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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 29, 2025
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-06024
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WOLVERINE WORLD WIDE, INC.
(Exact Name of Registrant as Specified in its Charter)
__________________________________________________________
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| Delaware |
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38-1185150 |
| (State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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| 9341 Courtland Drive N.E. |
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Rockford |
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Michigan |
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49351 |
| (Address of principal executive offices) |
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(Zip Code) |
(616) 866-5500
(Registrant’s telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class |
Trading symbol |
Name of each exchange on which registered |
| Common Stock, $1 Par Value |
WWW |
New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
☐ |
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Non-accelerated filer |
☐ |
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Smaller reporting company |
☐ |
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Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
There were 81,044,051 shares of common stock, $1 par value, outstanding as of April 21, 2025.
Table of Contents
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| PART I |
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| Item 1. |
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| Item 2. |
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| Item 3. |
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| Item 4. |
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| PART II |
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| Item 1. |
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| Item 1A. |
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| Item 2. |
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| Item 5. |
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| Item 6. |
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FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements,” which are statements relating to future, not past, events. In this context, forward-looking statements often address management’s current beliefs, assumptions, expectations, estimates and projections about future business and financial performance, national, regional or global political, economic and market conditions, and the Company itself. Such statements often contain words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “is likely,” “plans,” “predicts,” “projects,” “should,” “will,” variations of such words, and similar expressions. Forward-looking statements, by their nature, address matters that are, to varying degrees, uncertain. Uncertainties that could cause the Company’s performance to differ materially from what is expressed in forward-looking statements include, but are not limited to, the following:
•changes in general economic conditions, employment rates, business conditions, interest rates, tax policies and other factors affecting consumer spending and confidence in the markets and regions in which the Company’s products are sold;
•the inability for any reason to effectively compete in global footwear, apparel and direct-to-consumer markets;
•the inability to maintain positive brand images and anticipate, understand and respond to changing footwear and apparel trends and consumer preferences;
•the inability to effectively manage inventory levels;
•increases or changes in duties, tariffs, quotas or applicable assessments in countries of import and export;
•foreign currency exchange rate fluctuations and currency restrictions;
•supply chain and capacity constraints, production and distribution disruptions, including service interruptions at shipping and receiving ports, reduction in operating hours, labor shortages, and facility closures resulting in production delays at the Company’s manufacturers, quality issues, price increases or other risks associated with foreign sourcing;
•the cost, including the effect of inflationary pressures and availability of raw materials, inventories, services and labor for contract manufacturers;
•changes in relationships with, including the loss of, significant wholesale customers;
•risks related to the significant investment in, and performance of, the Company’s direct-to-consumer operations;
•risks related to expansion into new markets and complementary product categories;
•the impact of seasonality and unpredictable weather conditions;
•the impact of changes in general economic conditions, potential economic slowdown, and/or the credit markets on the Company’s manufacturers, distributors, suppliers, joint venture partners and wholesale customers;
•changes in the Company’s effective tax rates;
•failure of licensees or distributors to meet planned annual sales goals or to make timely payments to the Company;
•the risks of doing business in developing countries and politically or economically volatile areas;
•the ability to secure and protect owned intellectual property or use licensed intellectual property;
•legal compliance and litigation risks, including with respect to federal, state and local laws and regulations relating to the protection of the environment, environmental remediation and other related costs, and environmental effects on human health;
•risks of breach of the Company’s databases or other systems, or those of its vendors, which contain certain personal information, payment card data or proprietary information, due to cyberattack or other similar events;
•strategic actions, including new initiatives and ventures, acquisitions and dispositions, and the Company’s success in integrating acquired businesses, including Sweaty Betty®;
•risks related to stockholder activism;
•the risk of impairment to goodwill and other intangibles;
•the success of the Company's restructuring and realignment initiatives undertaken from time to time; and
•changes in future pension funding requirements and pension expenses.
These or other uncertainties could cause a material difference between an actual outcome and a forward-looking statement. The uncertainties included here are not exhaustive and are described in more detail in Part I, Item 1A: “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2024 (the “2024 Form 10-K”), filed with the SEC on February 20, 2025. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company does not undertake an obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations and Comprehensive Income
(Unaudited)
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Quarter Ended |
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| (In millions, except per share data) |
March 29,
2025 |
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March 30,
2024 |
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Revenue |
$ |
412.3 |
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$ |
394.9 |
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Cost of goods sold |
217.5 |
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213.5 |
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Gross profit |
194.8 |
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181.4 |
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Selling, general and administrative expenses |
172.0 |
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176.8 |
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| Impairment of long-lived assets |
— |
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6.1 |
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| Environmental and other related costs, net of recoveries |
3.1 |
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1.6 |
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| Operating profit (loss) |
19.7 |
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(3.1) |
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Other expenses: |
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Interest expense, net |
8.0 |
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12.0 |
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| Other income, net |
(1.5) |
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(0.8) |
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| Total other expense, net |
6.5 |
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11.2 |
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| Earnings (loss) before income taxes |
13.2 |
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(14.3) |
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| Income tax expense (benefit) |
1.0 |
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(0.6) |
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| Net earnings (loss) |
$ |
12.2 |
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$ |
(13.7) |
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| Less: net earnings attributable to noncontrolling interests |
1.1 |
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0.8 |
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| Net earnings (loss) attributable to Wolverine World Wide, Inc. |
$ |
11.1 |
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$ |
(14.5) |
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| Net earnings (loss) per share (see Note 3): |
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Basic |
$ |
0.13 |
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$ |
(0.19) |
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Diluted |
$ |
0.13 |
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$ |
(0.19) |
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| Comprehensive income (loss) |
$ |
14.6 |
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$ |
(19.3) |
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| Less: comprehensive income attributable to noncontrolling interests |
1.0 |
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0.9 |
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| Comprehensive income (loss) attributable to Wolverine World Wide, Inc. |
$ |
13.6 |
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$ |
(20.2) |
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Cash dividends declared per share |
$ |
0.10 |
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$ |
0.10 |
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See accompanying notes to consolidated condensed financial statements.
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited)
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| (In millions, except share data) |
March 29,
2025 |
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December 28,
2024 |
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March 30,
2024 |
ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ |
106.5 |
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$ |
152.1 |
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$ |
169.7 |
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Accounts receivable, less allowances of $9.1, $8.9 and $17.3 |
239.2 |
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209.4 |
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231.2 |
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| Finished products, net |
268.4 |
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237.8 |
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352.6 |
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| Raw materials and work-in-process, net |
2.3 |
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2.8 |
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1.7 |
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| Total inventories |
270.7 |
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240.6 |
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354.3 |
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| Prepaid expenses and other current assets |
76.0 |
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86.4 |
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70.7 |
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| Total current assets |
692.4 |
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688.5 |
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825.9 |
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Property, plant and equipment, net of accumulated depreciation of $233.8, $232.3 and $249.8 |
94.6 |
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89.7 |
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92.6 |
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| Lease right-of-use assets, net |
102.2 |
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102.1 |
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112.9 |
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| Goodwill |
427.1 |
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424.6 |
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426.0 |
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| Indefinite-lived intangibles |
175.8 |
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173.0 |
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173.3 |
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| Amortizable intangibles, net |
31.0 |
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31.5 |
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33.9 |
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| Deferred income taxes |
94.0 |
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93.7 |
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116.3 |
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| Other assets |
67.4 |
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65.7 |
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72.1 |
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| Total assets |
$ |
1,684.5 |
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$ |
1,668.8 |
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$ |
1,853.0 |
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current liabilities: |
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| Accounts payable |
$ |
174.6 |
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$ |
200.9 |
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|
$ |
202.3 |
|
| Accrued salaries and wages |
23.5 |
|
|
35.1 |
|
|
28.9 |
|
| Other accrued liabilities |
173.9 |
|
|
183.4 |
|
|
187.6 |
|
| Lease liabilities |
34.1 |
|
|
33.7 |
|
|
36.5 |
|
| Current maturities of long-term debt |
10.0 |
|
|
10.0 |
|
|
10.0 |
|
| Borrowings under revolving credit agreements |
135.0 |
|
|
70.0 |
|
|
265.0 |
|
|
|
|
|
|
|
| Total current liabilities |
551.1 |
|
|
533.1 |
|
|
730.3 |
|
| Long-term debt, less current maturities |
565.8 |
|
|
568.0 |
|
|
581.9 |
|
| Accrued pension liabilities |
70.6 |
|
|
71.4 |
|
|
77.7 |
|
| Deferred income taxes |
28.3 |
|
|
29.0 |
|
|
27.4 |
|
| Lease liabilities, noncurrent |
115.2 |
|
|
116.0 |
|
|
126.6 |
|
| Other liabilities |
32.7 |
|
|
34.8 |
|
|
49.0 |
|
| Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
Common stock – par value $1, authorized 320,000,000 shares; 114,435,216, 113,721,605, and 113,319,919 shares issued |
114.4 |
|
|
113.7 |
|
|
113.3 |
|
| Additional paid-in capital |
380.3 |
|
|
382.7 |
|
|
366.1 |
|
| Retained earnings |
851.9 |
|
|
849.5 |
|
|
812.0 |
|
| Accumulated other comprehensive loss |
(145.3) |
|
|
(147.8) |
|
|
(147.9) |
|
Cost of shares in treasury; 33,391,165, 33,392,585, and 33,399,710 shares |
(890.7) |
|
|
(890.8) |
|
|
(891.0) |
|
| Total Wolverine World Wide, Inc. stockholders’ equity |
310.6 |
|
|
307.3 |
|
|
252.5 |
|
| Noncontrolling interest |
10.2 |
|
|
9.2 |
|
|
7.6 |
|
| Total stockholders’ equity |
320.8 |
|
|
316.5 |
|
|
260.1 |
|
| Total liabilities and stockholders’ equity |
$ |
1,684.5 |
|
|
$ |
1,668.8 |
|
|
$ |
1,853.0 |
|
See accompanying notes to consolidated condensed financial statements.
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
| (In millions) |
March 29,
2025 |
|
March 30,
2024 |
OPERATING ACTIVITIES |
|
|
|
| Net earnings (loss) |
$ |
12.2 |
|
|
$ |
(13.7) |
|
| Adjustments to reconcile net earnings (loss) to net cash used in operating activities: |
|
|
|
Depreciation and amortization |
6.1 |
|
|
7.1 |
|
Deferred income taxes |
(0.1) |
|
|
— |
|
Stock-based compensation expense |
5.7 |
|
|
4.1 |
|
|
|
|
|
Pension and SERP expense |
(0.2) |
|
|
(0.2) |
|
|
|
|
|
|
|
|
|
| Impairment of long-lived assets |
— |
|
|
6.1 |
|
| Environmental and other related costs, net of cash payments |
(4.5) |
|
|
(10.0) |
|
|
|
|
|
Other |
(2.1) |
|
|
(2.6) |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
(26.6) |
|
|
(2.6) |
|
Inventories |
(25.8) |
|
|
15.8 |
|
Other operating assets |
2.3 |
|
|
5.1 |
|
Accounts payable |
(29.2) |
|
|
(3.7) |
|
Income taxes payable |
— |
|
|
(0.4) |
|
Other operating liabilities |
(21.6) |
|
|
(42.2) |
|
| Net cash used in operating activities |
(83.8) |
|
|
(37.2) |
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
Additions to property, plant and equipment |
(7.6) |
|
|
(5.1) |
|
| Proceeds from sale of businesses, intangible assets and other assets, net of cash disposed of |
— |
|
|
92.5 |
|
|
|
|
|
|
|
|
|
Other |
(0.3) |
|
|
(2.0) |
|
| Net cash provided by (used in) investing activities |
(7.9) |
|
|
85.4 |
|
FINANCING ACTIVITIES |
|
|
|
| Payments under revolving credit agreements |
(83.0) |
|
|
(146.0) |
|
| Borrowings under revolving credit agreements |
148.0 |
|
|
106.0 |
|
| Proceeds from company-owned life insurance policies |
— |
|
|
7.0 |
|
|
|
|
|
Payments on long-term debt |
(2.5) |
|
|
(24.2) |
|
|
|
|
|
Cash dividends paid |
(8.5) |
|
|
(8.1) |
|
|
|
|
|
| Employee taxes paid under stock-based compensation plans |
(7.7) |
|
|
(1.6) |
|
Proceeds from the exercise of stock options |
0.3 |
|
|
— |
|
|
|
|
|
|
|
|
|
| Net cash provided by (used in) financing activities |
46.6 |
|
|
(66.9) |
|
Effect of foreign exchange rate changes |
(0.5) |
|
|
3.8 |
|
| Decrease in cash and cash equivalents |
(45.6) |
|
|
(14.9) |
|
Cash and cash equivalents at beginning of the year |
152.1 |
|
|
184.6 |
|
Cash and cash equivalents at end of the quarter |
$ |
106.5 |
|
|
$ |
169.7 |
|
See accompanying notes to consolidated condensed financial statements.
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Stockholders' Equity
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wolverine World Wide, Inc. Stockholders' Equity |
|
|
|
|
| (In millions, except share and per share data) |
Common Stock |
|
Additional Paid-In Capital |
|
Retained Earnings |
|
Accumulated
Other
Comprehensive
Loss |
|
Treasury Stock |
|
Non-controlling Interest |
|
Total |
| Balance at December 30, 2023 |
$ |
113.0 |
|
|
$ |
364.0 |
|
|
$ |
834.8 |
|
|
$ |
(142.2) |
|
|
$ |
(891.0) |
|
|
$ |
21.4 |
|
|
$ |
300.0 |
|
| Net earnings (loss) |
|
|
|
|
(14.5) |
|
|
|
|
|
|
0.8 |
|
|
(13.7) |
|
| Other comprehensive income (loss) |
|
|
|
|
|
|
(5.7) |
|
|
|
|
0.1 |
|
|
(5.6) |
|
Shares issued, net of shares forfeited under stock incentive plans (366,137 shares) |
0.3 |
|
|
(1.9) |
|
|
|
|
|
|
|
|
|
|
(1.6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stock-based compensation expense |
|
|
4.1 |
|
|
|
|
|
|
|
|
|
|
4.1 |
|
Cash dividends declared ($0.10 per share) |
|
|
|
|
(8.3) |
|
|
|
|
|
|
|
|
(8.3) |
|
Issuance of treasury shares (3,570 shares) |
|
|
(0.1) |
|
|
|
|
|
|
— |
|
|
|
|
(0.1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Divestiture |
|
|
|
|
|
|
|
|
|
|
(14.7) |
|
|
(14.7) |
|
| Balance at March 30, 2024 |
$ |
113.3 |
|
|
$ |
366.1 |
|
0 |
$ |
812.0 |
|
0 |
$ |
(147.9) |
|
0 |
$ |
(891.0) |
|
0 |
$ |
7.6 |
|
0 |
$ |
260.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 28, 2024 |
$ |
113.7 |
|
|
$ |
382.7 |
|
|
$ |
849.5 |
|
|
$ |
(147.8) |
|
|
$ |
(890.8) |
|
|
$ |
9.2 |
|
|
$ |
316.5 |
|
| Net earnings |
|
|
|
|
11.1 |
|
|
|
|
|
|
1.1 |
|
|
12.2 |
|
| Other comprehensive income (loss) |
|
|
|
|
|
|
2.5 |
|
|
|
|
(0.1) |
|
|
2.4 |
|
Shares issued, net of shares forfeited under stock incentive plans (694,611 shares) |
0.7 |
|
|
(8.4) |
|
|
|
|
|
|
|
|
|
|
(7.7) |
|
Shares issued for stock options exercised, net (19,000 shares) |
— |
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
0.3 |
|
| Stock-based compensation expense |
|
|
5.7 |
|
|
|
|
|
|
|
|
|
|
5.7 |
|
Cash dividends declared ($0.10 per share) |
|
|
|
|
(8.7) |
|
|
|
|
|
|
|
|
(8.7) |
|
Issuance of treasury shares (1,420 shares) |
|
|
— |
|
|
|
|
|
|
0.1 |
|
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at March 29, 2025 |
$ |
114.4 |
|
|
$ |
380.3 |
|
|
$ |
851.9 |
|
|
$ |
(145.3) |
|
|
$ |
(890.7) |
|
|
$ |
10.2 |
|
|
$ |
320.8 |
|
See accompanying notes to consolidated condensed financial statements.
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
(Unaudited)
1.BASIS OF PRESENTATION
Nature of Operations
Wolverine World Wide, Inc. (the “Company”) is a leading designer, marketer and licensor of a broad range of quality casual footwear and apparel; performance outdoor and athletic footwear and apparel; kids’ footwear; industrial work shoes, boots and apparel; and uniform shoes and boots. The Company’s portfolio of owned and licensed brands includes: Bates®, Cat®, Chaco®, Harley-Davidson®, Hush Puppies®, HYTEST®, Merrell®, Saucony®, Stride Rite®, Sweaty Betty® and Wolverine®. The Company’s products are marketed worldwide through owned operations, through licensing and distribution arrangements with third parties, and through joint ventures. The Company also operates retail stores and eCommerce sites to market both its own brands and branded footwear and apparel from other manufacturers.
