going forward down by at least $75 million per year end? Any differences in puts and takes, and also anything on supply chain or freight costs that you're seeing? Thank you.
Dana Telsey: As you can and good to talk with.
Dana Telsey: You too as you think about the wholesale channel of distribution. What did you see domestically what did you see internationally does that break down differently by types of wholesale account and then with inventory levels coming down as they have how do you think about inventories going forward down by at least 75.
Chris Hofnagel: As you think about the wholesale channel of distribution, what did you see domestically, and what did you see internationally? There's a breakdown differently by types of wholesale account. And then, with inventory levels coming down as they have, how do you think about inventory going forward, down by at least 75 million for your end? Any differences and puts and takes, and also anything on supply chain or great cost that you're seeing. Thank you. Yeah, of course, Dana. I'll hand it over to the first partner.
For the year and what any differences and puts and takes and also anything on supply chain of freight costs that you're seeing thank you.
Chris Hufnagel: Yeah, of course, Dana. I'll handle the first part, and I'll let Taryn speak to the supply chain costs and what we're expecting for the back half of the year. Certainly, you know, we run a very large global business, and it's different both by region, and it's certainly different by channel in which we operate. Our inventory health in the U.S. market has come down materially, and Wolverine inventory at retail today is down materially, which is a key part of this turnaround phase as we work to clean up the marketplace. I think it varies a little bit by brand and, certainly, a little bit by channel.
Dana Telsey: Of course Dana.
Chris Hofnagel: I'll let Taryn speak to the supply chain costs and what we're expecting for the back half of the year. Certainly, you know, we run a very large global business, and it's different both by region and certainly different both by channel in which we operate. Our inventory health in the US market has come down materially, and Wolverine inventory at retail today is down materially, which is a key part of this turnaround phases work to clean up the marketplace. I think it varies a little bit by brand and certainly a little bit by channel. I think some of the challenges in the US wholesale marketplace are well documented.
Chris Hufnagel: I think some of the challenges in the U.S. wholesale marketplace are well documented, and I don't think we are immune from all of those challenges. At the same time, there are winners in every market, and where we are bringing innovative products with strong storytelling, we get really strong reactions, which we're encouraged by, which is why it was so important for us to work through that inventory as fast as we did because it was impeding the innovation in our product pipeline.
Chris Hofnagel: And I don't think we are immune from all of those challenges. At the same time, there are winners in every market, and where we are bringing innovative products with strong storytelling, we are getting really strong reactions, which we're encouraged by. This is why it was so important for us to work through the inventory as fast as we did, because it was impeding the innovation in our product pipeline. So, you know, where we have been successful, specifically a brand like Sockony, there is appetite, both for new product reductions, very fast at once replenishment as things begin to check, and then even expansion of door count in new retailers as we've been products that satisfy their needs.
Chris Hufnagel: So, you know, where we have been successful, specifically a brand like Saucony, there is an appetite both for new product introductions, very fast replenishment as things begin to check, and then even expansion of door counts in new retailers as we bring products that satisfy their needs. But I don't want to underestimate the challenges that are in the U.S. wholesale landscape, and we don't necessarily see those abating in the short term, certainly from where the consumer is and what's on the horizon.
Chris Hofnagel: But I don't want to underestimate the challenges that are in the US wholesale landscape, and we don't necessarily see those abating in the short term, certainly from where the consumer is and what's on the horizon. Around the world, you know, I think the brands are all in a little bit different place as well, but encourage, particularly by what we're seeing out of EMA, really led by Merrill and Sockony. Really strong reaction. I was just in London a couple of weeks ago and met with some key customers and also was getting ready for the London Sockony 10K, which was a fantastic event.
Chris Hufnagel: Around the world, you know, I think the brands are all in a little bit different places as well, but I'm encouraged particularly by what we're seeing out of EMA, really led by Merrill and Saucony, really strong reactions. I was just in London a couple of weeks ago and met with some key customers and also was getting ready for the London Saucony 10K, which was a fantastic event.
Chris Hufnagel: Again, when brands can bring innovative products that solve consumers' needs and we can package them with compelling storytelling, there is an appetite there, certainly in a category like RUN, which has some momentum. So I think, again, it's hard to paint with a broad stroke given how diversified our portfolio is and the regions of the world we operate in, but again, U.S. wholesale is not the easiest marketplace right now, but when brands can deliver, there is receptivity, and certainly, I think the consumer continues to buy things that inspire them, and they have shown a remarkable level of resilience given some of the headwinds they face. I will hand it over to Taryn to talk about the supply chain question. Yeah, on the supply chain point, I would say we don't have it.
Chris Hofnagel: Again, when brands can bring innovative products that solve consumers' needs and we can pack them with compelling storytelling, that there is an appetite there, certainly in a category like Run, which has some momentum. So I think again, it's hard to paint with a broad stroke given how diversified our portfolio is and the regions of the world we operate in. But again, US wholesale is not the easiest marketplace right now, but when brands can deliver, there is receptivity. And certainly, I think the consumer continues to buy things that inspire them, and they have shown a remarkable level of resilience given some of the headwinds they face.
Taryn Miller: Hand it over to Tara to talk about the supply chain question. Yeah, on the supply chain point, I would say we don't have a lot of new news to share based on what we've talked about in the May guidance. As I shared earlier, we do expect in the second half to benefit from the cost initiatives, you know, both in terms of our logistics as well as on our sourcing that we have in place to benefit us in the second half. We are closely monitoring the supply chain dynamics and the volatility that's going on right now and the ocean freight that, in terms of, could it have impact in terms of deliveries or cost based on the contracts we have in place. And based on how the supply chain is operating right now, we aren't anticipating meaningful impact from that.
Taryn Miller: Yeah, on the supply chain point, I would say we don't have a lot of new news to share based on what we've talked about in the May guidance. But, as I shared earlier, we do expect in the second half to benefit from the cost initiatives, both in terms of our logistics as well as in our sourcing that we have in place to benefit us in the second half. We are closely monitoring the supply chain dynamics and the volatility that's going on right now in ocean freight in terms of whether it could have an impact in terms of deliveries or cost based on the contracts we have in place, and based on how the supply chain is operating right now, we aren't anticipating a meaningful impact from that.
Dana Telsey: Thank you. Thanks, Dana.
Sam Poser: We'll take our next question from Sam Poser with Williams Trading. Please go ahead. Thank you for taking my questions.
Operator: We'll take our next question from Sam Poser with Williams Trading. Please go ahead.
Samuel Poser: Thank you for taking my questions. Good morning, everybody. I'd like to know a couple things. One, on Saucony, how are you seeing the breakout between performance and lifestyle? You brought up both. I'll stop there and move on in a moment. Let's start there.
Sam Poser: Good morning, everybody. I'd like to know a couple of things. One, on Sockany, how are you seeing the breakout between performance and lifestyle? You brought up both. And within your, I'll stop there and move on in a moment.