Effective January 1, 2024, the Company completed the sale of the Company’s equity interests in joint venture entities that sourced and marketed Merrell® and Saucony® footwear and apparel products in China. See Note 17 for further discussion.
Effective January 10, 2024, the Company completed the sale of the Sperry® business. See Note 17 for further discussion.
Effective May 4, 2024, the Company entered into global multi-year licensing agreements of the Merrell® and Saucony® kids footwear and Merrell® apparel and accessories.
Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for a complete presentation of the financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included in the accompanying financial statements. For further information, refer to the consolidated financial statements and notes included in the Company’s 2024 Form 10-K.
Fiscal Year
The Company’s fiscal year is the 52- or 53-week period that ends on the Saturday nearest to December 31. Fiscal year 2025 has 53 weeks and fiscal year 2024 had 52 weeks. The Company reports its quarterly results of operations on the basis of 13-week quarters for each of the first three fiscal quarters and a 13 or 14-week period for the fourth fiscal quarter. References to particular years or quarters refer to the Company’s fiscal years ended on the Saturday nearest to December 31 or the fiscal quarters within those years.
Seasonality
The Company experiences moderate fluctuations in sales volume during the year, as reflected in quarterly revenue. The Company expects current seasonal sales patterns to continue in future years. The Company also experiences some fluctuation in its levels of working capital, typically reflecting an increase in net working capital requirements near the end of the first and third fiscal quarters as the Company builds inventory to support peak shipping periods. Historically, cash provided by operating activities is higher in the second half of the fiscal year due to collection of wholesale channel receivables and higher direct-to-consumer sales during the holiday season. The Company meets its working capital requirements through internal operating cash flows and, as needed, borrowings under its revolving credit facility, as discussed in more detail under the caption "Liquidity and Capital Resources" in Item 2: "Management's Discussion and Analysis of Financial Condition and Results of Operations". The Company's working capital could also be impacted by other events.
Impairment of Long-Lived Assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or an asset group may not be recoverable. Each impairment test is based on a comparison of the carrying amount of the asset or asset group to the future undiscounted net cash flows expected to be generated by the asset or asset group. If such assets are considered to be impaired, the impairment amount to be recognized is the amount by which the carrying value of the assets exceeds their fair value.
In the first quarter of 2024, the Company incurred non-cash impairment charges on the long-lived property, plant and equipment and lease right-of-use assets at the Company’s distribution center in Louisville, Kentucky to adjust the carrying value of the assets to their estimated fair value.
The Louisville distribution center impairment charges were related to the Company’s transformation activities and actions to consolidate distribution operations. The long-lived assets had no fair value after the Company stopped using the distribution center.
The following table provides details related to asset impairment charges recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
| (In millions) |
|
|
March 30,
2024 |
|
|
|
|
| Lease right-of-use assets impairment |
|
|
$ |
2.9 |
|
|
|
|
|
| Property, plant and equipment impairment |
|
|
3.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total impairment |
|
|
$ |
6.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2.NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (“FASB”) has issued the following Accounting Standards Updates (“ASUs”) that the Company has not yet adopted. The following is a summary of the new standards and anticipated impact of adopting these new standards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Standard |
|
Description |
|
Effect on the Financial Statements |
| ASU 2023-09, Improvements to Income Tax Disclosures |
|
Requires annual disclosures of prescribed standard categories for the components of the effective tax rate reconciliation, disclosure of income taxes paid disaggregated by jurisdiction, and other income-tax related disclosures. The ASU is effective on a prospective basis, with retrospective application permitted, for fiscal years beginning after December 15, 2024. |
|
The Company is evaluating the impact of the new standard on its Consolidated Financial Statements. |
| ASU 2024-03, Disaggregation of Income Statement Expenses |
|
Requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The amendments in ASU 2024-03 should be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. |
|
The Company is evaluating the impact of the new standard on its Consolidated Financial Statements. |
3.EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
| (In millions, except per share data) |
March 29,
2025 |
|
March 30,
2024 |
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
| Net earnings (loss) attributable to Wolverine World Wide, Inc. |
$ |
11.1 |
|
|
$ |
(14.5) |
|
|
|
|
|
Adjustment for earnings allocated to non-vested restricted common stock |
(0.3) |
|
|
(0.3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net earnings (loss) used in calculating basic and diluted earnings per share |
$ |
10.8 |
|
|
$ |
(14.8) |
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
80.7 |
|
79.8 |
|
|
|
|
Effect of dilutive stock options |
0.1 |
|
— |
|
|
|
|
Shares used in calculating diluted earnings per share |
80.8 |
|
79.8 |
|
|
|
|
| Net earnings (loss) per share: |
|
|
|
|
|
|
|
| Basic |
$ |
0.13 |
|
|
$ |
(0.19) |
|
|
|
|
|
| Diluted |
$ |
0.13 |
|
|
$ |
(0.19) |
|
|
|
|
|
For the quarters ended March 29, 2025 and March 30, 2024, 474,375 and 1,770,500 outstanding stock options, respectively, have not been included in the denominator for the computation of diluted earnings per share because they were anti-dilutive.
4.GOODWILL AND INDEFINITE-LIVED INTANGIBLES
The changes in the carrying amount of goodwill are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
| (In millions) |
March 29,
2025 |
|
March 30,
2024 |
Goodwill balance at beginning of the year |
$ |
424.6 |
|
|
$ |
427.1 |
|
|
|
|
|
|
|
|
|
| Foreign currency translation effects |
2.5 |
|
|
(1.1) |
|
Goodwill balance at end of the quarter |
$ |
427.1 |
|
|
$ |
426.0 |
|
Goodwill balances are net of accumulated impairment charges. Accumulated impairment charges were $48.4 million as of March 29, 2025 and March 30, 2024, and are related to the Sweaty Betty® reporting unit, which is part of the Active Group reportable segment.
The Company’s indefinite-lived intangible assets, which comprise trade names and trademarks, totaled $175.8 million, $173.0 million, and $173.3 million as of March 29, 2025, December 28, 2024, and March 30, 2024, respectively. The Company conducted an interim impairment assessment as of March 29, 2025 and determined that there were no triggering events indicating impairment of the Company’s goodwill and indefinite-lived intangible assets.
For the Sweaty Betty® reporting unit included in the fiscal 2024 annual impairment test, the estimated fair value of the reporting unit exceeded the carrying value by 3%. The Sweaty Betty® trade name was valued using the income approach, specifically the multi-period excess earnings method. The key assumptions used in the valuations were revenue growth, EBITDA margin, and the discount rate. Although the Company believes the estimates and assumptions used in the valuations were appropriate, it is possible assumptions could change in future periods. The risk of future impairment to the Sweaty Betty® trade name and Sweaty Betty® goodwill depend on assumptions used in the determination of the trade name's and reporting unit's fair value, such as revenue growth, EBITDA margin, taxes, depreciation and amortization margin, discount rate, and assumed tax rate, or if macroeconomic conditions deteriorate and adversely affect the values of the Company's Sweaty Betty® trade name and the Sweaty Betty® reporting unit. A future impairment charge of the Sweaty Betty® trade name and the Sweaty Betty® reporting unit goodwill could have an adverse material effect on the Company's consolidated financial results. The carrying values of the Company’s Sweaty Betty® trade name indefinite-lived intangible asset and the Sweaty Betty® reporting unit goodwill were $101.1 million and $53.9 million, respectively, as of March 29, 2025.
5.ACCOUNTS RECEIVABLE
The Company and certain of its subsidiaries sell, on a continuous basis without recourse, their trade receivables to Rockford ARS, LLC (“Rockford ARS”), a wholly-owned bankruptcy-remote subsidiary of the Company. On December 7, 2022, Rockford ARS entered into a receivables purchase agreement (“RPA”), which was subsequently amended on April 15, 2024, to sell up to $125.0 million of receivables to certain purchasers (the “Purchasers”) on a recurring basis in exchange for cash (referred to as “capital” in the RPA) equal to the gross receivables transferred. The parties intend that the transfers of receivables to the Purchasers constitute purchases and sales of receivables. Rockford ARS has guaranteed to each Purchaser the prompt payment of sold receivables, and has granted a security interest in its assets for the benefit of the Purchasers. Under the RPA, which matures on December 5, 2025, each Purchaser’s share of capital accrues yield at a floating rate plus an applicable margin. The Company is the master servicer under the RPA, and is responsible for administering and collecting receivables.
The proceeds of the RPA are classified as operating activities in the company's consolidated condensed statement of cash flows. Cash received from collections of sold receivables may be used to fund additional purchases of receivables on a revolving basis or to return all or any portion of outstanding capital of the Purchasers. Subsequent collections of the pledged receivables, which have not been sold, will be classified as operating cash flows at the time of collection. Total receivables sold under the RPA were $112.6 million and $102.3 million for the quarters ended March 29, 2025 and March 30, 2024, respectively. Total cash collections under the RPA were $122.5 million and $101.7 million in the quarters ended March 29, 2025 and March 30, 2024, respectively. The fair value of the sold receivables approximated book value due to their credit quality and short-term nature, and as a result, no gain or loss on sale of receivables was recorded.
As of the fiscal quarters ended March 29, 2025 and March 30, 2024, the amount sold to the Purchasers under the RPA was $102.6 million and $94.5 million, respectively, which was derecognized from the consolidated condensed balance sheets. As collateral against sold receivables, Rockford ARS maintains a certain level of unsold receivables, which were $54.1 million and $53.5 million as of the fiscal quarters ended March 29, 2025 and March 30, 2024, respectively.
6.REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue Recognition and Performance Obligations
The Company reports disaggregated revenue for the wholesale and direct-to-consumer sales channels, which are reconciled to the Company’s reportable segments. The wholesale channel includes royalty revenue, which operates in a similar manner as other wholesale revenue due to similar oversight and management, customer base, the performance obligation (footwear and apparel goods) and point in time completion of the performance obligation.
|
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|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
| |
Quarter Ended March 29, 2025 |
|
Quarter Ended March 30, 2024 |
| (In millions) |
Wholesale |
|
Direct-to-Consumer |
|
Total |
|
Wholesale |
|
Direct-to-Consumer |
|
Total |
| Active Group |
$ |
239.1 |
|
|
$ |
87.6 |
|
|
$ |
326.7 |
|
|
$ |
196.2 |
|
|
$ |
93.6 |
|
|
$ |
289.8 |
|
| Work Group |
66.9 |
|
|
7.9 |
|
|
74.8 |
|
|
81.3 |
|
|
8.8 |
|
|
90.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other |
9.9 |
|
|
0.9 |
|
|
10.8 |
|
|
11.0 |
|
|
4.0 |
|
|
15.0 |
|
| Total Revenue |
$ |
315.9 |
|
|
$ |
96.4 |
|
|
$ |
412.3 |
|
|
$ |
288.5 |
|
|
$ |
106.4 |
|
|
$ |
394.9 |
|
The Company has agreements to license symbolic intellectual property with minimum guarantees or fixed consideration. The Company is due $37.2 million of remaining fixed transaction price under its license agreements as of March 29, 2025, which it expects to recognize per the terms of its contracts over the course of time through December 2028. The Company has elected to omit the remaining variable consideration under its license agreements given the Company recognizes revenue equal to what it has the right to invoice and that amount corresponds directly with the value to the customer of the Company’s performance to date.
Reserves for Variable Consideration
Revenue is recorded at the net sales price (“transaction price”), which includes estimates of variable consideration for which reserves are established. Components of variable consideration include trade discounts and allowances, product returns, customer markdowns, customer rebates and other sales incentives relating to the sale of the Company’s products. These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales. These estimates take into consideration a range of possible outcomes, which are probability-weighted in accordance with the expected value method for relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts. Revenue recognized during the fiscal periods presented related to changes in the Company’s contract liabilities was nominal.
The Company’s contract balances are as follows:
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (In millions) |
March 29,
2025 |
|
December 28,
2024 |
|
March 30,
2024 |
| Product returns reserve |
$ |
9.4 |
|
|
$ |
12.2 |
|
|
$ |
9.9 |
|
| Customer markdowns reserve |
0.6 |
|
|
0.5 |
|
|
4.9 |
|
| Other sales incentives reserve |
2.5 |
|
|
3.6 |
|
|
3.5 |
|
| Customer rebates liability |
11.9 |
|
|
10.4 |
|
|
11.3 |
|
| Customer advances liability |
5.1 |
|
|
7.5 |
|
|
4.9 |
|
The amount of variable consideration included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. Actual amounts of consideration ultimately received may differ from initial estimates. If actual results in the future vary from initial estimates, the Company subsequently adjusts these estimates, which would affect net revenue and earnings in the period such variances become known.
7.DEBT
Total debt consists of the following obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (In millions) |
March 29,
2025 |
|
December 28,
2024 |
|
March 30,
2024 |
| Term Facility, due October 21, 2026 |
$ |
30.0 |
|
|
$ |
32.5 |
|
|
$ |
47.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Senior Notes, 4.000% interest, due August 15, 2029 |
550.0 |
|
|
550.0 |
|
|
550.0 |
|
| Borrowings under revolving credit agreements |
135.0 |
|
|
70.0 |
|
|
265.0 |
|
| Unamortized deferred financing costs |
(4.2) |
|
|
(4.5) |
|
|
(5.6) |
|
| Total debt |
$ |
710.8 |
|
|
$ |
648.0 |
|
|
$ |
856.9 |
|
The Company’s Credit Agreement provides for a term loan A facility (the “Term Facility”) and for a revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Senior Credit Facilities”). The maturity date of the loans under the Senior Credit Facilities is October 21, 2026. The Credit Agreement provides for a debt capacity of up to an aggregate debt amount (including outstanding term loan principal and revolver commitment amounts in addition to permitted incremental debt) not to exceed $2.0 billion unless certain specified conditions set forth in the Credit Agreement are met.
The Term Facility requires quarterly principal payments with a balloon payment due on October 21, 2026. The scheduled principal payments due under the Term Facility over the next 12 months total $10.0 million as of March 29, 2025 and are recorded as current maturities of long-term debt on the consolidated condensed balance sheets. In addition, the Company made payments towards the Term Facility during fiscal year 2024 in accordance with requirements in the Credit Agreement relating to the use of proceeds from the disposition of the Company assets.
The Revolving Facility allows the Company to borrow up to an aggregate amount of $800.0 million. The Revolving Facility also includes a $100.0 million swingline subfacility and a $50.0 million letter of credit subfacility. The Company had outstanding letters of credit under the Revolving Facility of $6.0 million, $6.0 million and $6.9 million as of March 29, 2025, December 28, 2024 and March 30, 2024, respectively. These outstanding letters of credit reduce the borrowing capacity under the Revolving Facility.
The interest rates applicable to amounts outstanding under Term Facility and to U.S. dollar denominated amounts outstanding under the Revolving Facility are, at the Company’s option, either (1) the Alternate Base Rate plus an Applicable Margin as determined by the Company’s Consolidated Leverage Ratio, within a range of 0.125% to 1.000%, or (2) the Eurocurrency Rate plus an Applicable Margin as determined by the Company’s Consolidated Leverage Ratio, within a range of 1.125% to 2.000% (all capitalized terms used in this sentence are as defined in the Credit Agreement). At March 29, 2025, the Term Facility and the Revolving Facility had a weighted-average interest rate of 5.43%.
The obligations of the Company pursuant to the Credit Agreement are guaranteed by substantially all of the Company’s material domestic subsidiaries and secured by substantially all of the personal and real property of the Company and its material domestic subsidiaries, subject to certain exceptions.
The Senior Credit Facilities also contain certain affirmative and negative covenants, including covenants that limit the ability of the Company and its Restricted Subsidiaries to, among other things: incur or guarantee indebtedness; incur liens; pay dividends or repurchase stock; enter into transactions with affiliates; consummate asset sales, acquisitions or mergers; prepay certain other indebtedness; or make investments, as well as covenants restricting the activities of certain foreign subsidiaries of the Company that hold intellectual property related assets. Further, the Senior Credit Facilities require compliance with the following financial covenants: a maximum Consolidated Leverage Ratio and a minimum Consolidated Interest Coverage Ratio (all capitalized terms used in this paragraph are as defined in the Senior Credit Facilities). As of March 29, 2025, the Company was in compliance with all covenants and performance ratios under the Senior Credit Facilities.
The Company’s $550.0 million 4.000% senior notes issued on August 26, 2021 are due on August 15, 2029. Related interest payments are due semi-annually. The senior notes are guaranteed by substantially all of the Company’s domestic subsidiaries.
The Company has a foreign revolving credit facility with aggregate available borrowings of $1.0 million that are uncommitted and, therefore, each borrowing against the facility is subject to approval by the lender. There were no borrowings against this facility as of March 29, 2025, December 28, 2024 and March 30, 2024, respectively.
The Company included in interest expense the amortization of deferred financing costs of $0.5 million and $0.6 million for the quarters ended March 29, 2025 and March 30, 2024, respectively.
8.LEASES
The following is a summary of the Company’s lease cost.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
| (In millions) |
March 29,
2025 |
|
March 30,
2024 |
|
|
|
|
| Operating lease cost |
$ |
7.4 |
|
|
$ |
8.9 |
|
|
|
|
|
| Variable lease cost |
3.0 |
|
|
2.9 |
|
|
|
|
|
| Short-term lease cost |
0.4 |
|
|
0.5 |
|
|
|
|
|
| Sublease income |
(2.1) |
|
|
(1.3) |
|
|
|
|
|
| Total lease cost |
$ |
8.7 |
|
|
$ |
11.0 |
|
|
|
|
|
The following is a summary of the Company’s supplemental cash flow information related to leases.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
| (In millions) |
March 29,
2025 |
|
March 30,
2024 |
|
|
|
|
| Cash paid for operating lease liabilities |
$ |
9.1 |
|
|
$ |
13.0 |
|
|
|
|
|
| Operating lease assets obtained in exchange for lease liabilities |
4.0 |
|
|
4.6 |
|
|
|
|
|
The Company did not enter into any real estate leases with commencement dates subsequent to March 29, 2025.
9.DERIVATIVE FINANCIAL INSTRUMENTS
The Company utilizes foreign currency forward exchange contracts designated as cash flow hedges to manage the volatility associated primarily with U.S. dollar inventory purchases made by non-U.S. wholesale operations in the normal course of business. These foreign currency forward exchange hedge contracts extended out to a maximum of 538 days, 531 days, and 531 days as of March 29, 2025, December 28, 2024 and March 30, 2024, respectively. If, in the future, the foreign exchange contracts are determined not to be highly effective or are terminated before their contractual termination dates, the Company would remove the hedge designation from those contracts and reclassify into earnings the unrealized gains or losses that would otherwise be included in accumulated other comprehensive income (loss) within stockholders’ equity.
The Company also utilizes foreign currency forward exchange contracts that are not designated as hedging instruments to manage foreign currency transaction exposure. Foreign currency derivatives not designated as hedging instruments are offset by foreign exchange gains or losses resulting from the underlying exposures of foreign currency denominated assets and liabilities.
The Company has an interest rate swap arrangement, which unless otherwise terminated, will mature on May 30, 2025. This agreement, which exchanges floating rate interest payments for fixed rate interest payments over the life of the agreement without the exchange of the underlying notional amounts, has been designated as a cash flow hedge of the underlying debt. The notional amount of the interest rate swap arrangement is used to measure interest to be paid or received and does not represent the amount of exposure to credit loss. The differential paid or received on the interest rate swap arrangement is recognized as interest expense, net. In accordance with FASB Accounting Standards Codification (“ASC”) Topic 815 Derivatives and Hedging, the Company has formally documented the relationship between the interest rate swap and the variable rate borrowing, as well as its risk management objective and strategy for undertaking the hedge transactions. This process included linking the derivative to the specific liability or asset on the balance sheet. The Company also assessed at the inception of the hedge, and continues to assess on an ongoing basis, whether the derivative used in the hedging transaction is highly effective in offsetting changes in the cash flows of the hedged item.
The notional amounts of the Company’s derivative instruments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in millions) |
March 29,
2025 |
|
December 28,
2024 |
|
March 30,
2024 |
| Foreign exchange hedge contracts |
$ |
255.3 |
|
|
$ |
263.5 |
|
|
$ |
273.0 |
|
|
|
|
|
|
|
| Interest rate swap |
14.5 |
|
|
16.7 |
|
|
68.5 |
|
|
|
|
|
|
|
The recorded fair values of the Company’s derivative instruments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (In millions) |
March 29,
2025 |
|
December 28,
2024 |
|
March 30,
2024 |
| Financial assets: |
|
|
|
|
|
| Foreign exchange hedge contracts |
$ |
1.3 |
|
|
$ |
9.1 |
|
|
$ |
1.9 |
|
|
|
|
|
|
|
| Interest rate swap |
0.1 |
|
|
0.2 |
|
|
1.4 |
|
|
|
|
|
|
|
| Financial liabilities: |
|
|
|
|
|
| Foreign exchange hedge contracts |
$ |
(1.6) |
|
|
$ |
(0.7) |
|
|
$ |
(1.1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange hedge contract financial assets are recorded to prepaid expenses and other current assets and financial liabilities are recorded to other accrued liabilities on the consolidated condensed balance sheets. Interest rate swap financial assets are recorded to other assets on the consolidated condensed balance sheets.
10.STOCK-BASED COMPENSATION
The Company recognized compensation expense of $5.7 million and $4.1 million, and related income tax benefits of $1.2 million and $0.8 million, for grants under its stock-based compensation plans for the quarters ended March 29, 2025 and March 30, 2024, respectively.
The Company grants restricted stock or units (“restricted awards”), performance-based restricted stock or units (“performance awards”) and stock options under its stock-based compensation plans.
The Company granted restricted awards and performance awards as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-To-Date Ended March 29, 2025 |
|
Year-To-Date Ended March 30, 2024 |
| (In millions) |
Company Shares Issued |
|
Weighted-Average Grant Date Fair Value |
|
Company Shares Issued |
|
Weighted-Average Grant Date Fair Value |
| Restricted Awards |
602,757 |
|
$ |
22.19 |
|
|
1,667,037 |
|
$ |
8.09 |
|
| Performance Awards |
421,475 |
|
$ |
22.19 |
|
|
1,118,184 |
|
$ |
8.09 |
|
11.RETIREMENT PLANS
The following is a summary of net pension and Supplemental Executive Retirement Plan (“SERP”) expense recognized by the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Quarter Ended |
|
|
| (In millions) |
March 29,
2025 |
|
March 30,
2024 |
|
|
|
|
Service cost pertaining to benefits earned during the period |
$ |
0.5 |
|
|
$ |
0.7 |
|
|
|
|
|
Interest cost on projected benefit obligations |
4.2 |
|
|
4.4 |
|
|
|
|
|
Expected return on pension assets |
(4.5) |
|
|
(4.9) |
|
|
|
|
|
Net amortization loss |
(0.4) |
|
|
(0.4) |
|
|
|
|
|
| Net pension income |
$ |
(0.2) |
|
|
$ |
(0.2) |
|
|
|
|
|
The non-service cost components of net pension income is recorded in the Other income, net line item on the consolidated condensed statements of operations and comprehensive income.
12.INCOME TAXES
The Company maintains management and operational activities in overseas subsidiaries, and its foreign earnings are taxed at rates that are different than the U.S. federal statutory income tax rate. A significant amount of the Company’s earnings are generated by its Canadian, European and Asian subsidiaries and, to a lesser extent, in jurisdictions that are not subject to income tax.
The Company intends to permanently reinvest all non-cash undistributed earnings outside of the U.S. and has therefore not established a deferred tax liability on that amount of foreign unremitted earnings. However, if these non-cash undistributed earnings were repatriated, the Company would be required to accrue and pay applicable U.S. taxes and withholding taxes payable to various countries. It is not practicable to estimate the amount of the deferred tax liability associated with these non-cash unremitted earnings due to the complexity of the hypothetical calculation.
The Company’s effective tax rates for the quarters ended March 29, 2025 and March 30, 2024 were 7.5% and 4.1%, respectively. In the current year, the Company recognized discrete tax benefits resulting in a decrease to the effective tax rate. In the prior year, the Company recognized discrete tax expenses which also resulted in a decrease to the effective tax rate and reduced the tax benefit of the pretax loss.
The Company is subject to periodic audits by U.S. federal, state, local and non-U.S. tax authorities. Currently, the Company is undergoing routine periodic audits in both U.S. federal, state, local and non-U.S. tax jurisdictions. It is reasonably possible that the amounts of unrecognized tax benefits could change in the next 12 months as a result of the audits; however, any payment of tax is not expected to be significant to the consolidated condensed financial statements. The Company is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years before 2020 in the majority of tax jurisdictions.
13.ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated other comprehensive income (loss) represents net earnings and any revenue, expenses, gains and losses that, under U.S. GAAP, are excluded from net earnings and recognized directly as a component of stockholders’ equity.
The change in accumulated other comprehensive income (loss) during the quarters ended March 29, 2025 and March 30, 2024 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (In millions) |
Foreign
currency
translation |
|
Derivatives |
|
Pension |
|
Total |
| Balance at December 30, 2023 |
$ |
(116.3) |
|
|
$ |
(17.1) |
|
|
$ |
(8.8) |
|
|
$ |
(142.2) |
|
Other comprehensive income (loss) before reclassifications (1) |
(8.1) |
|
|
4.6 |
|
|
— |
|
|
(3.5) |
|
| Amounts reclassified from accumulated other comprehensive loss |
0.2 |
|
|
(2.7) |
|
(2) |
(0.4) |
|
(3) |
(2.9) |
|
| Income tax expense |
— |
|
|
0.6 |
|
|
0.1 |
|
|
0.7 |
|
| Net reclassifications |
0.2 |
|
|
(2.1) |
|
|
(0.3) |
|
|
(2.2) |
|
Net current-period other comprehensive income (loss) (1) |
(7.9) |
|
|
2.5 |
|
|
(0.3) |
|
|
(5.7) |
|
| Balance at March 30, 2024 |
$ |
(124.2) |
|
|
$ |
(14.6) |
|
|
$ |
(9.1) |
|
|
$ |
(147.9) |
|
|
|
|
|
|
|
|
|
| Balance at December 28, 2024 |
$ |
(132.8) |
|
|
$ |
(8.7) |
|
|
$ |
(6.3) |
|
|
$ |
(147.8) |
|
Other comprehensive income (loss) before reclassifications (1) |
7.7 |
|
|
(3.7) |
|
|
— |
|
|
4.0 |
|
| Amounts reclassified from accumulated other comprehensive loss |
— |
|
|
(1.5) |
|
(2) |
(0.4) |
|
(3) |
(1.9) |
|
| Income tax expense |
— |
|
|
0.3 |
|
|
0.1 |
|
|
0.4 |
|
| Net reclassifications |
— |
|
|
(1.2) |
|
|
(0.3) |
|
|
(1.5) |
|
Net current-period other comprehensive income (loss) (1) |
7.7 |
|
|
(4.9) |
|
|
(0.3) |
|
|
2.5 |
|
| Balance at March 29, 2025 |
$ |
(125.1) |
|
|
$ |
(13.6) |
|
|
$ |
(6.6) |
|
|
$ |
(145.3) |
|
(1)Other comprehensive income (loss) is reported net of taxes and noncontrolling interest.
(2)Amounts related to foreign currency derivatives used to manage the volatility associated with inventory purchases in various currencies and deemed to be highly effective are included in cost of goods sold. Amounts related to foreign currency derivatives that are no longer deemed to be highly effective are included in other income. Amounts related to interest rate swaps are included in interest expense.
(3)Amounts reclassified are included in the computation of net pension expense.
14. FAIR VALUE MEASUREMENTS
The Company measures certain financial assets and liabilities at fair value on a recurring basis. For additional information regarding the Company’s fair value policies, refer to Note 1 in the Company’s 2024 Form 10-K.
Recurring Fair Value Measurements
The following table sets forth financial assets and liabilities measured at fair value in the consolidated condensed balance sheets and the respective pricing levels to which the fair value measurements are classified within the fair value hierarchy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Fair Value Measurements |
|
Quoted Prices With Other Observable Inputs (Level 2) |
| (In millions) |
March 29,
2025 |
|
December 28,
2024 |
|
March 30,
2024 |
| Financial assets: |
|
|
|
|
|
| Derivatives |
$ |
1.4 |
|
|
$ |
9.3 |
|
|
$ |
3.3 |
|
| Financial liabilities: |
|
|
|
|
|
| Derivatives |
$ |
(1.6) |
|
|
$ |
(0.7) |
|
|
$ |
(1.1) |
|
The fair value of foreign currency forward exchange contracts represents the estimated receipts or payments necessary to terminate the contracts. The interest rate swap was valued based on the current forward rates of the future cash flows.
Fair Value Disclosures
The Company’s financial instruments that are not recorded at fair value consist of cash and cash equivalents, accounts and notes receivable, accounts payable, borrowings under revolving credit agreements and other short-term and long-term debt. The carrying amount of these financial instruments is historical cost, which approximates fair value, except for the debt. The carrying value and the fair value of the Company’s debt are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (In millions) |
March 29,
2025 |
|
December 28,
2024 |
|
March 30,
2024 |
| Carrying value |
$ |
710.8 |
|
|
$ |
648.0 |
|
|
$ |
856.9 |
|
| Fair value |
630.7 |
|
|
587.0 |
|
|
756.2 |
|
The fair value of the fixed rate debt was based on third-party quotes (Level 2). The fair value of the variable rate debt was calculated by discounting the future cash flows to its present value using a discount rate based on the risk-free rate of the same maturity (Level 3).
15. LITIGATION AND CONTINGENCIES
Litigation
The Company operated a leather tannery in Rockford, Michigan from the early 1900s through 2009 (the “Tannery”). The Company also owns a parcel on House Street in Plainfield Township that the Company used for the disposal of Tannery byproducts until about 1970 (the "House Street" site). Beginning in the late 1950s, the Company used 3M Company’s Scotchgard™ in its processing of certain leathers at the Tannery. Until 2002 when 3M Company changed its Scotchgard™ formula, Tannery byproducts disposed of by the Company at the House Street site and other locations may have contained PFOA and/or PFOS, two chemicals in the family of compounds known as per- and polyfluoroalkyl substances (together, “PFAS”). PFOA and PFOS help provide non-stick, stain-resistant, and water-resistant qualities, and were used for many decades in commercial products like firefighting foams and metal plating, and in common consumer items like food wrappers, microwave popcorn bags, pizza boxes, Teflon™, carpets and Scotchgard™.
In May 2016, the Environmental Protection Agency (“EPA”) announced a lifetime health advisory level of 70 parts per trillion (“ppt”) combined for PFOA and PFOS, which the EPA reduced in June 2022 to 0.004 ppt and 0.02 ppt for PFOA and PFOS, respectively. In January 2018, the Michigan Department of Environmental Quality (“MDEQ”, now known as the Michigan Department of Environment, Great Lakes, and Energy (“EGLE”)) enacted a drinking water criterion of 70 ppt combined for PFOA and PFOS, which set an official state standard for acceptable concentrations of these contaminants in groundwater used for drinking water purposes. On August 3, 2020, Michigan changed the standards for PFOA and PFOS in drinking water to 8 and 16 ppt, respectively, and set standards for four other PFAS substances.
Civil and Regulatory Actions of EGLE and EPA
On January 10, 2018, EGLE filed a civil action against the Company in the U.S. District Court for the Western District of Michigan under the federal Resource Conservation and Recovery Act of 1976 (“RCRA”) and Parts 201 and 31 of the Michigan Natural Resources and Environmental Protection Act (“NREPA”) alleging that the Company’s past and present handling, storage, treatment, transportation and/or disposal of solid waste at the Company’s properties has resulted in releases of PFAS at levels exceeding applicable Michigan cleanup criteria for PFOA and PFOS (the "EGLE Action"). Plainfield and Algoma Townships intervened in the EGLE Action alleging claims under RCRA, NREPA, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) and common law nuisance.
On February 3, 2020, the parties entered into a consent decree resolving the EGLE Action, which was approved by U.S. District Judge Janet T. Neff on February 19, 2020 (the “Consent Decree”). Under the Consent Decree, the Company agreed to pay for an extension of Plainfield Township’s municipal water system to more than 1,000 properties in Plainfield and Algoma Townships, subject to an aggregate cap of $69.5 million. The Company also agreed to continue maintaining water filters for certain homeowners, resample certain residential wells for PFAS, continue remediation at the Company’s Tannery property and House Street site, and conduct further investigations and monitoring to assess the presence of PFAS in area groundwater. The Company’s activities under the Consent Decree are not materially impacted by either the drinking water standards that became effective on August 3, 2020, or the EPA’s revised advisory levels issued in June 2022.
On December 19, 2018, the Company filed a third-party complaint against 3M Company seeking, among other things, recovery of the Company’s remediation and other costs incurred in defense of the EGLE Action ("the 3M Action"). On June 20, 2019, the 3M Company filed a counterclaim against the Company in response to the 3M Action, seeking, among other things, contractual and common law indemnity and contribution under CERCLA and Part 201 of NREPA. On February 20, 2020, the Company and 3M Company entered into a settlement agreement resolving the 3M Action, under which 3M Company paid the Company a lump sum amount of $55.0 million during the first quarter of 2020.