Chris Hofnagel: Good morning, Sam. I think on both fronts, we're encouraged, but by the progress we've made in short order in Sockany. And again, I think there certainly is the performance run piece of Sockany. I think there's a performance run lifestyle piece of Sockany. And then I think there's a broader lifestyle really related to the retro tech. And I think congratulations to that brand in very short order. We brought great innovation to that performance run piece, whether it's introductions of the Ride and Guide 17, the Hurricane 24, the Triumph 22. Those selfies are very strong, and it's really has been a pivot in how we used to manage the Sockany brand.
Chris Hufnagel: Yeah, good morning, Sam. I think on both fronts, we're encouraged by the progress we've made in short order at Saucony. And again, I think there certainly is the performance running piece of Saucony. I think there's a performance running lifestyle piece of Saucony. And then I think there's a broader lifestyle really related to retro tech.
Chris Hufnagel: And I think congratulations to that brand. In very short order, we brought great innovation to that performance run piece. Whether it's the introductions of the Ride and Guide 17, the Hurricane 24, and the Triumph 22, those sell-throughs are very strong.
Chris Hufnagel: And it really has been a pivot in how we used to manage the Saucony brand, and I really give the team credit for how they've approached the product line architecture and how they're thinking about distribution, colors, and materials. We're really pleased about the innovation in the endorphin collection. We have a marathon runner at the Olympics running next weekend in the Elite 2 on a new incredible run platform, which has been years in the making.
Chris Hofnagel: And I really give the team credit for how they've approached the product line architecture and how they're thinking about distribution, colors, and materials. Really pleased about the innovation and the endorphin collection. We have a marathon runner in the Olympics running next weekend in the Elite 2. Wow, on a new and credit run platform, which is years in the making, and we sold out in just a couple of hours when we dropped it early just a month ago. So we're encouraged by that. And then certainly Sockany benefits from a very large archive. And certainly retro tech is having a moment now, and we think about what we've done around collaborations to build brand heat.
Chris Hufnagel: And we sold out in just a couple of hours when we dropped it early just a month ago, so we're encouraged by that. And then certainly Saucony benefits from a very large archive. And certainly retro tech is having a moment now. And we think about what we've done around collaborations to build brand heat and then how that can extend down in the business. We're seeing a really nice pick-up.
Chris Hofnagel: And then how they can extend down in the business. We're seeing a really nice pickup, and that really is being led by selectively opening additional distribution that we've largely not played in before and having strong selfies. And I also think it speaks to the nimbleness of what we're trying to adjust from a supply chain standpoint, really beginning to chase opportunities in a way that we probably wouldn't have been able to chase before. But as we work to pivot to become a more consumer-obsessed organization, really, nimbleness and agility are key to that. And I'm encouraged by the way the supply chain has been able to react.
Chris Hufnagel: And that really is being led by selectively opening additional distribution that we've largely not played in before and having strong sell-through. And I also think that speaks to the nimbleness of what we're trying to adjust from a supply chain standpoint. We are really beginning to chase opportunities in a way that we probably wouldn't have been able to chase before. But as we work to pivot to become a more consumer-obsessed organization, really, nimbleness and agility are key to that.
Chris Hufnagel: And I'm encouraged by the way the supply chain has been able to react. And honestly, there are lots of categories right now and product lines within Saucony that we're actually chasing. I'm chasing, trying to expedite that supply chain right now, and that is a good problem to have, considering where we were just a year ago. So, I'm encouraged by the progress in Saucony, and I can't say it's one or the other. It's a little bit of both.
Chris Hofnagel: And honestly, there's lots of categories right now and product lines within Sockany that we're actually chasing. Chasing trying to expedite that supply chain right now. And that is a good a good problem to have considering where where we were just a year ago. So encouraged by the progress in Sockany, and I can't say it's one or the other. It's a little bit about.
Samuel Poser: Thank you. I do want to follow up on that.
Sam Poser: Thank you.
Chris Hofnagel: I just want to follow up on that. I mean, you talk about your nimbleness. So I'm just going to go on to that. My checks are telling me that you're getting increasing orders now on a lot of that new distribution on more of the retro tech product into early. You know, people are writing January February orders now. And you didn't want to talk about your backlog. But given your nimbleness, I assume your guidance isn't assuming that there's pull forward. But would your nimbleness potentially allow you, if the demand, if the demand signs are there, to pull orders forward into QQ4 if necessary.
Chris Hufnagel: I mean, you talk about your nimbleness, so I'm just going to go on to that. My checks are telling me that you're getting increasing orders now on a lot of that new distribution, on more of the retro tech products, into early January, February orders now. You didn't want to talk about your backlog, but given your nimbleness, I assume your guidance isn't assuming that there's a pull forward, but would your nimbleness potentially allow you, if the demand signs are there, to pull orders forward into Q4 if necessary?
Speaker Change: Signs are there to pull orders forward into Q Q4, if necessary.
Chris Hufnagel: Yeah, I think nimbleness is relative too. I would say we have not always been the fastest organization, and we're working to become a faster organization and be more reactive and chase more opportunities. So, I think we're evaluating all of that. Again, and I think also, Sam, and you've been thoughtful about this with us before, we're going to try to manage our brands a little bit differently. And we're not just going to jam a sell-in.
Chris Hofnagel: Yeah, I think nimbleness is relative too. I would say we have not always been the fastest organization, and we're working to become a faster organization and be more reactive and chase more opportunities. So I think we're evaluating all of that again. And I think also Sam, and you've been thoughtful on this with us before. We're going to try to manage our brands a little bit differently, and we're not just going to jam sell in. We're going to focus on sell through, and we're going to have some level of selectivity on how fast we want to grow.
Speaker Change: Yes, I think the nimbleness is relative to I would say, we have not always been the fastest organization and we're working to become a faster organization and be more reactive and in CIT and chase more opportunities. So I think we're evaluating all of that.
Speaker Change: Again, and I think also Sam and you've been thoughtful on this with us before.
Speaker Change: We're going to try to manage our brands a little bit differently and we're not just going to jam sell in we're going to focus on sell through and we're going to have some level of selectivity and how fast we want to grow we ultimately want to pivot to be able to drive long term sustainable growth and returns for the shareholders and not just obsess about immediate sell.
Chris Hofnagel: We ultimately want to pivot to be able to drive long term sustainable growth and returns for the shareholders and not just success about immediate sell-in to the detriment of how we manage our brand. So we will chase responsibly. We will open responsibly. And we're also working to be that we can be more reactive in the world. The world certainly is moving quicker. Whole sailors are behaving differently; consumers are behaving differently. And we have to build a better company. That that can react to how the world has moved.
Speaker Change: In.
Speaker Change: To the detriment of how we manage our brands. So we will chase responsibly, we will open responsibly and we're also working to be that we can be more reactive in the world. The world certainly is moving quicker wholesalers are behaving differently consumers are behaving differently and we have to build a better company that can react to how the world has moved.
Chris Hufnagel: We're going to focus on sell-through, and we're going to have some level of selectivity on how fast we want to grow. We ultimately want to pivot to be able to drive long-term, sustainable growth and returns for shareholders and not just obsess about immediate sell-in to the detriment of how we manage our brands. So, we will chase responsibly. We will open responsibly. And we're also working to be so that we can be more reactive. The world certainly is moving quicker. Wholesalers are behaving differently. Consumers are behaving differently, too. And we have to build a better company that can react to how the world has changed.