On January 10, 2018, the EPA entered a Unilateral Administrative Order (the “Order”) under Section 106(a) of CERCLA, 42 U.S.C. § 9606(a) with an effective date of February 1, 2018. The Order pertained to specified removal actions at the Company's Tannery and House Street sites, including certain time critical removal actions subsequently identified in an April 29, 2019 letter from the EPA, to abate the actual or threatened release of hazardous substances at or from the sites. On October 28, 2019, the EPA and the Company entered into an Administrative Settlement and Order on Consent (“AOC”) that supersedes the Order and addresses the agreed-upon removal actions outlined in the Order. The Company has completed the activities required by the AOC.
The Company discusses its reserve for remediation costs in the environmental liabilities section below.
Individual and Class Action Litigation
Beginning in late 2017, individual lawsuits and three putative class action lawsuits were filed against the Company that raise a variety of claims, including claims related to property, remediation, and human health effects. The three putative class action lawsuits were subsequently refiled in the U.S. District Court for the Western District of Michigan as a single consolidated putative class action lawsuit. 3M Company has been named as a co-defendant in the individual lawsuits and consolidated putative class action lawsuit. In addition, the current owner of a former landfill and gravel mining operation sued the Company seeking damages and cost recovery for property damage allegedly caused by the Company’s disposal of tannery waste containing PFAS. The owner of another former landfill filed notice threatening suit and sent a demand letter to the Company seeking recovery for damages allegedly caused by the Company’s disposal of tannery waste containing PFAS (this notice, the former landfill and gravel mining suit and the individual lawsuits and putative class action, collectively, the “Litigation Matters”).
On January 11, 2022, the Company and 3M Company entered into a master settlement agreement with the law firm representing certain of the plaintiffs in the individual lawsuits included in the Litigation Matters, and each of these plaintiffs subsequently agreed to participate in the settlement. These plaintiffs’ lawsuits were dismissed with prejudice on or around April 25, 2022.
On December 9, 2021, the Company and 3M Company reached a settlement in principle to resolve certain of the remaining individual lawsuits included in the Litigation Matters, and the parties entered into definitive settlement agreements in March 2022. These plaintiffs’ lawsuits were dismissed with prejudice on June 14, 2022. The last remaining individual action was dismissed without prejudice on June 24, 2022.
In addition, in September 2022, the parties to the putative class action filed a motion for preliminary approval of a proposed class action settlement seeking to resolve the putative class action plaintiffs’ claims. On March 29, 2023, the court presiding over the putative class action granted final approval of the proposed settlement and dismissed the lawsuit with prejudice.
The last remaining Litigation Matter, the lawsuit filed by the current owner of a former landfill and gravel mining operations, was pending in Michigan state court but has been administratively stayed by the Court.
There were no developments during the first quarter of 2025 that required the Company to change the amount accrued for the Litigation Matters described above. The Company made related payments of $1.8 million in connection with the Litigation Matters described above during the first quarter of 2025. As of March 29, 2025, the Company had recorded liabilities of $8.4 million for certain of the Litigation Matters described above which are recorded as other accrued liabilities and other liabilities in the consolidated condensed balance sheets.
In December 2018, the Company filed a lawsuit against certain of its historic liability insurers, seeking to compel them to provide a defense against the Litigation Matters on the Company's behalf and coverage for remediation efforts undertaken by, and indemnity provided by, the Company. Following the last recovery payment received, the lawsuit was dismissed in December 2024. The Company recognized certain recoveries from legacy insurance policies in 2024.
Other Litigation
The Company is also involved in litigation incidental to its business and is a party to legal actions and claims, including, but not limited to, those related to employment, intellectual property, and consumer related matters. Some of the legal proceedings include claims for compensatory as well as punitive damages. While the final outcome of these matters cannot be predicted with certainty, considering, among other things, the meritorious legal defenses available to the Company and reserves for liabilities that the Company has recorded, along with applicable insurance, it is management’s opinion that the outcome of these items are not expected to have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
Environmental Liabilities
The following is a summary of the activity with respect to the environmental remediation reserve established by the Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
| (In millions) |
March 29,
2025 |
|
March 30,
2024 |
Remediation liability at beginning of the year |
$ |
39.7 |
|
|
$ |
57.9 |
|
Changes in estimate |
2.6 |
|
|
— |
|
Amounts paid |
(5.1) |
|
|
(9.8) |
|
Remediation liability at the end of the quarter |
$ |
37.2 |
|
|
$ |
48.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The reserve balance as of March 29, 2025 includes $17.0 million that is expected to be paid within the next twelve months and is recorded as a current obligation in other accrued liabilities, with the remaining $20.2 million expected to be paid over the course of up to 25 years, recorded in other liabilities.
The Company's remediation activity at the Tannery property, House Street site and other relevant operations or disposal sites is ongoing. Although the Consent Decree has made near-term costs more clear, it is difficult to estimate the long-term cost of environmental compliance and remediation given the uncertainties regarding the interpretation and enforcement of applicable environmental laws and regulations, the extent of environmental contamination and the existence of alternative cleanup methods. Future developments may occur that could materially change the Company’s current cost estimates, including, but not limited to: (i) changes in the information available regarding the environmental impact of the Company’s operations and products; (ii) changes in environmental regulations, changes in permissible levels of specific compounds in drinking water sources, or changes in enforcement theories and policies, including efforts to recover natural resource damages; (iii) new and evolving analytical and remediation techniques; (iv) changes to the form of remediation; (v) success in allocating liability to other potentially responsible parties; and (vi) the financial viability of other potentially responsible parties and third-party indemnitors. For locations at which remediation activity is largely ongoing, the Company cannot estimate a possible loss or range of loss in excess of the associated established reserves for the reasons described above. The Company adjusts recorded liabilities as further information develops or circumstances change.
Minimum Royalties and Advertising Commitments
The Company has future minimum royalty and advertising obligations due under the terms of certain licenses held by the Company. These minimum future obligations for the fiscal periods subsequent to March 29, 2025 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (In millions) |
2025 |
|
2026 |
|
2027 |
|
2028 |
|
2029 |
|
Thereafter |
| Minimum royalties |
$ |
0.8 |
|
|
$ |
1.2 |
|
|
$ |
1.3 |
|
|
$ |
1.4 |
|
|
$ |
1.5 |
|
|
$ |
— |
|
| Minimum advertising |
1.8 |
|
|
3.1 |
|
|
3.2 |
|
|
3.3 |
|
|
— |
|
|
— |
|
Minimum royalties are based on both fixed obligations and assumptions regarding the Consumer Price Index. Royalty obligations in excess of minimum requirements are based upon future sales levels. In accordance with these agreements, the Company incurred royalty expense of $0.3 million and $0.3 million for the quarters ended March 29, 2025 and March 30, 2024, respectively.
The terms of certain license agreements also require the Company to make advertising expenditures based on the level of sales of the licensed products. In accordance with these agreements, the Company incurred advertising expense of $0.5 million and $1.0 million for the quarters ended March 29, 2025 and March 30, 2024, respectively.
16. BUSINESS SEGMENTS
The Company’s portfolio of brands is organized into the following reportable segments.
•Active Group, consisting of Merrell® footwear and apparel, Saucony® footwear and apparel, Sweaty Betty® activewear, and Chaco® footwear; and
•Work Group, consisting of Wolverine® footwear and apparel, Cat® footwear, Bates® uniform footwear, Harley-Davidson® footwear and HYTEST® safety footwear;
The Company's operating segments are the Active Group, Work Group, and Sweaty Betty®. Sweaty Betty® and the Active Group were evaluated and combined into one reportable segment because they meet the similar economic characteristics and qualitative aggregation criteria set forth in the relevant accounting guidance. The Company's chief operating decision maker is the President and Chief Executive Officer. The chief operating decision maker uses segment operating profit to assess the performance of, and to allocate resources to, each segment.
Kids' footwear offerings from Saucony®, Merrell®, Hush Puppies® and Cat® are included with the applicable brand.
The Company also reports “Other” and “Corporate” categories. Other consists of Sperry® footwear, Hush Puppies® footwear and apparel, sourcing operations that include third-party commission revenues, multi-branded direct-to-consumer retail stores and the Stride Rite® licensed business. The Corporate category consists of unallocated corporate expenses, such as corporate employee costs, corporate facility costs, reorganization activities, impairment of long-lived assets and environmental and other related costs.
The reportable segments are engaged in designing, manufacturing, sourcing, marketing, licensing and distributing branded footwear, apparel and accessories. Revenue for the reportable segments includes revenue from the sale of branded footwear, apparel and accessories to third-party customers; revenue from third-party licensees and distributors; and revenue from the Company’s direct-to-consumer businesses. The Company’s reportable segments are determined based on how the Company internally reports and evaluates financial information used to make operating decisions.
Company management uses various financial measures to evaluate the performance of the reportable segments. The following is a summary of certain key financial measures for the respective fiscal periods indicated. The significant expense categories and amounts align with the segment-level information that is regularly provided to the Company's chief operating decision maker.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Quarter Ended March 29, 2025 |
| (In millions) |
Active Group |
|
Work Group |
|
Other |
|
Corporate |
|
Total |
| Revenue |
$ |
326.7 |
|
|
$ |
74.8 |
|
|
$ |
10.8 |
|
|
$ |
— |
|
|
$ |
412.3 |
|
| Cost of goods sold |
166.5 |
|
|
47.7 |
|
|
1.3 |
|
|
2.0 |
|
|
217.5 |
|
| Operating expenses |
102.1 |
|
|
20.0 |
|
|
2.0 |
|
|
51.0 |
|
|
175.1 |
|
| Operating income |
$ |
58.1 |
|
|
$ |
7.1 |
|
|
$ |
7.5 |
|
|
$ |
(53.0) |
|
|
$ |
19.7 |
|
| Interest expense, net |
|
|
|
|
|
|
|
|
8.0 |
|
| Other income, net |
|
|
|
|
|
|
|
|
(1.5) |
|
| Earnings before income taxes |
|
|
|
|
|
|
|
|
$ |
13.2 |
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization expense |
$ |
1.5 |
|
|
$ |
0.1 |
|
|
$ |
0.3 |
|
|
$ |
4.2 |
|
|
$ |
6.1 |
|
| Capital expenditures |
$ |
0.4 |
|
|
$ |
— |
|
|
$ |
0.9 |
|
|
$ |
6.3 |
|
|
$ |
7.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Quarter Ended March 30, 2024 |
| (In millions) |
Active Group |
|
Work Group |
|
Other |
|
Corporate |
|
Total |
| Revenue |
$ |
289.8 |
|
|
$ |
90.1 |
|
|
$ |
15.0 |
|
|
$ |
— |
|
|
$ |
394.9 |
|
| Cost of goods sold |
157.4 |
|
|
56.2 |
|
|
7.3 |
|
|
(7.4) |
|
|
213.5 |
|
| Operating expenses |
96.2 |
|
|
21.2 |
|
|
3.5 |
|
|
63.6 |
|
|
184.5 |
|
| Operating income |
$ |
36.2 |
|
|
$ |
12.7 |
|
|
$ |
4.2 |
|
|
$ |
(56.2) |
|
|
$ |
(3.1) |
|
| Interest expense, net |
|
|
|
|
|
|
|
|
12.0 |
|
| Other income, net |
|
|
|
|
|
|
|
|
(0.8) |
|
| Loss before income taxes |
|
|
|
|
|
|
|
|
$ |
(14.3) |
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization expense |
$ |
2.1 |
|
|
$ |
0.1 |
|
|
$ |
0.4 |
|
|
$ |
4.5 |
|
|
$ |
7.1 |
|
| Capital expenditures |
$ |
1.3 |
|
|
$ |
— |
|
|
$ |
0.6 |
|
|
$ |
3.2 |
|
|
$ |
5.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (In millions) |
March 29,
2025 |
|
December 28,
2024 |
|
March 30,
2024 |
| Total assets: |
|
|
|
|
|
| Active Group |
$ |
1,072.2 |
|
|
$ |
1,011.6 |
|
|
$ |
1,132.6 |
|
| Work Group |
238.8 |
|
|
266.2 |
|
|
278.7 |
|
| Other |
93.6 |
|
|
79.4 |
|
|
97.4 |
|
| Corporate |
279.9 |
|
|
311.6 |
|
|
344.3 |
|
| Total |
$ |
1,684.5 |
|
|
$ |
1,668.8 |
|
|
$ |
1,853.0 |
|
| Goodwill: |
|
|
|
|
|
| Active Group |
$ |
317.5 |
|
|
$ |
315.4 |
|
|
$ |
316.7 |
|
| Work Group |
60.5 |
|
|
60.2 |
|
|
60.2 |
|
| Other |
49.1 |
|
|
49.0 |
|
|
49.1 |
|
|
|
|
|
|
|
| Total |
$ |
427.1 |
|
|
$ |
424.6 |
|
|
$ |
426.0 |
|
17. DIVESTITURES
Sale-Leaseback of Courtland Drive Facility
On September 17, 2024, the Company completed a sale and leaseback transaction with an independent third party for the land, building and related fixed assets of the Company’s Courtland Drive facility located in Rockford, Michigan for a sale price of $10.5 million. The independent third party leased back the facility to the Company under a seven-year lease agreement, which includes a five-year renewal option. The transaction qualifies for sales recognition under the sale leaseback accounting requirements, and the Company recorded a gain of $8.5 million in the third quarter of 2024.
Divestiture of Sperry® Business
On January 10, 2024, the Company entered into a Purchase Agreement with ABG Intermediate Holdings 2 LLC, an affiliate of Authentic Brands Group LLC. (the "ABG Buyer"), pursuant to which the ABG Buyer agreed to purchase all of the outstanding equity of certain subsidiaries of the Company that own or hold for use intellectual property used by the Company exclusively in the footwear, apparel, and accessories business conducted by the Company under the Sperry® brand. In addition, on January 10, 2024 the Company entered into an Inventory Purchase Agreement with Aldo U.S. Inc., an affiliate of the Aldo Group (the "Aldo Buyer"), pursuant to which the Aldo Buyer agreed to purchase certain inventory and other assets of the Sperry® business, and to assume certain contracts of the Sperry® business, including Sperry® retail store leases. The sale was effective January 10, 2024, in accordance with the terms and conditions of the Purchase Agreement. The aggregate purchase price under these two purchase agreements was $97.4 million in cash.
Divestiture of Merrell® and Saucony® China Joint Venture Entities
On December 17, 2023, the Company and Xtep entered into a Purchase Agreement pursuant to which Xtep agreed to purchase the Company’s equity interests in the Merrell and Saucony joint venture entities that sourced and marketed Merrell® and Saucony® footwear and apparel products in China (Saucony Brand Operations Ltd., Saucony Distribution Operations Ltd., Merrell Brand Operations Ltd. and Merrell Distribution Operations Ltd.), transitioning the business from a joint venture model to a license and distribution rights model under which Xtep will exclusively carry out the development, marketing and distribution of footwear, apparel and accessories for the Saucony and Merrell brands in China. The sale was effective January 1, 2024, in accordance with the terms and conditions of the Purchase Agreement and the purchase price was $22.0 million in cash.
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion of the Company’s results of operations and liquidity and capital resources. This section should be read in conjunction with the Company’s consolidated condensed financial statements and related notes included elsewhere in this Quarterly Report.
BUSINESS OVERVIEW
The Company is a leading global designer, marketer and licensor of branded footwear, apparel and accessories. The Company’s strategic vision is to build and grow high-energy footwear, apparel and accessories brands that inspire and empower consumers to explore and enjoy their active lives. The Company seeks to fulfill this vision by offering innovative products and compelling brand propositions; complementing its footwear brands with strong apparel and accessories offerings; expanding its global direct-to-consumer footprint; and delivering supply chain excellence.
The Company’s brands are marketed in approximately 170 countries and territories at March 29, 2025, including through owned operations in the U.S., Canada, the United Kingdom and certain countries in continental Europe and Asia Pacific. In other regions (Latin America, portions of Europe and Asia Pacific, the Middle East and Africa), the Company relies on a network of third-party distributors, licensees and joint ventures. At March 29, 2025, the Company operated 120 retail stores in the U.S., United Kingdom, Ireland and Italy and 39 direct-to-consumer eCommerce sites.
Effective January 1, 2024, the Company completed the sale of the Company’s equity interests in the Merrell® and Saucony® China joint venture entities.
Effective January 10, 2024, the Company completed the sale of the Sperry® business.
Effective May 4, 2024, the Company entered into global multi-year licensing agreements relating to Merrell® and Saucony® kids footwear and Merrell® apparel and accessories.
2025 FINANCIAL OVERVIEW
•Revenue was $412.3 million for the first quarter of 2025, representing an increase of 4.4% compared to the first quarter of 2024.
•Gross margin was 47.3% in the first quarter of 2025 compared to 45.9% in the first quarter of 2024.
•The effective tax rates in the first quarters of 2025 and 2024 were 7.5% and 4.1%, respectively.
•Diluted earnings per share for the first quarter of 2025 was $0.13 per share compared to diluted loss per share of $0.19 per share for the first quarter of 2024.
•The Company declared cash dividends of $0.10 per share in the first quarters of both 2025 and 2024.
•Cash flow used in operating activities was $83.8 million for the first quarter of 2025 compared to cash flow used in operating activities of $37.2 million for the first quarter of 2024.
•Compared to the first quarter of 2024, inventory as of the end of the first quarter of 2025 decreased $83.6 million, or 23.6%.
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Quarter Ended |
|
|
| (In millions, except per share data) |
March 29,
2025 |
|
March 30,
2024 |
|
Percent
Change |
|
|
|
|
|
|
Revenue |
$ |
412.3 |
|
|
$ |
394.9 |
|
|
4.4 |
% |
|
|
|
|
|
|
Cost of goods sold |
217.5 |
|
|
213.5 |
|
|
1.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
194.8 |
|
|
181.4 |
|
|
7.4 |
% |
|
|
|
|
|
|
| Selling, general and administrative expenses |
172.0 |
|
|
176.8 |
|
|
(2.7) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Impairment of long-lived assets |
— |
|
|
6.1 |
|
|
(100.0) |
% |
|
|
|
|
|
|
| Environmental and other related costs, net of recoveries |
3.1 |
|
|
1.6 |
|
|
93.8 |
% |
|
|
|
|
|
|
| Operating profit (loss) |
19.7 |
|
|
(3.1) |
|
|
735.5 |
% |
|
|
|
|
|
|
Interest expense, net |
8.0 |
|
|
12.0 |
|
|
(33.3) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income, net |
(1.5) |
|
|
(0.8) |
|
|
(87.5) |
% |
|
|
|
|
|
|
| Earnings (loss) before income taxes |
13.2 |
|
|
(14.3) |
|
|
192.3 |
% |
|
|
|
|
|
|
| Income tax expense (benefit) |
1.0 |
|
|
(0.6) |
|
|
266.7 |
% |
|
|
|
|
|
|
| Net earnings (loss) |
12.2 |
|
|
(13.7) |
|
|
189.1 |
% |
|
|
|
|
|
|
| Less: net earnings attributable to noncontrolling interests |
1.1 |
|
|
0.8 |
|
|
37.5 |
% |
|
|
|
|
|
|
| Net earnings (loss) attributable to Wolverine World Wide, Inc. |
$ |
11.1 |
|
|
$ |
(14.5) |
|
|
176.6 |
% |
|
|
|
|
|
|
| Diluted earnings (loss) per share |
$ |
0.13 |
|
|
$ |
(0.19) |
|
|
168.4 |
% |
|
|
|
|
|
|
REVENUE
Revenue was $412.3 million for the first quarter of 2025, representing an increase of $17.4 million compared to the first quarter of 2024. The change in revenue reflected a $36.9 million, or 12.7%, increase from the Active Group, a $15.3 million, or 17.0%, decrease from the Work Group, and a $4.2 million, or 28.0%, decrease from Other. The Active Group’s revenue increase was primarily driven by an increase of $29.6 million from Saucony® and $17.6 million from Merrell®, partially offset by a decrease of $7.1 million from Sweaty Betty® and $3.2 million from Chaco®. The Work Group’s revenue decrease was primarily driven by a decrease of $7.5 million from Cat®, $3.8 million from Wolverine®, $2.2 million from HYTEST® and $1.2 million from Harley-Davidson®. The decrease in Other revenue was primarily driven by a decrease of $4.1 million from Sperry® which was sold in 2024, partially offset by an increase of $1.0 million from Hush Puppies®. Changes in foreign exchange rates decreased revenue by $4.7 million during the first quarter of 2025. Direct-to-consumer revenue decreased during the first quarter of 2025 by $10.0 million, or 9.4%, compared to the first quarter of 2024.
GROSS MARGIN
Gross margin was 47.3% in the first quarter of 2025 compared to 45.9% in the first quarter of 2024. The gross margin increase in the first quarter was primarily due to healthier sales mix, lower promotional activity and the benefit of supply chain cost initiatives within the Active Group.
OPERATING EXPENSES
Operating expenses decreased $9.4 million, from $184.5 million in the first quarter of 2024 to $175.1 million in the first quarter of 2025. The decrease was primarily driven by lower impairment of long-lived and intangible assets ($6.1 million), lower reorganization costs ($4.1 million), lower general and administrative costs ($3.3 million), lower selling costs ($1.6 million), lower distribution costs ($0.5 million) and lower incentive compensation costs ($0.2 million), partially offset by higher advertising costs ($4.9 million) and higher environmental and other related costs, net of insurance recoveries ($1.5 million). Environmental and other related costs were $3.1 million and $1.9 million in the first quarter of 2025 and 2024, respectively.
INTEREST, OTHER AND INCOME TAXES
Net interest expense was $8.0 million in the first quarter of 2025 compared to $12.0 million in the first quarter of 2024. The decrease in interest expense is primarily due to lower average principal balances of variable rate debt and lower weighted average interest rates on variable rate debt.
Other income was $1.5 million in the first quarter of 2025, compared to other income of $0.8 million in the first quarter of 2024.
The effective tax rates in the first quarter of 2025 and 2024 were 7.5% and 4.1%, respectively. In the current year, the Company recognized discrete tax benefits resulting in a decrease to the effective tax rate. In the prior year, the Company recognized discrete tax expenses which also resulted in a decrease to the effective tax rate and reduced the tax benefit of the pretax loss.
REPORTABLE SEGMENTS
The Company’s portfolio of brands is organized into the following reportable segments.
•Active Group, consisting of Merrell® footwear and apparel, Saucony® footwear and apparel, Sweaty Betty® activewear, and Chaco® footwear; and
•Work Group, consisting of Wolverine® footwear and apparel, Cat® footwear, Bates® uniform footwear, Harley-Davidson® footwear and HYTEST® safety footwear;
Kids' footwear offerings from Saucony®, Merrell®, Hush Puppies® and Cat® are included with the applicable brand.
The Company also reports “Other” and “Corporate” categories. The Other category consists of Sperry® footwear, Hush Puppies® footwear and apparel, sourcing operations that include third-party commission revenues, multi-branded direct-to-consumer retail stores and the Stride Rite® licensed business. The Corporate category consists of unallocated corporate expenses, such as corporate employee costs, corporate facility costs, reorganization activities, impairment of long-lived assets and environmental and other related costs.
The reportable segment results are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Quarter Ended |
|
|
| (In millions) |
March 29,
2025 |
|
March 30,
2024 |
|
Change |
|
Percent Change |
|
|
|
|
|
|
|
|
| REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Active Group |
$ |
326.7 |
|
|
$ |
289.8 |
|
|
$ |
36.9 |
|
|
12.7 |
% |
|
|
|
|
|
|
|
|
| Work Group |
74.8 |
|
|
90.1 |
|
|
(15.3) |
|
|
(17.0) |
% |
|
|
|
|
|
|
|
|
| Other |
10.8 |
|
|
15.0 |
|
|
(4.2) |
|
|
(28.0) |
% |
|
|
|
|
|
|
|
|
Total |
$ |
412.3 |
|
|
$ |
394.9 |
|
|
$ |
17.4 |
|
|
4.4 |
% |
|
|
|
|
|
|
|
|
| OPERATING PROFIT (LOSS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Active Group |
$ |
58.1 |
|
|
$ |
36.2 |
|
|
$ |
21.9 |
|
|
60.5 |
% |
|
|
|
|
|
|
|
|
| Work Group |
7.1 |
|
|
12.7 |
|
|
(5.6) |
|
|
(44.1) |
% |
|
|
|
|
|
|
|
|
| Other |
7.5 |
|
|
4.2 |
|
|
3.3 |
|
|
78.6 |
% |
|
|
|
|
|
|
|
|
Corporate |
(53.0) |
|
|
(56.2) |
|
|
3.2 |
|
|
5.7 |
% |
|
|
|
|
|
|
|
|
Total |
$ |
19.7 |
|
|
$ |
(3.1) |
|
|
$ |
22.8 |
|
|
735.5 |
% |
|
|
|
|
|
|
|
|
Further information regarding the reportable segments can be found in Note 16 to the consolidated condensed financial statements.
Active Group
The Active Group’s revenue increased $36.9 million, or 12.7%, in the first quarter of 2025 compared to the first quarter of 2024. The revenue increase was primarily driven by increases of $29.6 million from Saucony® and $17.6 million from Merrell®, partially offset by decreases of $7.1 million from Sweaty Betty® and $3.2 million from Chaco®. The Saucony® increase was primarily driven by the strength and expanded sales of lifestyle product, including ProGrid Omni 9 and ProGrid Triumph 4, and strong performance in the international channel. The Merrell® increase was primarily due to growth in the core brand franchises, including Moab 3, Moab Speed, and Speed Strike, particularly in the wholesale and international channels. The Sweaty Betty® decrease was primarily driven by softer consumer demand in direct-to-consumer channels and lower closeout sales compared to the prior year. The Chaco® decrease was primarily due to lower closeout sales compared to the prior year and softer consumer demand.
The Active Group’s operating profit increased $21.9 million, or 60.5%, in the first quarter of 2025 compared to the first quarter of 2024. The operating profit increase was due to revenue increases and a 340 basis point increase in gross margin, partially offset by a $5.7 million increase in selling, general and administrative expenses. The increase in gross margin in the current year period was primarily due to healthier sales mix, lower promotional activity and the benefit of supply chain cost initiatives. The increase in selling, general and administrative expenses in the current year period was primarily due to higher advertising costs.
Work Group
The Work Group’s revenue decreased $15.3 million, or 17.0%, during the first quarter of 2025 compared to the first quarter of 2024. The revenue decrease was primarily driven by decreases of $7.5 million from Cat®, $3.8 million from Wolverine®, $2.2 million from HYTEST® and $1.2 million from Harley-Davidson®. The Cat® decrease was primarily due to timing of shipments in the U.S. and international channels and softer consumer demand in the international channel. The Wolverine® decrease was primarily due to timing of shipments in the U.S. and international channels and softer consumer demand in the U.S. wholesale channel. The HYTEST® decrease was primarily due to softer consumer demand in the U.S. wholesale channels and high inventory levels at certain retail customers. The Harley-Davidson® decrease was primarily due to declines in top dealer accounts.
The Work Group’s operating profit decreased $5.6 million, or 44.1%, in the first quarter of 2025 compared to the first quarter of 2024. The operating profit decrease was due to revenue decreases and a 130 basis point decrease in gross margin, partially offset by a $1.2 million decrease in selling, general and administrative expenses. The decrease in gross margin in the current year period was primarily due to unfavorable sales mix changes. The decrease in selling, general and administrative expenses in the current year period was primarily due to lower employee costs and selling expenses.
Other
The Other category’s revenue decreased $4.2 million, or 28.0%, in the first quarter of 2025 compared to the first quarter of 2024. The revenue decrease was primarily driven by a decrease of $4.1 million from Sperry®, partially offset by an increase of $1.0 million from Hush Puppies®. The Sperry® decrease was due to the divestiture of the business effective January 10, 2024. The Hush Puppies® increase was primarily due to strong performance in the international channel.
Other operating profit increased $3.3 million, or 78.6%, in the first quarter of 2025 compared to the first quarter of 2024. The operating profit increase was primarily due to higher Hush Puppies® royalty income on higher revenue and losses incurred in the prior year associated with the Sperry® business.
Corporate
Corporate expenses decreased $3.2 million in the first quarter of 2025 compared to the first quarter of 2024, primarily due to lower impairment of long-lived and intangible assets ($6.1 million) and lower reorganization activities ($4.1 million), partially offset by business model change gain recorded in the prior year that did not reoccur ($6.5 million) and higher environmental and other related costs ($1.5 million).
LIQUIDITY AND CAPITAL RESOURCES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (In millions) |
March 29,
2025 |
|
December 28,
2024 |
|
March 30,
2024 |
| Cash and cash equivalents |
$ |
106.5 |
|
|
$ |
152.1 |
|
|
$ |
169.7 |
|
| Debt |
710.8 |
|
|
648.0 |
|
|
856.9 |
|
Available revolving credit facility (1) |
659.0 |
|
|
724.0 |
|
|
728.1 |
|
(1)Amounts are net of both borrowings, if any, and outstanding standby letters of credit in accordance with the terms of the revolving credit facility.
Liquidity
Cash and cash equivalents of $106.5 million as of March 29, 2025 were $63.2 million lower compared to March 30, 2024. The decrease is due primarily to repayments less borrowings of debt of $147.5 million, cash dividends paid of $32.9 million, additions to property, plant and equipment of $22.7 million, and employee taxes paid under stock-based compensation of $8.7 million, partially offset by cash provided by operating activities of $133.5 million, proceeds from divestitures of $9.9 million, and proceeds from company-owned life insurance policies of $7.9 million. The Company had $659.0 million of borrowing capacity available under the Revolving Facility as of March 29, 2025. Cash and cash equivalents located in foreign jurisdictions totaled $95.0 million as of March 29, 2025.
Cash flow from operating activities is expected to be sufficient to meet the Company’s working capital needs for the foreseeable future. Any excess cash flow from operating activities is expected to be used to fund organic growth initiatives, reduce debt, pay dividends and for general corporate purposes.
The Company did not repurchase shares of its common stock during the first quarter of both 2025 and 2024.
A detailed discussion of environmental remediation costs is found in Note 15 to the consolidated condensed financial statements. The Company has established a reserve for estimated environmental remediation costs based upon an evaluation of currently available facts with respect to each individual affected site.
As of March 29, 2025, the Company has a reserve of $37.2 million, of which $17.0 million is expected to be paid in the next 12 months and is recorded as a current obligation in other accrued liabilities and the remaining $20.2 million recorded in other liabilities and expected to be paid over the course of up to 25 years. The Company's remediation activity at its former Tannery site and sites where the Company disposed of Tannery byproducts is ongoing. It is difficult to estimate the cost of environmental compliance and remediation given the uncertainties regarding the interpretation and enforcement of applicable environmental laws and regulations, the extent of environmental contamination and the existence of alternative cleanup methods.
Developments may occur that could materially change the Company’s current cost estimates. The Company adjusts recorded liabilities as further information develops or circumstances change.
Financing Arrangements
The Company’s credit agreement provides for a term loan A facility (the “Term Facility”) and for a revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Senior Credit Facilities”). The maturity date of the loans under the Senior Credit Facilities is October 21, 2026. The credit agreement provides for a debt capacity of up to an aggregate debt amount (including outstanding term loan principal and revolver commitment amounts in addition to permitted incremental debt) not to exceed $2.0 billion unless certain specified conditions set forth in the credit agreement are met. The Revolving Facility allows the Company to borrow up to an aggregate amount of $800.0 million.
The Company’s $550.0 million 4.0% senior notes issued on August 26, 2021 are due on August 15, 2029. Related interest payments are due semi-annually. The senior notes are guaranteed by substantially all of the Company’s domestic subsidiaries.
As of March 29, 2025, the Company was in compliance with all covenants and performance ratios under the credit agreement.
The Company’s debt at March 29, 2025 totaled $710.8 million compared to $648.0 million at December 28, 2024. The Company expects to use the current borrowings to fund organic growth initiatives, pay dividends and for general corporate purposes. The increased debt position is due to higher borrowings under the Revolving Facility mainly resulting from operating cash outflows.
Cash Flows
The following table summarizes cash flow activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
| (In millions) |
March 29,
2025 |
|
March 30,
2024 |
| Net cash used in operating activities |
$ |
(83.8) |
|
|
$ |
(37.2) |
|
| Net cash provided by (used in) investing activities |
(7.9) |
|
|
85.4 |
|
| Net cash provided by (used in) financing activities |
46.6 |
|
|
(66.9) |
|
| Additions to property, plant and equipment |
(7.6) |
|
|
(5.1) |
|
| Depreciation and amortization |
6.1 |
|
|
7.1 |
|
Operating Activities
The principal source of the Company’s operating cash flow is net earnings, including cash receipts from the sale of the Company’s products, net of costs of goods sold.
For the first quarter of 2025, an increase in net working capital represented a use of cash of $100.9 million. Working capital balances were unfavorably impacted by an increase in accounts receivable of $26.6 million, an increase in inventories of $25.8 million, a decrease in accounts payable of $29.2 million, and a decrease in other operating liabilities of $21.6 million, partially offset by a decrease in other operating assets of $2.3 million. Operating cash flows included non-cash add back for environmental and other related costs, net of cash payments and recoveries received, cash outflow of $4.5 million, depreciation and amortization expense adjustment of $6.1 million, stock-based compensation expense adjustment of $5.7 million, pension expense adjustment of $0.2 million, and deferred income taxes of $0.1 million.