Chris Hofnagel: I'm sorry to bother you for one or two more on Wolverine on the boot business that you know that was better significantly better than anticipated. But you really didn't adjust the numbers that much. So I was wondering why, and I was part of that, the pull forwards or whatever. And then secondly, when you look at Merrill Sock and the Sweaty Betty and and and Wolverine, I guess. But really, because it's overall, which of those do you think is far this along. It sounds like it's talking. But which of those, you know, with progress being made.
Samuel Poser: I'm sorry to bother you for one, two more. One, on Wolverine, on the boot business, that was better, significantly better than anticipated, but you really didn't adjust the numbers that much. So I was wondering why, and was part of that the pull forwards or whatever? And then, secondly, when you look at Meryl, Saucony, Sweaty Betty, and Wolverine, I guess, but really, the boot business overall, which of those do you think is the farthest along? It sounds like it's Saucony, but which one? With progress being made, do you think it has the longest way to go, too, right now? Yeah, good, good, good, good question.
Speaker Change: I'm sorry to bother you for two more one on Wolverine on the war on the boot business.
Speaker Change: Matt.
Speaker Change: That was better significantly better than anticipated, but you really didn't adjust the numbers that much. So I was wondering why and was part of that a pull forward or.
Chris Hofnagel: You think has the longest way to go to right now. Good, good, good, good question. I'll answer the latter part of that first. You know, I'm really pleased by the progress. Sock and he has made it in very short order. Some very thoughtful and significant shifts in how we manage that brand from a strategy standpoint, but also really, really quick execution. Sock and he also, in all fairness, benefits from operating in a category that has tailwinds. And I think in that market that has fragmented, there is space for brands to grow. And I think that is just a structural shift in that category.
Chris Hufnagel: Yeah, good, good, good, good question. I'll answer the latter part of that first. You know, I'm really pleased by the progress Saucony has made in very short order. Some very thoughtful and significant shifts in how we've managed that brand from a strategy standpoint, but also really, really quick execution. Saucony also, in all fairness, benefits from operating in a category that has tailwinds. And I think in that market that has fragmented, there is space for brands to grow, and I think that is just a structural shift in that category, and I think Saucony is benefiting from that. Sweaty Betty, a ton of credit to that team. We've worked really hard with the Sweaty Betty team over the past sort of half a year. We have a new leader in place.
Chris Hofnagel: And I think sock, and he is benefiting from that. Sweaty Betty, a ton of credit to that team. We've worked really hard with Sweaty Betty team over the past sort of half a year. We have a new leader in place. I spent a lot of time with Sweaty Betty, really encouraged by how they're running that business. The largely directing consumer business, which is where I grew up and what I love. Because every single day the consumer votes, and you have a lot of control how the business goes, but really nice foundation for that Sweaty Betty team.
Chris Hufnagel: I've spent a lot of time with Sweaty Betty, and I'm really encouraged by how they're running that business, a largely direct consumer business, which is where I grew up and what I love, because every single day, the consumer votes, and you have a lot of control over how the business goes. But a really nice foundation for that Sweaty Betty team, and encouraged by the progress we've made, along with really getting that integration done into the company, which, honestly, we were slow to do after the acquisition.
Chris Hofnagel: And encouraged by the progress we've made along with really, really getting that integration down to the company, which honestly we were slow to do after the acquisition. Merrill, I'm encouraged by the progress made in Merrill, but you know, certainly that category is facing some headwinds. And it is incumbent upon the market share leader; we gained another 210 basis points the last quarter to really innovate. And that's really what Merrill is working hard to do. And you've seen us really get after lighter and faster, more athletic trail styles, whether it's the Agility Peak Five, whether it's the Moab Speed 2. We're seeing really positive selfers.
Chris Hufnagel: Merrill, I'm encouraged by the progress we've made at Merrill, but certainly that category is facing some headwinds, and it is incumbent upon the market share leader, we gained another 210 basis points in the last quarter, to really innovate, and that's really what Merrill is working hard to do. And you've seen us really get after lighter and faster, more athletic trail styles, whether it's the Agility Peak 5, whether it's the Moab Speed 2, we're seeing really positive sell-through, and I'm encouraged by that, but there are headwinds there.
Chris Hofnagel: And I'm encouraged by, but there are headwinds there. And you know, and you've called us on this; this is when Merrill is at its best. It's not just a trail brand. It's an outdoor lifestyle brand. And frankly, we have more work to go do there specifically for her. And after that, team is focused on and then from a work perspective. You know, I think we probably missed a couple of trends in work. And I think you know, we honestly sort of assessed, you know, where those brands were. What we were doing. And I think we had a model that we didn't pivot fast enough to consumer sentiment, particularly around the Western boot trend.
Chris Hufnagel: And you know, and you've called us on this, when Merrill is at its best, it's not just a trail brand; it's an outdoor lifestyle brand. And frankly, we have more work to do there specifically for her. And that's what that team is focused on. And then from a work perspective, you know, I think we probably missed a couple of trends in work. And I think, you know, we honestly sort of assessed where those brands were, what we were doing, and I think we had a model that didn't pivot fast enough to consumer sentiment, particularly around the Western boot trend.
Chris Hofnagel: And I think we made some progress there. We've also worked hard on that marketplace. So, to answer your question, I think so I can use the further song. I'll be benefiting from tailwinds. At the same time, I think there's broad-based advancements from a public pipeline standpoint that encourages in our back half guide. And as we think about the first half of '25 and the second half of '25.
Chris Hufnagel: And I think we've made some progress there. We've also worked hard in that marketplace. So, to answer your question, I think stocking is the furthest along, albeit benefiting from tailwinds. At the same time, I think there are broad-based advancements from a product pipeline standpoint that encourage us in our back half guide and as we think about the first half of 25 and the second half of 25.
Laurent Vasilescu: Our next question comes from Laurent Vasilescu with BNP Paribas. Please go ahead. Good morning, thank you very much for taking my question, and congrats on the continued execution on the business. Chris, I wanted to ask; I appreciate that you quantified on the call and prepared remarks about a $5 million shift from 3Q to 2Q. And clearly, there are some disruptions around supply chains. Are you anticipating that there might be a shift in revenues from 3Q to 4Q? And so what kind of numbers should we assume? You know, at the headline, certainly there are disruptions in supply chain, whether it's what's happening in the Red Sea with shipping, whether it's where containers are, or what's happening in Bangladesh right now, where we have a, where we do source the footwear from.
Operator: Our next question comes from Laurent Vasilescu with BNP Paribas. Please go ahead.
Laurent Vasilescu: Oh, good morning. Thank you very much for taking my question and congratulations on the continued execution of the business. Chris, I wanted to ask you quantified on the call and prepared remarks about a $5 million shift from 3Q into 2Q. And clearly, there are some disruptions around supply chains. Are you anticipating that there might be a shift in revenues from 3Q into 4Q? And if so, what kind of numbers should we assume? No.