Investing Activities
The Company made capital expenditures of $7.6 million and $5.1 million in the first quarter of 2025 and 2024, respectively, for corporate headquarters building improvements, and eCommerce site and information system enhancements.
Financing Activities
The current year debt activity includes net borrowings under the Revolving Facility of $65.0 million. The Company paid $2.5 million and $24.2 million in principal payments associated with its long-term debt during the first quarter of 2025 and 2024, respectively. The Company paid $7.7 million and $1.6 million during the first quarter of 2025 and 2024, respectively, in connection with shares or units withheld to pay employee taxes related to awards under stock incentive plans. The Company did not repurchase shares in the first quarter of 2025 or 2024.
The Company declared cash dividends of $0.10 per share during the first quarter of 2025 and 2024. Dividends paid in the first quarter of 2025 and 2024 totaled $8.5 million and $8.1 million, respectively. A quarterly dividend of $0.10 per share was declared on April 30, 2025 to shareholders of record on July 1, 2025.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of the Company’s consolidated condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP"), requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates these estimates. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Historically, actual results have not been materially different from the Company’s estimates. However, actual results may differ materially from these estimates under different assumptions or conditions.
The Company has identified the critical accounting policies used in determining estimates and assumptions in the amounts reported. For information regarding our critical accounting policies refer to Part II, Item 7: “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in the Company’s 2024 Form 10-K. Management believes there have been no material changes in those critical accounting policies.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
The Company faces market risk to the extent that changes in foreign currency exchange rates affect the Company’s foreign assets, liabilities and inventory purchase commitments. The Company manages these risks by attempting to denominate contractual and other foreign arrangements in U.S. dollars. The Company does not believe that there has been a material change in the nature of the Company’s primary market risk exposures, including the categories of market risk to which the Company is exposed and the particular markets that present the primary risk of loss to the Company. As of the date of this Quarterly Report on Form 10-Q, the Company does not know of any material change in the near-term in the general nature of its primary market risk exposure.
Under the provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 815, Derivatives and Hedging, the Company is required to recognize all derivatives on the balance sheet at fair value. Derivatives that are not qualifying hedges must be adjusted to fair value through earnings. If a derivative is a qualifying hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings or recognized in accumulated other comprehensive income (loss) until the hedged item is recognized in earnings.
The Company conducts wholesale operations outside of the U.S. in Canada, continental Europe, the United Kingdom, Hong Kong, China and Mexico where the functional currencies are primarily the Canadian dollar, euro, British pound, Hong Kong dollar, Chinese renminbi and Mexican peso, respectively. The Company utilizes foreign currency forward exchange contracts to manage the volatility associated primarily with U.S. dollar inventory purchases made by non-U.S. wholesale operations in the normal course of business as well as to manage foreign currency translation exposure. As of March 29, 2025 and March 30, 2024, the Company had outstanding forward currency exchange contracts to purchase primarily U.S. dollars in the amounts of $255.3 million and $273.0 million, respectively, with maturities ranging up to 538 and 531 days, respectively.
The Company also has sourcing locations in Asia, where financial statements reflect the U.S. dollar as the functional currency. However, operating costs are paid in the local currency. Revenue generated by the Company from third-party foreign licensees is calculated in the local currencies but paid in U.S. dollars. Accordingly, the Company’s reported results are subject to foreign currency exposure for this stream of revenue and expenses. Any associated foreign currency gains or losses on the settlement of local currency amounts are reflected within the Company's consolidated condensed statement of operations and comprehensive income.
Assets and liabilities outside the U.S. are primarily located in the United Kingdom, Canada and the Netherlands. The Company’s investments in foreign subsidiaries with a functional currency other than the U.S. dollar are generally considered long-term. As of March 29, 2025, a weaker U.S. dollar compared to certain foreign currencies increased the value of these investments in net assets by $7.7 million from their value as of December 28, 2024. As of March 30, 2024, a stronger U.S. dollar compared to certain foreign currencies decreased the value of these investments in net assets by $8.4 million from their value as of December 30, 2023.
The Company is exposed to interest rate changes primarily as a result of interest expense on the term loan borrowings and any borrowings under the Revolving Facility. The Company’s total variable-rate debt was $165.0 million at March 29, 2025 and the Company held a forward-dated interest rate swap agreement, denominated in U.S. dollars, that will effectively convert $14.5 million of this amount to fixed-rate debt.
The Company does not enter into contracts for speculative or trading purposes, nor is it a party to any leveraged derivative instruments.
ITEM 4. Controls and Procedures
An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on, and as of the time of such evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures, as defined in Securities Exchange Act Rule 13a-15(e), were effective as of the end of the period covered by this report. There have been no changes during the quarter ended March 29, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is involved in litigation and various legal matters arising in the normal course of business, including certain environmental compliance activities. For a discussion of legal matters, refer to Note 15 to the Company’s consolidated condensed financial statements.
ITEM 1A. Risk Factors
There have been no material changes in the assessment of the Company’s risk factors from those set forth in the Company’s Annual Report on Form 10-K for the year ended December 28, 2024, filed with the SEC on February 20, 2025.
In addition to the other information set forth in this report, you should carefully consider the risks and uncertainties discussed in Part I, Item 1A. Risk Factors in the Company’s 2024 Form 10-K, which could materially adversely affect our business, financial condition, or future results. The information presented below updates, and should be read in conjunction with, the risk factors disclosed in our 2024 Form 10-K. Otherwise, except as presented below, there have been no material changes to the risk factors disclosed in our 2024 Form 10-K.
The Company is subject to risks from changes to the trade policies, tariffs and import and export regulations of the U.S. and foreign governments.
Changes in import and export policies, including trade restrictions, new or increased tariffs or quotas, embargoes, sanctions and counter sanctions, safeguards or customs restrictions by the U.S. and foreign governments, could materially adversely affect the Company’s business performance, financial condition, results of operations, and relationships with customers, suppliers, and employees. Similarly, changes in laws and policies governing foreign trade, manufacturing, development, and investment in the territories or countries where the Company currently manufacture or sell products or conduct business, and adverse changes in, or withdrawal from, trade agreements or political relationships between the U.S. and such countries and territories could materially adversely affect the Company’s business.
Substantially all of the units the Company sources are procured from third-party manufacturers in the Asia Pacific region. Restrictions on international trade, such as tariffs, can materially adversely affect the Company’s operations and supply chain and limit the Company’s ability to offer and distribute products. The impact can be particularly significant if these restrictive measures apply to countries and regions where the Company has significant supply chain operations or from which the Company derives a significant portion of revenues. These restrictive measures can substantially increase the cost to procure products and the raw materials the Company uses, and may require the Company to take various actions, including raising prices on products, changing manufacturers or suppliers, renegotiating purchase prices with suppliers and material vendors, ceasing to offer and distribute certain products, or reducing investments. Changing operations and supply chain in response to new or changed restrictions on international trade can be expensive, time-consuming and disruptive to the Company’s operations. These restrictions may be announced with little or no advance notice, which can create uncertainty, and we may not be able to effectively mitigate all resulting adverse impacts on the Company’s business, financial condition and results of operations. In addition, if the Company is required to raise prices on products but competitors do not take similar price increases, the Company’s competitive position may be materially adversely affected.
The extent and duration of the effects on the Company’s business of recent U.S.tariffs, tariffs proposed by other countries in response, and the resulting impact on general economic conditions are uncertain and will depend on various factors, including future actions of the U.S. and other countries, negotiations between the U.S. and other countries, exemptions or exclusions that may be granted, availability and cost of alternative manufacturers and sources of supply, and demand for the Company’s products in affected markets.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information regarding the Company’s purchases of its own common stock during the first quarter of 2025.
Issuer Purchases of Equity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Period |
Total Number of Shares Purchased |
|
Average Price Paid per Share |
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
Maximum Dollar Amount that May Yet Be Purchased Under the Plans or Programs |
| Period 1 (December 29, 2024 to February 1, 2025) |
|
|
|
|
|
|
|
Common Stock Repurchase Program(1) |
— |
|
|
— |
|
|
— |
|
|
$ |
150,000,000 |
|
Employee Transactions(2) |
14,514 |
|
|
22.80 |
|
|
— |
|
|
|
| Period 2 (February 2, 2025 to March 1, 2025) |
|
|
|
|
|
|
|
Common Stock Repurchase Program(1) |
— |
|
|
— |
|
|
— |
|
|
$ |
150,000,000 |
|
Employee Transactions(2) |
360,495 |
|
|
20.94 |
|
|
— |
|
|
|
| Period 3 (March 2, 2025 to March 29, 2025) |
|
|
|
|
|
|
|
Common Stock Repurchase Program(1) |
— |
|
|
— |
|
|
— |
|
|
$ |
150,000,000 |
|
Employee Transactions(2) |
542 |
|
|
13.42 |
|
|
— |
|
|
|
| Total for the First Quarter Ended March 29, 2025 |
|
|
|
|
|
|
|
Common Stock Repurchase Program(1) |
— |
|
|
— |
|
|
— |
|
|
$ |
150,000,000 |
|
Employee Transactions(2) |
375,551 |
|
|
21.00 |
|
|
— |
|
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(1)On March 7, 2024, the Company’s Board of Directors approved a common stock repurchase program that authorized the repurchase of $150.0 million of common stock over a three-year period. Since that date, the Company has not repurchased any common stock.
(2)Employee transactions include: (1) shares delivered or attested to in satisfaction of the exercise price and/or tax withholding obligations by holders of employee stock options who exercised options, and (2) restricted shares and units withheld to offset statutory minimum tax withholding that occurs upon vesting of restricted shares and units. The Company’s employee stock compensation plans provide that the shares delivered or attested to, or withheld, shall be valued at the closing price of the Company’s common stock on the date the relevant transaction occurs.
ITEM 5. Other Information
(c) During the quarter ended March 29, 2025, no director or Section 16 officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement, in each case, as defined in Item 408(a) of Regulation S-K.
ITEM 6. Exhibits
Exhibits filed as a part of this Form 10-Q are incorporated by reference herein.
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| 10.1 |
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| 31.1 |
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| 31.2 |
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| 32 |
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| 101 |
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The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 29, 2025, formatted in Inline XBRL: (i) Consolidated Condensed Statements of Operations and Comprehensive Income; (ii) Consolidated Condensed Balance Sheets; (iii) Consolidated Condensed Statements of Cash Flows; (iv) Consolidated Condensed Statements of Stockholders’ Equity; and (v) Notes to Consolidated Condensed Financial Statements. |
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| 104 |
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The cover page of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 29, 2025, formatted in Inline XBRL (included in Exhibit 101). |
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* Management contract or compensatory plan or arrangement Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SIGNATURES
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WOLVERINE WORLD WIDE, INC. |
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| May 8, 2025 |
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/s/ Christopher E. Hufnagel |
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Christopher E. Hufnagel
President and Chief Executive Officer
(Principal Executive Officer and Duly Authorized Signatory for Registrant) |
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| May 8, 2025 |
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/s/ Taryn L. Miller |
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Taryn L. Miller
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer and Duly Authorized Signatory for Registrant) |
EX-10.1
2
a2025-q1ex101rsuawardagree.htm
EXHIBIT-10.1
Document
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U.S. Restricted Stock Unit Agreement #63 |
RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement (the “Agreement”) is made as of the award date set forth in the grant (the “Grant Date”), between WOLVERINE WORLD WIDE, INC., a Delaware corporation (“Wolverine”), and the employee identified in the grant (“Employee”).
The Wolverine World Wide, Inc. Stock Incentive Plan of 2024, as it may be further amended from time to time (the “Plan”) is administered by the Compensation and Human Capital Committee of Wolverine’s Board of Directors (the “Committee”). The Committee has determined that Employee is eligible to participate in the Plan and has awarded restricted stock units to Employee, subject to the terms and conditions contained in this Agreement and in the Plan.
The Committee has awarded to Employee restricted stock units of Wolverine subject to the terms, conditions and restrictions contained in this Agreement and in the Plan (the “Restricted Stock Unit Award”). Employee acknowledges receipt of a copy of the Plan and accepts this restricted stock unit award subject to all of the terms, conditions, and provisions of this Agreement and the Plan.
1. Award. Wolverine hereby awards to Employee the Restricted Stock Unit Award consisting of the number of restricted stock units as set in the grant (the “Restricted Stock Units”), which shall be eligible to vest in in accordance with the terms of this Agreement and the Plan. Each Restricted Stock Unit shall represent the conditional right to receive, without payment but subject to the terms, conditions and limitations set forth in this Agreement and in the Plan, on the applicable vesting date one share of common stock of the Company (“Common Stock”) or, at the option of the Committee, a cash payment in an amount equal to the Fair Market Value (as defined in the Plan) of a share of Common Stock on the date of vesting multiplied by the number of shares of Common Stock that vest hereunder, subject to any applicable withholdings required by applicable laws.
2. Transferability. Until the Restricted Stock Units vest as set forth in this Agreement, the Plan provides that Restricted Stock Units are generally not transferable by Employee except by will or according to the laws of descent and distribution, and further provides that all rights with respect to the Restricted Stock Units are exercisable during Employee’s lifetime only by Employee, Employee’s guardian, or legal representative.
3. Vesting. Except as otherwise provided in this Agreement, the Restricted Stock Units shall vest as follows: one-third on each of the first, second, and third Grant Date anniversaries.
4. Termination of Employment Status.
(a) If Employee’s employment with Wolverine or any of its Subsidiaries is terminated prior to the date on which the Restricted Stock Units vest hereunder, any then unvested Restricted Stock Units shall be automatically forfeited with no consideration due to Employee.
(b) Notwithstanding the above, if Employee’s employment with Wolverine or its Subsidiaries terminates due to Employee’s (a) death; (b) Disability; or (c) Retirement, any then unvested Restricted Stock Units will immediately vest in full.
(c) Upon a Change in Control, unvested Restricted Stock Units will vest, if at all, in accordance with Section 13(b)(ii) of the Plan. Employee’s rights under this sub-Section (c) are in addition to any other rights Employee has under this Section 4.
(d) If, in connection with a Change in Control, the Restricted Stock Units are not assumed or continued, or a new award is not substituted for the Restricted Stock Units by the acquirer or survivor (or an affiliate of the acquirer or survivor) in accordance with the provisions of Section 13(b) of the Plan, the Restricted Stock Units will automatically vest in full upon the occurrence of such Change in Control.
5. Settlement. On or within sixty (60) days following the vesting date of the Restricted Stock Units, Wolverine will deliver shares of Common Stock and/or pay cash, as applicable, in respect of such vested Restricted Stock Units, unless such payment or delivery is deferred in a manner consistent with Section 409A of the Code.
6. Employment by Wolverine. The Agreement and the Restricted Stock Unit Award under this Agreement shall not impose upon Wolverine or any Subsidiary any obligation to retain Employee in its employ for any given period or upon any specific terms of employment. Wolverine or any Subsidiary may at any time dismiss Employee from employment, free from any liability or claim under the Plan or this Agreement, unless otherwise expressly provided in any written agreement with Employee. By accepting this Award, Employee reaffirms the obligations of any Employee Confidentiality, Intellectual Property Protection, and Restrictive Covenant Agreement or similar agreement, previously entered into between Wolverine and Employee.
7. Stockholder Rights. Employee (or Employee’s permitted transferees) shall not have any voting and liquidation rights with respect to the Restricted Stock Units or the underlying Common Stock represented thereby unless and until shares of Common Stock are actually issued to Employee upon vesting of the Restricted Stock Units, in accordance with the terms of this Agreement. Employee shall be paid a dividend equivalent (“Dividend Equivalent”) in the form of cash, with respect to any cash dividend, and stock, with respect to any stock dividend, if any, prior to the vesting of the Restricted Stock Unit Award (or portion thereof), on which dividends are paid on Common Stock underlying outstanding Restricted Stock Units. Such Dividend Equivalent shall be computed by multiplying the amount of the cash dividend or the amount of the stock dividend, as applicable, declared and paid per share of Common Stock by the number of Restricted Stock Units held by Employee on the record date for the payment of such dividend. Any cash or stock dividends declared on the Common Stock underlying the Restricted Stock Units prior to vesting of the award (or any portion of the award) will be credited by the Company for Employee’s account and will be paid, if at all, to Employee on the applicable vesting date with respect to the applicable Restricted Stock Units that vest and to which such dividends relate. Upon vesting of the Restricted Stock Units and issuance to Employee of underlying shares of Common Stock, if applicable, Employee shall have all stockholder rights, including the right to transfer the underlying shares of Common Stock, subject to such conditions as Wolverine may reasonably specify to ensure compliance with applicable federal, provincial and state securities laws.
8. Withholding. Wolverine or one of its subsidiaries shall be entitled to (a) withhold and deduct from Employee’s future wages (or from other amounts that may be due and owing to Employee from Wolverine or a Subsidiary), or make other arrangements for the collection of, all legally required amounts necessary to satisfy any and all applicable federal, state and local withholding and employment-related tax requirements attributable to the Restricted Stock Units award under this Agreement, including, without limitation, the award, vesting, or settlement of Restricted Stock Units and any Dividend Equivalents; or (b) require Employee promptly to remit the amount of such withholding to Wolverine or a Subsidiary before taking any action with respect to the Restricted Stock Units. Unless the Committee provides otherwise, withholding may be satisfied by withholding shares of Common Stock to be received by Employee pursuant to this Agreement or by delivery to Wolverine or a Subsidiary of previously owned Common Stock of Wolverine.
9. Section 409A of the Code.
(a) If Employee is deemed on the date of his or her termination of employment to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B), then, with regard to any payment that is considered nonqualified deferred compensation under Section 409A of the Code, to the extent applicable, payable on account of a “separation from service”, to the extent required in order to avoid any accelerated taxation or the imposition of an additional tax, interest or penalty under Section 409A of the Code, such payment will be made or provided on the date that is the earlier of (i) the expiration of the six-month period measured from the date of such “separation from service” and (ii) the date of the Participant’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments delayed pursuant to this Section (whether they would have otherwise been payable in a single lump sum or in installments in the absence of such delay) will be paid on the first business day following the expiration of the Delay Period in a lump sum and any remaining payments due under the Award will be paid in accordance with the normal payment dates specified for them in this Agreement. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid any accelerated taxation or the imposition of an additional tax, interest or penalty under Section 409A of the Code, Employee shall not be considered to have terminated employment with the Company or any affiliate for purposes of this Restricted Stock Unit Award until Employee would be considered to have incurred a “separation from service” from the Company and its affiliates within the meaning of Section 409A of the Code (after giving effect to the presumptions contained therein).
(b) For purposes of Section 409A of the Code, each payment made hereunder will be treated as a separate payment.
(c) With regard to any payment considered to be nonqualified deferred compensation under Section 409A of the Code, to the extent applicable, that is payable upon a Change in Control or other similar event, to the extent required in order to avoid any accelerated taxation or the imposition of an additional tax, interest or penalty under Section 409A of the Code, no amount will be payable unless such change in control constitutes a “change in control event” within the meaning of Section 1.409A-3(i)(5) of the Treasury Regulations.
(d) This Restricted Stock Unit Award is intended to comply with, or be exempt from, the requirements of Section 409A of the Code and shall be interpreted consistent with this intent. Notwithstanding the foregoing, neither the Company, any affiliate of the Company, the Committee, nor any other person shall have any liability to Employee with respect to the foregoing.
10. Effective Date. This Restricted Stock Unit Award shall be effective as of the Grant Date.
11. Agreement Controls. The Plan is hereby incorporated in this Agreement by reference. Capitalized terms not defined in this Agreement shall have those meanings provided in the Plan. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the provisions of the Agreement shall control.
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WOLVERINE WORLD WIDE, INC. |
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/s/ Taryn L. Miller |
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Taryn L. Miller |
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Chief Financial Officer |
EX-10.3
4
a2025-q1ex103settlementagr.htm
EXHIBIT-10.3
Document
Dated:3 March 2025
WITHOUT PREJUDICE AND SUBJECT TO CONTRACT
(1)WOLVERINE EUROPE LIMITED
(2)ISABEL SORIANO CORRAL
Settlement agreement
THIS AGREEMENT is made on 3 March 2025
BETWEEN:
(1)WOLVERINE EUROPE LIMITED whose registered office is at King’s Place 90 York Way, London N1 9AG (the Employer); and
(2)ISABEL SORIANO CORRAL of Goldens Way, Flat 2 Goldings Hall, SG14 2WH (the Employee / you)
1.PERMITTED DISCLOSURES
1.1Nothing in this agreement prevents the parties from making a disclosure:
1.1.1which amounts to a protected disclosure within the meaning of section 43A of the Employment Rights Act 1996;
1.1.2in order to report an offence to a law enforcement agency or to co-operate with a criminal investigation or prosecution;
1.1.3for the purposes of reporting misconduct, or a serious breach of regulatory requirements, to any body responsible for supervising or regulating the matters in question;
1.1.4if and to the extent required by law.
1.2All other terms of this agreement are to be read subject to this Clause.
2.DEFINITIONS
2.1In this Agreement the following expressions have the following meanings:
“the Adviser” Kimberly Shaw of Charterhouse Law Limited;
“the Determination Date” 3 March 2025;
“the Group” the Employer and its Parent Undertakings, its Subsidiary Undertakings and the Subsidiary Undertakings of any of its Parent Undertakings from time to time (“Parent Undertaking” and “Subsidiary Undertaking” having the meanings set out in section 1162 Companies Act 2006);
“PAYE deductions” deductions made to comply with or to meet any liability of the Employer to account for tax pursuant to regulations made under Chapter 2 of Part 11 of ITEPA 2003 and to comply with any obligation to make a deduction in respect of national insurance contributions;
“ITEPA 2003” the Income Tax (Earnings and Pensions) Act 2003;
“Tax Equalisation” means an arrangement under which the Employee is entitled to specified net income. The Employer agrees to meet UK income tax and National Insurance liabilities on such income, in excess of liabilities which it is agreed will be borne by the Employee.
“Gross-up” means additional income which is deemed to reflect the fact that the Employer is funding a proportion of the Employee’s tax and employee National Insurance liabilities, under the principles of tax equalisation.
“Hypothetical tax” means a reduction of the Employee’s gross pay, to reflect the proportion of her tax liability which she will be bearing personally, under the principles of tax equalisation.
“Hypothetical social security” means a reduction of the Employee’s gross pay, to reflect the proportion of her employee social security liability which she will be bearing personally, under the principles of tax equalisation.
“the Service Agreement” the service agreement entered into by the parties dated 8 June 2018, a copy of which is appended to this Agreement at Schedule 6;
“the Termination Date” 12 months after the Determination Date;
“the Termination Payment” the payment referred to in Clause 6.
3.BASIS OF AGREEMENT
3.1The parties have entered into this Agreement to record and implement the terms on which they have agreed to settle all outstanding claims which you have or may have against the Employer or the Group or its/their respective officers or employees arising out of or in connection with or as a consequence of your employment and/or its termination and your office as a director and/or its cessation. The terms set out in this Agreement constitute the entire Agreement between the parties and are without admission of liability on the part of the Employer or the Group.
3.2The Employer is entering into this Agreement for itself and as agent for and trustee of all companies in the Group and is duly authorised to do so. The parties intend that each company in the Group should be able to enforce in its own right the terms of this Agreement which expressly or impliedly confer a benefit on that company subject to and in accordance with the provisions of the Contracts (Rights of Third Parties) Act 1999.
3.3In the event that you are dismissed, prior to the Termination Date, on grounds of gross misconduct, then you will forfeit any right to the payments and benefits provided to you under this Agreement.
4.TERMINATION
4.1Your employment with the Employer will terminate on the Termination Date by reason of redundancy.
4.2The parties have agreed that your period of contractual notice of termination stated under the Service Agreement of 9 months shall be extended to 12 months and that such notice period will commence on the Determination Date and that you shall, subject to clauses 4.3 and 4.5 below, perform your usual duties between the Determination Date and the Termination Date. The Employer provides this extended period of contractual notice to you in consideration of your agreement to the post termination restrictions set out at clause 13.2 below as well as in return for your agreement to the possibility of being placed on garden leave or on alternative duties (as set out below) for the whole or part of your new period of contractual notice of 12 months.
4.3During the notice period referred to above, the Employer can, entirely at its discretion, and irrespective of whether you are already working under the arrangements set out at clause 4.5 below or not, require you to take garden leave as set out under the terms of clause 21.2 and 21.3 of the Service Agreement and ask you to remain available to answer any questions asked and provide any assistance required by the Employer during that period, whether for the whole of the notice period, for the period of any unserved notice period after the Determination Date or for certain defined periods during that notice period only.
4.4In the period between the Determination Date and the Termination Date, it is agreed that you will complete a proper handover including certain key deliverables to be provided to you by the Employer. Subject to the terms of this Agreement and completion of all of the relevant key deliverables associated with transition to the reasonable satisfaction of the Employer, the Employer will pay you a payment of £1,000 less PAYE deductions within 28 days of the later of this Agreement becoming binding in accordance with Clause 19 and the Termination Date. The Employer will not deduct hypothetical tax on this amount, and will not fund any employee liabilities thereon.
4.5It is also agreed that the Employer can, at any time during the period between the Determination Date and the Termination Date require, on 7 days’ notice, and entirely separate to any period of garden leave, that you, while continuing in active employment (with continued access to Employer systems, premises and colleagues) and receiving full salary and benefits, cease to perform your current role and usual day to day duties and solely focus on being available to respond to transition inquiries raised by the Employer and that such transition assistance will become at that point your normal duties and that this requirement will not constitute a breach of any kind of either the Service Agreement or of this Agreement. During the performance of such transition assistance you will not be required to work on a full time basis and will remain reasonably available to respond to transition inquiries raised by the Employer. For the avoidance of doubt, the period during which you agree to focus on transition assistance under this clause will in any event commence at the latest by 1 September 2025.
5.REMUNERATION TO TERMINATION DATE
5.1You will be paid your normal salary and provided with all contractual benefits and allowances for the period up to and including the Termination Date, as follows:
•Salary, which will be subject to tax equalisation (and therefore paid less hypothetical tax at 28%, less hypothetical social security at £463.40 per month, plus gross-up, less PAYE deductions).
•Pay in lieu of pension, which will be subject to tax equalisation (and therefore paid less hypothetical tax at 28%, plus gross-up, less PAYE deductions).
•Living allowance, on which the Employer will fund all UK liabilities (and therefore paid plus gross-up, less PAYE deductions).
•Housing allowance, on which the Employer will fund all UK liabilities (and therefore paid plus gross-up, less PAYE deductions).
•Private health insurance, which will be subject to tax equalisation (therefore you will fund hypothetical tax at 28% and the Employer will fund the appropriate gross- up).
You will also be eligible to receive employee equity awards in February 2025. Please see paragraphs 7.3 to 7.5 for further information regarding equity.
For the avoidance of doubt, the Employer will not deduct any hypothetical tax on Wolverine dividends you receive, and will not fund any liabilities thereon.
5.2You will not later than the Termination Date, submit to the Employer your final business expenses claim up to and including the Termination Date. All business expenses reasonably incurred by you during your employment which are outstanding at the Termination Date will be reimbursed in the usual way provided you comply with the Employer’s current policy regarding expenses. The Employer will not reimburse you for any expenses incurred after the Termination Date.
5.3You will be paid for any untaken holiday that accrues prior to you taking any garden leave. Such holiday pay will be subject to tax equalisation (and therefore paid less hypothetical tax at 28%, plus gross-up, less PAYE deductions). Holiday that accrues during the garden leave period will be deemed to have been taken prior to the Termination Date and no sum in respect of that will be due to you on termination of employment.
6.TERMINATION PAYMENTS
6.1Subject to and conditional upon your compliance with the terms of this Agreement, within 28 days of the Termination Date the Employer will pay you an ex gratia payment for loss of office of 1 year’s salary at the level in force at the date of this Agreement which amounts to £466,352.00 (subject to any requested reduction under clause 10.12 below). The payment will be subject to tax equalisation, and will therefore be paid less hypothetical tax at 28%, plus gross-up, less PAYE deductions.
7.BENEFITS AND EQUITY
7.1Save as provided in Clause 7.2, 7.3, 7.7 and 7.8, the provision of all benefits will cease on the Termination Date.
7.2You remain eligible to receive, on the usual bonus payment date any 2024 and 2025 calendar year bonus payments, which will be subject to tax equalisation (and therefore paid less hypothetical tax at 28%, plus gross-up, less PAYE deductions) to which you become entitled under the relevant rules of the Employer’s Amended and Restated Short Term Incentive Plan (Annual Bonus Plan) and in respect of 2025 any requirement to be in employment on the bonus payment date shall be waived. Bonus is paid out based on performance against pre-established corporate, brand and personal objectives for the relevant fiscal year.
7.3You are entitled to receive any stock that vests whilst you remain in employment in accordance with the applicable Stock Incentive Plan and associated plan rules and award agreements (together, the “Plan”). Exceptionally, notwithstanding the forfeiture provisions of the Plan, you are also entitled to receive any stock that vests for a period of up to 8 months following the Termination Date. Except as explicitly set forth in the foregoing, any and all other stock awards for which the restrictions have not lapsed as of the Termination Date shall be forfeited in accordance with the terms of the Plan. You agree to waive any claims against the Employer and the Group in respect of any entitlement to the grants after the end of the 8-month period following the Termination Date, and you acknowledge and agree that you are not entitled to any further payments or benefits in respect of the grants or the associated plans other than those identified above. You further accept and agree that you remain bound by all obligations placed upon you by the rules of the Plan and associated award agreements and associated plans including the Wolverine Worldwide Insider Trading Policy but for the avoidance of doubt the Employer confirms that clause 2.b of the Plan does not impose any additional restriction on your post termination employment activity over and above that set out under this Agreement. In the event of any conflict between this Agreement and the rules governing the Plan, the terms of the Plan shall apply and supersede this Agreement.
7.4All stock that vests under this agreement will be subject to tax equalisation, and will therefore be processed less hypothetical tax at 28%, plus gross-up, less PAYE deductions. You agree to fund the hypothetical tax liabilities in accordance with the methods provided for in the applicable plan rules.
7.5You are responsible for all liabilities (for example, capital gains tax) due on the disposal of shares, irrespective of when these liabilities arise, and irrespective of when the shares were acquired. The Employer will not fund any such liabilities.
7.6Any other bonus and or incentive entitlement or eligibility apart from that referred to in this Agreement will be lost by you.
7.7The Employer agrees to continue to provide you with reasonable access to UK tax advice support from Deloitte on the basis you currently enjoy in respect of payments provided to you as a result of your employment and/or its termination. For the avoidance of doubt, this will include tax advice for the fiscal years 2025/2026 and 2026/2027 as well as in respect of any advice needed for any payments received under this Agreement which arise in relation to subsequent tax years.
7.8The Employer agrees to pay you a repatriation sum of £300,000, which will be subject to tax equalisation (and therefore paid less hypothetical tax at 28%, plus gross-up, less PAYE deductions). Such payment to be made within 60 days of the Termination Date.
8.PENSION
8.1Your active membership of any pension scheme will cease with effect from the Termination Date.
9.LEGAL FEES
9.1Subject to and conditional upon your compliance with the terms of this Agreement and subject to receipt of an invoice from your Adviser and provided the Adviser is a qualified lawyer (as defined in the Employment Rights Act 1996), the Employer agrees to pay to the Adviser up to a maximum of £7000 plus VAT as a contribution towards your legal fees incurred exclusively in connection with the termination of your employment. Any invoice should be addressed to you but expressed to be payable by the Employer and sent under private and confidential cover to Jennifer Miller at the Employer.
10.TAXATION
10.1The Employer will deduct from the Termination Payment and other sums to be paid to you under this Agreement any PAYE deductions it is required by law to make.
10.2In this regard, the parties believe the following to be correct, although neither party gives any warranty to this effect:
10.2.1All payments made under this Agreement apart from the Termination Payment and benefits-in-kind are subject to PAYE deductions.
10.2.2In respect of the Termination Payment:
10.2.2.1No part of the Termination Payment is post-employment notice pay for the purposes of section 402D of ITEPA 2003.
10.2.2.2The first £30,000 of the Termination Payment can be paid free of tax, being a termination award to which section 403 of ITEPA 2003 applies but which falls under the threshold stipulated in that section. This position will be mirrored for tax equalisation purposes (ie, no hypothetical tax will be applied on the first £30,000 of the payment).
10.2.2.3The remaining £436,352 (or lower sum in the event of any requested reduction under clause 10.12 below) of the balance of the Termination Payment is subject to deductions for income tax only, being a termination award to which section 403 of ITEPA 2003 applies and which exceeds the threshold stipulated in that section. As detailed in paragraph 6.1, this payment is subject to tax equalisation, and will therefore be processed accordingly.
10.3The PAYE deductions required by the Employer by law do not necessarily constitute the final tax liability due. The final liability due is calculated on preparation of your year-end self- assessment tax return for the tax year in question. The final liability may be higher or lower than the PAYE applied. There may also be liabilities due on preparation of the tax return relating to benefits-in-kind.
10.4Following the termination of the employment, further compliance actions will be required, in order to finalise your tax position, as well as your net pay position under the principles of tax equalisation, for all tax years in which income was paid by the Employer. These compliance actions may include tax return filings and tax equalisation calculations. These may result in payments due by or to you, the Employer or the tax authorities.