Chris Hufnagel: In the headlines, certainly, there are disruptions in the supply chain, whether it's what's happening in the Red Sea with shipping, whether it's where containers are, or what's happening in Bangladesh right now, where we do source footwear from. I think we have our eyes wide open to all of those realities and are working to manage them. At the same time, really working to control what we can control. As it currently stands, based on how Q3 and Q4 play out, we're not expecting any sort of material shifts between those quarters due to that disruption.
Chris Hofnagel: I think we have our eyes wide open to all of those realities and working to manage them at the same time, really working to control; we control.
Chris Hofnagel: As it currently stands, based on how Q3 and Q4 play out, we're not expecting any sort of material shifts between those quarters to do that disruption. At the same time, it's something that we're monitoring extraordinarily closely, and we talk about every single week. I think one of the things that we've done as an organization is really worked hard over the past year to really tie all the parts of the organization together much more closely in this notion of working together as one Wolverine. So I think our supply chain and our brands and our corporate functions are working as closely as they ever had.
Chris Hufnagel: At the same time, it's something that we're monitoring extraordinarily closely, and we talk about it every single week. And I think one of the things that we've done as an organization is really worked hard over the past year to really tie all the parts of the organization together much more closely. And this notion of working together as one Wolverine. So, I think our supply chain and our brands, and our corporate functions are working as closely as they ever have.
Chris Hufnagel: It doesn't mean that we're immune to some of those macro challenges. At the same time, I think we've got visibility into them and are working collectively to solve them as best as we can. So, we're paying attention. We've got a great leader in the global supply chain. We're very connected to the brands. And we're going to do our very best to navigate through those challenges. Thank you.
Chris Hofnagel: It doesn't mean that we won't; we're immune from some of those macro challenges. At the same time, I think we've got visibility to them and are working collectively to solve them as best as we can. So we're paying attention. We've got a great leader in the global supply chain. We're very connected to the brands, and we're going to do our very best to navigate through those challenges.
Taryn Miller: Chris, that's very helpful. And maybe on the supply chain in Bangladesh, can you maybe quantify? I think your last impact report was from 2022. Maybe can you quantify how big is Bangladesh as a percentage of your sourcing? And then if we think about China terrorist potentially for 2025, I think the last impact report showed that China was about 20 to 30% of your mix. Maybe can you give us some updates on those exposures for both countries? Yeah, Bangladesh is about 19% as it sits today, and China is less.
Laurent Vasilescu: Chris, that's very helpful. And maybe on the supply chain in Bangladesh, can you maybe quantify? I think your last impact report was from 2022. Maybe, can you quantify how big Bangladesh is as a percentage of your sourcing? And then, if we think about Chinese tariffs potentially for 2025, I think the last impact report showed that China was about 20 to 30% of your mix. Maybe can you give us some updates on those exposures for both countries? and Bangladesh.
Chris Hufnagel: Bangladesh is about 19% as it sits today, and China is less.
Taryn Miller: Okay, very helpful. And then, as we think about gross margins, you know, it's great to see the 44.5 for the year, absence of any increase in tariffs or shipping rates. How do you think about longer term the gross margin? Is there a new feeling that we should contemplate longer term for the business? I think that we're pleased with where we're at in the first half. And on the midpoint of our guidance, gross margins in the second half are consistent with the first half. So, right at that, you know, 44.5, 44.7 in the first half, 44.4 in the second half.
Laurent Vasilescu: Okay, very helpful. And then, and then as we think about gross margins, you know, it's great to see the 44.5 for the year. In the absence of any increase in tariffs or shipping rates, how do you think about, longer term, the gross margin? Is there a new ceiling that we can contemplate, longer term, for the business?
Taryn Miller: I think that we're pleased with where we are in the first half. At the midpoint of our guidance, gross margins in the second half are consistent with the first half, so right at that, you know, 44 and a half, 44.7 in the first half, 44.4 in the second half, and the expected benefit from that being, as I called out earlier, in terms of those supply chain savings and the SG&A reductions, I would, I would say, in terms of you think longer term, the range that we have Based on what we see right now, I think that's still the range that we're looking at for the business in terms of gross margin.
Taryn Miller: And they expected benefit from that being, as I called out earlier, in terms of those supply chain savings and the SG&A reduction. I would say in terms of, if you think longer term, the range that we have put out there that we're targeting is in that 45 to 47 percent range. Based on what we see right now, I think that's still the range that we're looking at for the business in terms of gross margins.
Speaker Change: <unk> for the business in terms of gross margins.
Taryn Miller: Okay, very helpful. Thank you very much, and best of luck.
Laurent Vasilescu: Okay, very helpful. Thank you very much and best of luck.
Speaker Change: Okay very helpful. Thank you very much and best of luck.
Mitch Kovats: Thanks, Ron. The next question comes from Mitch Kovats with Seaport Research. Yes, thanks for taking my questions. Chris, if I heard you correctly, I think you said that sock any e-con business was up 20 percent or over 20 percent. So, correct me if I'm wrong there, but I guess my real question is, what can you say about wholesale, sell the real? I know, you know, you probably constrained in terms of kind of like you're in inventory in the sell-in, but what do you see at retail with your wholesale partners in terms of how the brand is performing? Is it kind of comparable to what you're seeing on the e-con business, or do you have much intel on that?
Ron: Thanks, Ron.
Operator: The next question comes from Mitch Kummetz with Seaport Research.
Mitch <unk>: The next question comes from Mitch <unk> with Seaport research.
Mitch Kummetz: Yes, thanks for taking my questions. Chris, if I heard you correctly, I think you said that Saucony's e-com business was up 20% or over 20%. So, correct me if I'm wrong there, but I guess my real question is, what can you say about wholesale sell-through? I know, you know, you're probably constrained in terms of kind of like your inventory in the sell-in, but what are you seeing at retail with your wholesale partners in terms of how the brand is performing? Is it kind of comparable to what you're seeing in the e-com business, or do you have any intel on that?
Mitch <unk>: Yes, thanks for taking my questions.
Mitch <unk>: Chris If I heard you correctly I think you said that Saucony E com business was up 20% or over 20%.
Mitch <unk>: So correct me if I'm wrong, there, but I guess my real question is what can you say about host wholesale sell through I know you probably constrained in terms of kind of like your inventory in the sell in but what are you seeing at retail with your wholesale partners in terms of how the brand is performing as it kind of comparable to what you are seeing I mean.
Speaker Change: Your comm business or do you have much Intel on that.
Chris Hofnagel: Yeah, good question. Thanks, Mitch. Yeah, sockney.com on the quarter was up; I said over 20 was actually 21 percent year on year, which we're encouraged by. And honestly, probably could have been better. We certainly have holes in the assortment today because things have sold out sort of faster than we anticipated, and we really went into this year with a very mindful thought on how we wanted to manage inventory. And I think we, given where the company was a year ago, we all sort of held hands and said that we will chase opportunity versus the risk of continuing some of the inventory challenges that we've had.
Chris Hufnagel: Yeah, good question. Thanks, Mitch. Yeah, Salknee.com in the quarter was up, I said over 20, it was actually 21% year-on-year, which we're encouraged by, and honestly, probably could have been better.
Speaker Change: Yeah. Good question. Thanks, <unk>, Yeah E <unk> dot com in the quarter was up I said over 20 was actually 21%.
Speaker Change: Year on year, which we're encouraged by and honestly.
Speaker Change: Could have been better.
Speaker Change: We have we certainly have holes in the assortment today, because things have sold out sort of faster faster than we anticipated and we really went into this year with a very mindful thought on how we wanted to manage manage inventory.
Chris Hufnagel: We certainly have holes in the assortment today because things have sold out sort of faster than we anticipated. And we really went into this year with a very thoughtful thought on how we wanted to manage inventory. And I think we, given where the company was a year ago, we all sort of held hands and said that we would chase opportunity versus the risk of continuing some of the inventory challenges that we've had.
Speaker Change: And I think we given where the company was a year ago, we all sort of held hands and say that we will chase opportunity.
Speaker Change: <unk> versus <unk> versus the risk of continuing some of the inventory challenges that we've had so.
Chris Hufnagel: So, we're encouraged by the progress there. We're encouraged by where that business is going. I wish we had a little bit more inventory today to chase more of that demand, but it certainly is a better place than we were a year ago. And then wholesale sell-through, I think specifically in run specialty, which has been such a core part of that Salknee business for so long. I think we're encouraged by the sell-through rates we're hearing and the feedback we're getting from that run specialty channel. Again, when Salknee delivers innovation, it's an over 100-year-old brand. It is my favorite.
Chris Hofnagel: So, we're encouraged by the progress there; we encourage by where that business is. I wish we had a little bit more inventory today to chase more of that demand, but it certainly is a better place than we were a year ago. And then wholesale sell-throughs, I think specifically in run specialty, which has been such a core part of that Sockney business for so long, I think we're encouraged by the sell-through rates we're hearing and the feedback we're getting from that run specialty channel. Again, when Sockney delivers innovation, it is a over a hundred-year-old brand, it is a favorite.
Speaker Change: We're encouraged by the progress there we encouraged by.
Speaker Change: Where that businesses I wish we had a little bit more inventory today not to chase more of that demand, but it certainly is a better place than we were a year ago, and then wholesale sell throughs.
Speaker Change: Specific in run specialty which has been.
Speaker Change: Such a core part of that Saucony business for so long.
Speaker Change: I think we're encouraged by by the sell through rates were hearing and the feedback we're getting from that run specialty channel again, when saucony delivers innovation.
Speaker Change: It is a it's a over 100 year old brand. It is a is a favorite.
Chris Hufnagel: And we clearly know when we deliver something that works because the initial reactions are strong. So, we're encouraged by sell-throughs, Triumph 22 and Riding Guide 17, which I talked about.
Chris Hofnagel: And we clearly know when we deliver something that works because the initial reactions are strong. So, we're encouraged by sell-throughs, Triumph 22, Ride and Guide 17, which I talked about, Hurricane 24 just dropped last month, and we're seeing sort of high single digit or better sell-throughs in the first couple of weeks.
Speaker Change: We clearly know when we deliver something that works because the initial reactions are strong. So we're encouraged by sell throughs try 22.
Speaker Change: Ryan Guide 17, which I talked about Hurricane 24, just dropped last month, and we're seeing sort of high single digit or better sell throughs.
Chris Hufnagel: Hurricane 24 just dropped last month, and we're seeing sort of high single-digit or better sell-throughs in the first couple of weeks. So I think certainly from a Saucony perspective, and I talked about this in the February call, you know, we're still obviously in the throes of the turnaround then, and I said I was bullish on Saucony's prospects, and I think Saucony today continues to improve its product line, and I think the changes we've made there have been positive.
Speaker Change: In the first couple of weeks so I.
Chris Hofnagel: So, I think certainly from a Sockney perspective, and I talked about this in the February call, we're still obviously in the throes of the turnaround then. And I said I was bullish on Sockney's prospects, and I think Sockney today continues to elevate its product line, and I think the changes we've made there have been positive. No one's declaring victory; we have to get to a place where we're stealing share again. But the initial steps we've taken there from a brand perspective and how we thought about that brand, how we want to manage the brand, I think give us some very early initial stages that we're on the right path.
Speaker Change: I think our I think certainly from a softening perspective, and I talked about this in the February call.
Speaker Change: We're still obviously in the throes of the turnaround then and I said I was bullish on saucony as prospects in the and I think Saucony today continues continues to elevate its product line and.
Speaker Change: And I think the changes we've made there have been have been positive no one's declaring victory, we have to get to a place where we're stealing share again, but the initial steps we've taken there from a brand perspective, and how we thought about that Brian how we want to manage the brand.
Chris Hufnagel: No one's declaring victory. We have to get to a place where we're stealing share again, but the initial steps we've taken there from a brand perspective and how we think about that brand, how we want to manage the brand, I think give us some very early signs that we're on the right path.
Speaker Change: I think give us some very early initial stages that we're on the right path.
Mitch Kummetz: And then on SOC, any early reads for back-to-school, particularly in the South, where a lot of kids have already gone back? And have you done more in terms of kind of gearing your marketing for back-to-school this year, particularly around the kind of lifestyle portion of the assortment?
Mitch Kovats: And then on Sockney, any early reads for back to school, particularly like in the South where a lot of kids have already gone back, and have you done more in terms of kind of gearing your marketing for back to school this year, particularly around kind of the lifestyle portion of the assortment? Yeah, good question. Nothing too early to report back to school. Other than, you know, we are seeing and you met you track this as well as anyone who covers us. I think from a brand perspective, we're seeing really good search interest in Sockini, which is continuing, particularly in the UK.
Speaker Change: And then on Saucony any early reads for back to school, particularly like in the South were water kids have already gone back and have you done more in terms of kind of gearing your marketing for back to school this year, particularly around kind of the lifestyle portion of the assortment.
Chris Hufnagel: Yeah, good question. Nothing too really important back to school, other than, you know, we are seeing, and Mitch, you track this as well as anyone who covers us, I think from a brand perspective, we're seeing really good search interest in Saucony, which is continuing, particularly in the UK. I said in my prepared remarks, I think right now, you know, one of the best expressions of Saucony is what's happening in EMA and the activations we've done, and certainly the sponsorship of the London 10K. We're seeing sort of record search interest for Saucony there.
Speaker Change: Yes, yes, good question.
Speaker Change: Too early to report back to school.
Speaker Change: Other than we are seeing and you met you track this as well as anyone who covers us.
Speaker Change: I think.
Speaker Change: From a brand perspective, we're seeing really good search interest in Saucony, which is continuing particularly in the U K and I said in the prepared remarks, I think right now one of the best expressions of Saucony.
Chris Hofnagel: I said in the prepared remarks, I think right now, you know, one of the best expressions of Sockini is what's happening in EMA, in the activations we've done and certainly the sponsorship of the London 10K. We are seeing sort of record search interest for Sockini. There, I was just there a couple of weeks ago and I thought the activations, the run clubs, around the Sockini 10K, the London 10K, sponsored by Sockini, were fantastic, but we are seeing sort of broad based search interest improvements, which we're encouraged by.
Speaker Change: Is what's happening in EMA.
Speaker Change: And the Activations, we've done and certainly the sponsorship of the London 10-K, we're seeing sort of record search interest for Saucony. There I was just there a couple of weeks ago and I thought the activations to run clubs around that softening 10-K, the London 10-K sponsored by Saucony were fantastic, but we are seeing sort of broad based search interest improvements.
Chris Hufnagel: I was just there a couple of weeks ago, and I thought the activations, the run clubs around the Saucony 10K, the London 10K sponsored by Saucony, were fantastic, but we are seeing sort of broad-based search interest improvements, which we're encouraged by.
Speaker Change: Which we're encouraged by.
Mitch Kummetz: And then maybe last question. On the wholesale order shift, I think it was 5 million. How much of that is like a true order shift versus maybe just pulled forward demand? And if demand were to, you know, stay strong through the third quarter, kind of what's your ability to supply that, just given kind of some of your, you know, inventory constraints and supply chain considerations?
Taryn Miller: And then maybe last, last question on the wholesale order shift. I think it was five million. How much of that is like a true order shift versus maybe just pulled-forward demand. And if demand were to, you know, stay strong through the third quarter, kind of what's your ability to supply that, just given kind of some of your, you know, inventory constraints and supply chain considerations. Yeah, no, I think the five million that we said, it really wasn't shipped earlier than we had expected. You know, we've been working to become, as Chris talked about, to strengthen the execution and our supply chain.
Speaker Change: And then maybe last question on the wholesale order shift I think it was 5 million how much of that is like a true order ship versus maybe just pulled forward demand.
Speaker Change: And if demand were to stay strong through the third quarter and kind of what's your ability to supply that just given kind of some of your <unk>.
Speaker Change: Inventory constraints in the supply chain considerations.
Taryn Miller: Yeah, no, I think the 5 million that we said wasn't shipped earlier than we had expected. You know, we've been working to become, as Chris talked about, strengthen the execution in our supply chain. And I think that as we've been able to do that, then as the customer orders are coming in, we're more able to respond to that. And that's really why we were able to ship it earlier than we had originally anticipated we'd be able to.
Speaker Change: Yeah, No I think the $5 million that we said it really was it shipped earlier than we had expected yeah. We've we've been working.
Speaker Change: Come as Chris talked about to strengthen the execution in our supply chain.
Taryn Miller: And I think that as we've been able to do that, then, as the customer orders are coming in, we're more able to respond to that. And that's really, we were able to ship it earlier than we had originally anticipated we'd be able to. So I don't, in terms of the five million, when you're talking about the broader point on our ability to respond, I think Chris really hit that point earlier in terms of we're getting better. I would say the environment that we're in, though, is probably getting a little chopier in terms of supply chain.
Speaker Change: Jane and I think that as we've been able to do that then as the customer orders are coming in we're more able to respond to that and Thats really we were able to ship. It earlier than we had originally anticipated we'd be able to so I don't.
Taryn Miller: So, I don't, in terms of the 5 million, when you're talking about the broader point about our ability to respond, I think Chris really hit that point earlier in terms of us getting better. I would say the environment that we're in, though, is probably getting a little choppier in terms of the supply chain. So, I think we're looking to balance the strength in our execution with the overall market backdrop that we're in. All right.
Speaker Change: In terms of the $5 million and you're talking about the broader point on our ability to respond I think Chris really hit that point earlier in terms of.
Chris: We're getting better I would say the environment that we're in though.
Speaker Change: Is probably getting a little choppy or in terms of supply chain. So I think we're looking to balance.
Taryn Miller: So I think we're looking to balance the strength in our execution with the overall market backdrop that we're in.
Chris: This strength in our execution with the overall market backdrop that we're in.
Operator: All right, thank you, and good luck.
Mitch Kummetz: All right, thank you, and good luck.
Speaker Change: Alright, Thank you and good luck.
Ashley Owens: The next question comes from Ashley Owens with KeyBank Capital Markets. Hi, good morning. So just a few from me. One, can you help us unpack and kind of let to the results versus the outline expectation from last quarter for sweaty body? I think it was flat versus upload single digits. And then on Merrill, the plant and flex looks like for you. It could be the turning point there, and given the guide today. Was this always the expectation, or just any shifts relative to three months ago that you're seeing or expect to play out? I think in terms of sweaty Betty, the being, you know, the approximately flat in the quarter was roughly in line with our expectations for the Sweaty Betty team.
Mitch <unk>: Thanks Mitch.
Operator: The next question comes from Ashley Owens with KeyBank Capital Markets.
Speaker Change: The next question comes from Ashley <unk> with Keybanc capital markets.
Ashley Owens: Hi, good morning. So just a few for me. One, can you help us unpack and kind of what led to the results versus the outlined expectations from last quarter for Sweaty Buddy? I think it was flat versus up low single digits. And then on Merrill, the plans to inflect look like 4Q. It could be the turning point there, given the guide today. Was this always the expectation, or just any shifts relative to three months ago that you're seeing or expecting to play out?
Ashley: Hi, Good morning, So just a few from me one can you help us unpack and kind of what led to the results versus the outlined expectation from last quarter for <unk>.
Speaker Change: <unk> versus up low single digits, and then on Merrell Clemson flex it looks like <unk> could be the turning point, there and given the guide today.
Speaker Change: The expectation or just any shifts relative to three months ago that youre seeing or expect to play out.
Taryn Miller: I think in terms of Sweaty Betty, the approximately flat performance in the quarter was roughly in line with our expectations for the Sweaty Betty team. I think in terms of the UK stores and the broader e-com, we've seen while the stores have been a little softer, e-com has compensated for that. So broadly in line with what we expected for Sweaty Betty. Regarding Meryl, when you look at the numbers, I'd say I'd take a step back and talk about Q4 on the inflected growth. It's really good, I'll come back to it.
Speaker Change: I think in terms of sweaty Betty.
Speaker Change: Being the approximately flat in the quarter was roughly in line with our expectations for the sweaty Betty team I think Dave in terms of the UK stores and the broader E. Com, we've seen while the stores have been a little softer E. Com has compensated for that so broadly.
Taryn Miller: I think they, in terms of the UK stores and the broader e-com, we've seen that while the stores have been a little softer, e-com has compensated for that. So broadly in line with what we expected for Sweaty Betty.
Speaker Change: In line with what we expected for Sweaty Betty <unk>.
Taryn Miller: Regarding Merrill, when you look at the, I'd say I'd take a step back and talk about the Q4 on the inflected growth. It's really I'll come back to it. That was the plan, you know, and so we're executing against the plan that we laid out in February. And the momentum that we're seeing across the brands, you know, we spent time on this call talking about Sockini, but I'd say that we're the momentum, and it was called out work earlier, but as well in Maryland. So we're seeing the momentum in our brands really coming from those new products that we talked about, as well as healthier inventory.
Speaker Change: Regarding merrell when you look at the I'd say I'd take a step back and talk about the Q4 Q4 on the inflect the growth.
Taryn Miller: That was the plan, you know, and so we're executing against the plan that we laid out in February. And the momentum that we're seeing across the brands, you know, we spent time on this call talking about Saucony, but I'd say the momentum, which was called out work earlier, but as well as Meryl. So, we're seeing the momentum in our brands really coming from those new products that we talked about as well as healthier inventory levels across the portfolio.
Speaker Change: It's really Oh I'll come back to it that was the plan and so we're executing against the plan that we laid out in February.
Speaker Change: And the momentum that we're seeing across the brands. We spent time on this call talking about saucony.
Speaker Change: But I'd say that the momentum and it was called out work earlier, but as well in Merrell. So we're seeing the momentum in our brands really coming from those new products.
Speaker Change: So we talked about as well as healthier inventory levels across the portfolio.
Taryn Miller: Inventory levels across the portfolio. Inventory is probably a little lower in Sockini and probably a little higher than the other two on that balance. And so when you think of more work to do in terms of when we've called out more work to do on inventory, it's probably more in the Maryland workspace. But with that, I'd say that I feel good about the plans we have in the momentum we're seeing in the order book, as well as cleaner inventories across the world. That would set us up for that and flight to growth broadly in the fourth quarter.
Taryn Miller: Inventories are probably a little lower in Saucony and probably a little higher than the other two on that balance. And so, when you think of more work to do in terms of when we've called out more work to do on inventory, it's probably more in Meryl and workspace. But with that, I'd say that I feel good about the plans we have and the momentum we're seeing in the order book as well as cleaner inventories across the page that would set us up for that diluted growth broadly in the fourth quarter.
Speaker Change: Inventories are probably a little lower in saucony, and probably a little higher than the other two in that balance.
Speaker Change: And so when you think of more work to do in terms of when we've called out more work to do on inventory, it's probably more in the Maryland work space.
Speaker Change: With that I'd say that feel good about the plans, we have and the momentum we're seeing in the order book as well as cleaner inventories across the page that would set would set us up for that in selected growth broadly in the fourth quarter.
Chris Hofnagel: Okay, great. And then just one more. So, with the new product collaboration, any early learning, you know, we saw the JTIT come out. Merrill's been doing some with new colorways and more to come next year, obviously. Are you starting to see that intended effect of expanding beyond specialty into more lifestyle wear occasions? Yeah, good question. Yeah, I'm really encouraged by some of the progress you've made around the collaborations. And I think certainly Sockini again has done a fantastic job; you know, the JTITS collaboration last year, which was named Collaboration of the Year. Which was fantastic.
Ashley Owens: Okay, great. And then just one more.
Speaker Change: Okay, Great and then just one more so with the new product collaboration any early learnings.
Chris Hufnagel: So with the new product collaboration, any early learning, you know, we saw the J-tips come out. Merrill's been doing some with new collarways, and more to come next year, obviously. Are you starting to see that intended effect of expanding beyond just specialty into more lifestyle wear occasions?
Speaker Change: It could come out <unk> been doing some with new color ways and more to come next year obviously.
Speaker Change: We're starting to see that intended effects of expanding beyond the specialty into more lifestyle wear occasions.
Chris Hufnagel: Yeah, good question. Yeah, I'm really encouraged by some of the progress you've made on the collaborations. And I think certainly Saucony, again, has done a fantastic job. The JTIPS collaboration last year, which was named Collaboration of the Year, was fantastic.
Speaker Change: Yes. Good question, Yeah, I'm really encouraged by some of the progress you've made are around my collaborations and I think certainly saucony again has done a fantastic job you know the J tips collaboration last year, which was named collaboration of the year.
Speaker Change: Which was fantastic I think we're doing more of this year. We are following that up which were which were encouraged by.
Chris Hufnagel: I think we're doing more this year. We're following that up, which we're encouraged by. Just that those rates of drops are critically important. We did a minted ProGrid Triumph collection with Saucony as well. It was a three-hour line for the launch event and sold out in just about 10 minutes.
Chris Hofnagel: I think we're doing more this year. We're following that up, which we're which we're encouraged by just that that those those rate of drops are critically important. We did a minted pro grid triumph collection with Sockini as well. So three hour line for the launch event and sold out and just about 10 minutes. We sold out to the pair. So those things, those special moments where you can capture consumers' attention, build brand heat, brand love, brand affinity. And always sort of be on that radar screen with that consumer is critically important. And the same thing can be said can be said for both what Wolverine brand has done.
Speaker Change: Just that that those those rate of drops are critically important we did a minted pro grid trying to collection with saucony as well, it's a three hour line for the launch event and sold out in just just about 10 minutes, we sold out to the pair so those things.
Chris Hufnagel: We sold out to the pair. So those things, those special moments where you can capture a consumer's attention, build a brand, heat up a brand, love brand affinity, and always sort of be on that radar screen with that consumer are critically important. And the same thing can be said for what the Wolverine brand has done. They just dropped a great thousand mile collection with the University of Michigan celebrating this year's team. And then even in Merrill, whether it's the Parks project, which was a great collaboration, or something that I love, which is the Grayson collaboration.
Speaker Change: Special moments, where you can capture consumer's attention build brand heat brand love brand affinity and I always sort of beyond that on that radar screen with that consumer is critically important and the same thing can be said can be said for both Wolverine brand has done they just dropped a great a great thousand mile collection with the University of Michigan celebrating this.
Chris Hofnagel: They just draft a great, a great thousand mile collection with the University of Michigan celebrating this year's team. And then even in Merrill, whether it's the parks project, which was a great collaboration, or something that I love, which is a grace and collaboration, you know, we make fantastic shoes for the trail. And those shoes, those shoes are equally good for the course and a great little brand, another Michigan-based brand, Grace, and we did a fantastic collaboration with that drove a tremendous amount of interest. It was very polarizing, which we loved. At the same time now, now people are beginning to talk about the extensions of Merrill as well.
Speaker Change: Years' team and then even in Maryland.
Speaker Change: Whether it's the parks project, which was a great collaboration or something that I love, which is the Grace and collaboration you know we make fantastic shoes for the trail and those shoes are those shoes are are equally good good for the course and.
Chris Hufnagel: We make fantastic shoes for the trail, and those shoes are equally good for the course. And a great little brand, another Michigan-based brand, Grayson, we did a fantastic collaboration with that drove a tremendous amount of interest. It was very polarizing, which we loved.
Speaker Change: A great Little brand another Michigan based brand Grayson, we did have a fantastic collaboration with that.
Speaker Change: That drove a tremendous amount of interest it was very polarizing, which we loved at the same time now now people are bidding and talk about the extensions of Merrill as well. So those things are important as we manage these brands and against not saw building awesome products, because we build great products. It's also being able to package them with great storytelling, and giving consumers a reason to pay attention to what we're doing so those are.
Chris Hufnagel: At the same time, now people are beginning to talk about the extensions of Merrill as well, so those things are important as we manage these brands. And again, it's not just about building awesome products, because we build great products. It's also being able to package them with great storytelling and give consumers a reason to pay attention to what we're doing. So those are all important things. You'll see more of that from us in the future. And we're excited about where we can go from here.
Chris Hofnagel: So those things are important as we manage these brands. And again, it's not just all building off some products because we build great products. It's also being in the package them with great storytelling and give consumers a reason to pay attention to what we're doing. So those are important things.
Speaker Change: Important things Youll see only more of more of that from us in the future and we're excited about where we can go from here.
Chris Hofnagel: You'll see only more of that from us in the future. And we're excited about where we can go from here. Great.
Speaker Change: Great. Thanks, so much.
Jonathan Komp: Thanks so much. We will take our last question from Jonathan Compe of R.W. Baird. Please go ahead. Yeah, thanks. Good morning.
Operator: We will take our last question from Jonathan Komp of R.W. Baird. Please go ahead.
Ashley Owens: Great, thanks so much. We will take our last question from Jonathan Komp of R.W. Baird. Please go ahead. Yeah, thanks. Good morning. Hoping Taryn or Chris, you might be willing to give
Speaker Change: We will take our last question from Jonathan Komp of RW Baird. Please go ahead.
Jonathan Komp: Yeah. Thanks, good morning, hoping Darren or Curtis who might be willing to give a little more color on the channel assumptions.
Jonathan Komp: Hoping Taryn to Chris, you might be willing to give a little more color on the channel assumptions embedded in the fourth quarter inflection to growth. And then Chris, just curious as you look forward.
Jonathan Komp: Embedded in the fourth quarter inflection to growth and then Chris just curious as you look forward I know, it's early but are there scenarios that you already next year you might be approaching your aspirational revenue growth targets or any other just directional color as you look forward.
Chris Hofnagel: I know it's early, but are there scenarios already next year you might be approaching your aspirational revenue growth targets or any other just directional color as you look forward? Yeah, thanks, John. You know, I think, you know, no material changes in how we're thinking about channel assumptions. You know, I think Taryn said it well a little bit ago. You know, we set out an ambitious plan as part of the turnaround. And then we sort of talked about the full year and what our expectations were for 2024 and were very much on that plan right now and sort of doing what we said we're going to go do.
Jonathan Komp: Yeah, thanks, John. I think there are no material changes in how we're thinking about channel assumptions. You know, I think Taryn said it well, a little bit ago. We set out an ambitious plan as part of the turnaround. And then we sort of talked about the full year and what our expectations were for twenty twenty four, and we're very much on that plan right now and sort of doing what we said we would go do.
Speaker Change: Yeah.
Speaker Change: Thanks, John I think no material changes in how we're thinking about channel assumptions I think parents said, it well a little bit ago.
Speaker Change: We set out an ambitious plan as part of the turnaround.
Speaker Change: And then we sort of talked about the full year and what our expectations were for 2024, and we're very much on that plan right now and sort of doing what we said we're going to go do so theres no no material changes that we think about about Q3 and Q4 and.
Chris Hofnagel: So there's no, no material changes that we think about about Q3 and Q4. You know, at the same time, as I think about 2025, you know, right now we're very focused on that continuing the strength and innovation that product pipeline and really trying to generate that brand heat as wholesalers think about, think about where they're going to go both domestically as well in the US. So the order book for 2025 will be coming together here in the next handful of months. Every brand is a little bit different from an order window standpoint, and every region and channel is actually a little bit different too, based on when those orders are placed.
Jonathan Komp: So there are no material changes that we think about for Q3 and Q4. And at the same time, as I think about twenty twenty five, you know, right now, we're very focused on continuing the strength and innovation of that product pipeline and really trying to generate that brand heat as wholesalers. Think about think about where they're gonna go both domestically as well as in the US. So the order book for twenty twenty five will be coming together here in the next handful of months. Every brand's a little bit different from an order window standpoint, and every region and channel is actually a little bit different just based on when those orders are placed.
Speaker Change: And at the same time.
Speaker Change: As I think about.
Speaker Change: 2025, right now we're very focused on that on that continuing to strengthen innovation in that product pipeline.
Speaker Change: And really trying to generate at that brand heat as wholesalers think about think about where theyre going to go both domestically as well in the U S. So the order book for 2025 will be coming together here in the next handful of months every brands a little bit different from our order window standpoint in every region and channel is actually a little bit different too just based on when those orders are.
Chris Hufnagel: But I would say I'm encouraged by the innovation we have seen and certainly encouraged by some of the reactions that we've seen and then encouraged by some of the sell-throughs that we've seen as well from a wholesale perspective. But at the same time, I can't emphasize enough, you know, we still have a lot of work to do. No one's declaring victory. We're happy with where we stand. But the work we've done over the past year has only given us the privilege to really keep driving the company forward and keep driving for growth. So, while while while, again.
Chris Hofnagel: But I would say I'm encouraged by the innovation we have seen and certainly encouraged by some of the reactions that we've seen and then encouraged by some of the shelters that we've seen as well from a whole self perspective. But at the same time I can't underscore, you know, we still have a lot of work to go do. No one's declaring victory. We're happy with where we stand, but the work we've done over the past year has only given us the privilege to really keep driving the company forward and keep driving for growth. So we are while while while while again we're trying to keep driving for growth.
Speaker Change: Place, but.
Speaker Change: I would say I'm encouraged by the innovation, we have seen and certainly encouraged by some of the reactions that we've seen and then encouraged by some of the sell throughs that we've seen as well for from a wholesale perspective, but.
Speaker Change: At the same time I can't underscore we still have a lot of work to go do no one's declaring victory were happy with where we stand but the work we've done over the past year has only given us the privilege to really keep driving the company forward and keep driving for growth. So we are <unk> while again.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Operator: Please stand by. We are experiencing technical difficulties. Your program will resume shortly.
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Speaker Change: Please standby we are experiencing technical difficulties your program will resume shortly.
Speaker Change: Yeah.
Operator: Please stand by. We are experiencing technical difficulties. Your program will resume shortly.
Operator: We are experiencing technical difficulties. Your program will resume shortly. You may now resume your program.
Speaker Change: Please standby we are experiencing technical difficulties see your program will resume shortly.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Operator: You may now resume your program. I think we got disconnected, but I think Taryn also answered John's last question, unless there's a follow-up.
Speaker Change: You may now resume your program.
Chris Hufnagel: I think we got disconnected, but I think Taryn also answered John's last question, unless there's a follow-up. Okay, operator. I think we're good.
Speaker Change: I think I think we got disconnected, but I, but I think turn also answer the John's last question unless there's a follow up.
Operator: Okay, operator, I think we're good.
Speaker Change: Okay, operator, I think we're good.
Operator: All right, this does conclude today's question-and-answer period. I will now turn the call back over to our presenters for any additional or closing remarks. Thanks very much. Thanks for joining us. We appreciate the questions, and we'll look forward to the follow-ups and look forward to speaking to you in November.
Operator: All right, this does conclude today's question and answer period. I will now turn the call back over to our presenters for any additional or closing remarks.
Operator: Alright. This does conclude today's question and answer period, I will now turn the call back over to our presenters for any additional or closing remarks.
Chris Hufnagel: Thanks very much. Thanks for joining us. We appreciate the questions, and we'll look forward to the follow-ups. Look forward to speaking to you in November.
Speaker Change: Thanks, very much thanks for joining us we appreciate the questions and I will look forward to the follow ups before speaking to you in November thanks, everyone be well be safe.
Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.
Operator: Thanks everyone. Be well, be safe.
Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.
Speaker Change: This does conclude today's program. Thank you for your participation you may disconnect at any time.
Speaker Change: Yes.