10.5You agree that your self-assessment tax returns for all tax years in which income was paid by the Employer will be prepared by the Employer’s appointed tax adviser. You agree to provide the appointed tax adviser with the information requested from you in order to finalise your tax affairs (including any implications of your tax equalised status) for all years impacted, on a timely basis. Penalties, interest and surcharges which arise as a result of untimely or incorrect data provided by you will be for your account, and will not be funded by the Employer.
10.6Where amounts are payable to the Employer as a result of your tax equalised status, you agree to either mandate these amounts to the Employer (where the tax authorities allow repayments directly to third parties), or pay these amounts to the Employer on a timely basis. Such amounts may include tax refunds, tax equalisation settlements, or other payments.
10.7The Employer will continue to meet its obligations which arise as a result of your tax equalised status, for example, payment of tax liabilities and/or tax equalisation settlements, to the extent due by the Employer under the agreed tax equalisation principles.
10.8For the avoidance of doubt, the Employer agrees to the settlement of liabilities/payments of gross-ups where specified in this agreement. No such amounts will be settled in respect of any other liabilities which you may incur. In addition, any liabilities/payments of gross-ups funded by the Employer will be in relation to United Kingdom tax and National Insurance liabilities only. To the extent that liabilities are triggered in any jurisdictions outside the United Kingdom, the Employer will not be liable.
10.9For any period when liabilities are due both by you and the Employer, priority will be given to the Employer when allocating tax allowances and bands.
10.10The Employer reserves the right to the final interpretation of tax equalisation arrangements, including after the termination of the employment.
10.11You will be responsible for the payment of any tax and employee’s national insurance contributions referable to the Termination Payment and all other payments and the provision of benefits set out in this Agreement in excess of any PAYE deductions made by the Employer. You hereby agree to indemnify the Employer and the Group on a continuing basis immediately on demand against all such liabilities, including any interest, penalties, reasonable costs and expenses incurred as a result of any default or delay by you which the Employer or any company in the Group may incur in respect of or by reason of such payments or the provision of such benefits. If the Employer becomes aware that any such liabilities may arise it will provide relevant details to you so that you are given the opportunity at your own expense to dispute any such payment with HM Revenue and Customs or other relevant authority provided that the Employer will be entitled to pay any such liabilities as they fall due.
10.12In the event that you inform the Employer, before the date of 28 days before the Termination Date, that you wish for any part of the Termination Payment to be not paid to you but instead paid directly into your pension with the Termination Payment therefore reduced and the tax equalisation applied to it amended as a result, the Employer will use reasonable endeavours to facilitate that but only on the basis that it makes no warranty to you in respect of the tax treatment of such payment and that neither the Employer or the Group shall suffer any adverse tax or other consequences as a result and that such payment shall at all times be subject to the tax indemnity provided to the Employer and/or Group by you as set out at clause 10.11 above.
11.SOCIAL MEDIA, RETURN OF PROPERTY AND DIRECTORSHIPS
11.1On or within two working days of the commencement of any garden leave period referred to above (if relevant) or the Termination Date (whichever comes first) you will return to the Employer all credit cards, keys, your security pass, any identity badge, all computer disks, memory cards, software and computer programs, , printer, and other electronic equipment, all documents and copies (including electronic or recorded versions and copies in whatever medium held) together with all other property belonging to the Employer or the Group or relating to its or their business in your possession or control except for such items of property as the Employer notifies you in writing that you may retain, which shall include the laptop and mobile phone, which the Employee is permitted to retain once they have been wiped of any relevant data of the Employer and/or Group.
11.2On or within seven working days after the Termination Date you will amend your profiles on any social media accounts to show that you are no longer employed by the Employer.
11.3You shall, if requested, provide the Employer with a signed statement confirming that you have complied fully with your obligations under Clause 11.1 and Clause 11.2 and shall provide such reasonable evidence of compliance as may be requested.
11.4You agree that you will, within 2 days of any request at any time by the Employer write to the Employer and/or Group (as requested) in a form which is the same as or similar to that outlined at Schedule 5 resigning from all directorships/other formal positions that you hold with any Group Company. You irrevocably appoint the Employer to be your attorney in your name and on your behalf to sign execute or do any such instrument or thing and generally to use your name in order to give the Employer (or its nominee) the full benefit of the provisions of this clause.
12.WARRANTIES AND REPRESENTATIONS
12.1In consideration of the sum of £100 (less PAYE deductions) you warrant as a strict condition of this Agreement and represent to the Employer that up to and as at the date this Agreement becomes binding in accordance with Clause 19 you:
12.1.1have not committed, as far as you are aware, any breach of any duty owed to the Employer or any company in the Group. For the avoidance of doubt, this Agreement will not operate to release you from any liability owed to any company in the Group of which you were a director by virtue of your employment with the Employer;
12.1.2have not done or failed to do anything, as far as you are aware, which act or omission amounts to a repudiatory breach of the express or implied terms of your employment with the Employer or which, if it were to be done or omitted after the date of this Agreement, would be in breach of any of its terms;
12.1.3are not employed or self-employed in any capacity by a party other than the Employer nor are you in discussions which are likely to lead to nor have you received such an offer of employment or self-employment;
12.1.4have not commenced any action or issued any proceedings against the Employer or any company in the Group or any of its/their respective officers or employees.
12.2The Employer is under no obligation to make the payments or provide the benefits specified in Clause 6, Clause 7.2, Clause 7.3, 7.5 or Clause 9 if:
12.2.1you are in breach of any of the warranties referred to in this Clause 12; or
12.2.2on or before the Termination Date you do or fail to do, or have done or failed to do, anything which act or omission amounts to a repudiatory breach of the express or implied terms of your employment with the Employer.
13.CONFIDENTIALITY AND OTHER RESTRICTIONS
13.1You accept and agree that your express and implied duties relating to confidential information, and intellectual property continue after the Termination Date. In particular, you affirm the duties and restrictions in clauses 18 and 19 of the Service Agreement.
13.2In respect of post termination restrictions/restrictive covenants, you agree to a variation of the relevant provisions set out at clause 17 of the Service Agreement such as to place amended restrictions on you, with your agreement given in consideration of the extended contractual notice period provided to you under clause 4.2 and the other benefits set forth above, and that the following provisions and agreed variation of the Service Agreement shall therefore apply:
13.2.1the parties acknowledge and agree that they shall continue to be bound by the provisions set out at clauses 17.1, 17.4, 17.6, 17.7 and 17.8 of the Service Agreement;
13.2.2you specifically affirm your agreement to Clause 17.2.1 of the Service Agreement which shall continue to apply to you as originally drafted;
13.2.3you acknowledge and agree that the duration of the restrictions placed on you as set out at clause 17.2.2 of the Service Agreement shall be increased to a period of 12 months from the Termination Date instead of 6 months and that the restriction placed on you as set out at clause 17.2.3 of the Service Agreement shall be increased to a period of 7 months from the Termination Date instead of 6 months; and
13.2.4the parties agree that the garden leave set off provisions at clause 17.5 of the Service Agreement shall now apply to all of the restrictions set out above including those set out at clauses 17.2.2 (as varied) and 17.2.3 of the Service Agreement and that such garden leave set off will apply to the varied contractual notice period provided to you under clause 4.2 above in circumstances where you are placed on garden leave under clause 4.3 above, but for the avoidance of doubt the parties agree and accept that no set off provisions shall apply to the restrictions at clauses 17.2.1 and 17.2.2 of the Service Agreement (as varied) in relation to the period outlined at clause 4.5 above where you remain in active employment with the Employer, but that such set off shall apply to the restriction at clause 17.2.3 of the Service Agreement (as varied) in relation to the period outlined at clause 4.5 above.
13.3In consideration of the payment of £100 (less PAYE deductions), you agree and undertake as a strict condition of this Agreement not to divulge to any person, firm or company or use for your own benefit or the benefit of any person, firm or company any trade secret or information of a private, secret or confidential nature concerning the business, finances or affairs of the Employer or any company in the Group or any of its/their respective customers, clients or suppliers (including but not limited to terms of contracts or arrangements, existing and potential projects, accounts, information regarding customers, clients or suppliers, disputes, business development and/or marketing programmes and plans) which have or may have come to your knowledge during the course of your employment with the Employer or any company in the Group.
13.4The parties consider that confidentiality is mutually beneficial in all the circumstances and agree and undertake (in consideration of their mutual promises to that effect) and subject to Clause 13.6 that neither will:
13.4.1make or publish any statement to a third party concerning the fact, negotiations or terms of this Agreement, the dispute settled by it or the circumstances surrounding the termination of your employment;
13.4.2make or publish any derogatory or disparaging statement or do anything in relation to the other and in your case in relation to any company in the Group or any past, current or future officers or employees of the Employer or any company in the Group which is intended to or which might be expected to damage or lower their respective reputations,
provided that the parties will not be prevented from making a disclosure:
(a)for the purposes of seeking legal or tax advice in relation to this Agreement, provided the professional adviser is bound by a duty of confidence, or to HMRC for tax purposes;
(b)in your case:
(i)to your spouse, civil partner or partner, provided such person agrees to maintain confidentiality;
(ii)to a medical practitioner or counsellor for the purpose of seeking or obtaining treatment;
(iii)about the circumstances surrounding the termination of your employment but not the terms of this Agreement, to someone with whom you are seeking employment, for the purposes of seeking employment; or
(iv)to your insurer for the purpose of any insured claim for loss of employment, provided any such insurer agrees to keep any disclosed information confidential
(c)in the case of the Employer and/or any company in the Employer’s group where they have a regulatory and/or legal obligation to make such disclosure (which for the avoidance of doubt will include here a requirement to disclose a copy of this Agreement and a summary of its terms to the US Securities and Exchange Commission for the purpose of public filings and notifications and to make associated public statements in respect of this which the parties agree shall not constitute any breach of the Agreement), where in its reasonable opinion it is in the interests of good corporate governance to do so and/or in order to defend any litigation brought (or intimated may be brought) by you or resist or process any actual or intimated claim of insurance, for which latter purpose you hereby provide express consent on the basis that the insurer has agreed to keep any disclosed information confidential; or
(d)consistent with the terms and spirit of any agreed reference.
13.5You warrant that you have not done or failed to do anything including without limitation published any statement or authorised or permitted anyone else to do so prior to the date of this Agreement which would constitute a breach of Clauses 13.1, 13.3 or 13.3, if it had occurred after the date of this Agreement.
13.6The Employer will not be liable for any breach of its undertakings at Clause 13.4 caused by the actions of any of its past, current or future officers or employees if it has taken such steps as are reasonable to prevent that breach or breaches of that kind.
13.8 In consideration of the payment of the sum of £500 less PAYE deductions, you agree to provide the Employer and any companies in the Group and their solicitors/advisers with reasonable assistance for a period of 3 years from the Termination Date in relation to any pending and future claims made against the Employer or any company in the Group or brought by the Employer or any company in the Group against third parties or any internal investigation or administrative, regulatory or judicial enquiry or proceedings. You agree to use your best endeavours to co-operate with the Employer and any companies in the Group and their solicitors/advisers to such an extent that may be necessary to protect the interests of the Employer and any company in the Group in relation to all and any such investigation, enquiry or claims irrespective of whether proceedings are actually commenced. You acknowledge that this could involve, but is not limited to, responding to or defending any regulatory or legal process, providing information in relation to any such process, preparing witness statements and giving evidence on behalf of the Employer or any company in the Group. You will be paid by the Employer any reasonably incurred out of pocket expenses that you sustain as a result of such assistance.
14.REFERENCES AND ANNOUNCEMENTS
14.1Should any third party ask the Employer to give a reference in relation to you following the Termination Date, any written reference given in response to such a request will be the terms set out in Schedule 3 provided that the third party’s request is made directly to Amy Klimek, Chief Human Resources Officer. This clause is subject to the proviso that the Employer will cease to be obliged to provide a reference, whether written or oral, in the agreed terms if after the signing of this Agreement new facts come to the Employer’s attention which make the agreed reference substantially and materially incorrect.
14.2The Employer will provide to the Employee, for her reasonable review and comment at the appropriate time, the wording for an internal and external announcement relating to the Employee’s departure from the Employer.
15.REAFFIRMATION
15.1The Employer’s obligations to make the payments and provide the benefits specified in Clause 6, Clause 7 and Clause 9 are entirely conditional on you entering into a further agreement with the Employer on the terms set out in the reaffirmation letter set out in Schedule 4 within 7 days of the Termination Date, and, within that period, sending to the Employer a letter in the form set out in that Schedule to confirm your agreement, which letter must be signed by you.
15.2On receipt of the signed reaffirmation letter and subject to receipt of an invoice from the Adviser, the Employer agrees to pay the Adviser up to a maximum of £500 plus VAT as a contribution towards the legal fees incurred in connection with the reaffirmation letter.
16.FULL AND FINAL SETTLEMENT
16.1The terms of this Agreement are, without any admission of liability on the part of the Employer or any company in the Group, in full and final settlement of all sums due to you from the Employer or any company in the Group and all claims in all jurisdictions under contract, tort, statute or otherwise which you have or may have against the Employer or any company in the Group or its/their respective current or former officers or employees arising directly or indirectly out of or in connection with or as a consequence of your position as a director of the Employer or your employment and/or its termination (whether such claims are, or could be, known to the parties, and including any claims which may arise in the future) including in particular for the avoidance of doubt the claims specified in Schedule 1, each of which is hereby intimated and waived.
16.2You agree to refrain from commencing any action or issuing any proceedings against the Employer or any company in the Group or its/their respective current or former officers or employees in respect of any claims referred to in Clause 16.1 including the claims specified in Schedule 1.
16.3Neither the settlement and waiver in Clause 16.1 nor the agreement to refrain from proceedings in Clause 16.2 applies to:
16.3.1any claim in respect of accrued pension rights accrued up to the Termination Date;
16.3.2any claim for personal injury arising out of acts or omissions which have not yet occurred at the time the agreement is entered into;
16.3.3any other claim for personal injury of which you are not aware and could not reasonably be expected to be aware at the date of this agreement unless it arises from or in connection with any of the claims referred to in Schedule 1;
16.3.4any claim for the sums and benefits due to you pursuant to this Agreement.
17.NO KNOWLEDGE OF OTHER CLAIMS
17.1You confirm that you are not aware of any claims other than those specified in Schedule 1 or facts or circumstances that may give rise to any claim against the Employer or any Group companies or any of its/their respective current or former officers or employees in relation to any other matters.
17.2You represent and warrant that:
17.2.1you have instructed the Adviser to advise as to whether you have or may have any claims, including statutory claims, against the Employer or any company in the Group or its/their respective current or former officers and employees including arising out of or in connection with your employment or its termination;
17.2.2you have provided the Adviser with all available information which the Adviser requires or may require in order to advise whether you have any such claims; and
17.2.3the Adviser has advised you that, on the basis of the information available to the Adviser, your only claims or particular complaints against the Employer or any company in the Group or its/their respective current or former officers and employees whether statutory or otherwise are those listed in Schedule 1 of this Agreement and that you have no other claim against the Employer or any company in the Group or its/their respective current or former officers and employees whether statutory or otherwise.
17.3In the event of you commencing any action or issuing or pursuing any proceedings or being granted any judgment against the Employer or any company in the Group arising out of your employment or its termination you shall indemnify the Employer or relevant company in the Group in respect of:
17.3.1its legal costs of defending such action or proceedings (including reasonable legal and professional fees and disbursements together with VAT thereon); and
17.3.2any award or judgment,
and such part of the Termination Payment equivalent to the amount of such costs, award or judgment shall become immediately repayable to the Employer or relevant company in the Group as a debt.
18.COMPLIANCE WITH STATUTORY PROVISIONS
18.1To the extent that they are relevant, the conditions regulating Settlement agreements, compromise agreements and compromise contracts under the following instruments and provisions (as subsequently consolidated, modified or re-enacted from time to time) are satisfied and met: the Sex Discrimination Act 1975; the Trade Union and Labour Relations (Consolidation) Act 1992; the Employment Rights Act 1996; the Working Time Regulations 1998; the National Minimum Wage Act 1998; the Employment Relations Act 1999; sub- paragraphs (a) to (e) of r41(4) of the Transnational Information and Consultation of Employees Regulations 1999; the Merchant Shipping (Working Time: Inland Waterways) Regulations 2003; sub-paragraphs (a) to (e) of r40(4) of the Information and Consultation of Employees Regulations 2004; the Fishing Vessels (Working Time: Sea-fishermen) Regulations 2004; sub-paragraphs (a) to (e) of paragraph 13(1) of the Schedule to the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006; sub-paragraphs (a) to (e) of r41(4) of the European Cooperative Society (Involvement of Employees) Regulations 2006; sub-paragraphs (a) to (e) of r62(4) of the Companies (Cross-Border Mergers) Regulations 2007; the Cross-border Railway Services (Working Time) Regulations 2008; the Pensions Act 2008; sub-paragraphs (a) to (e) of r39(4) of the European Public Limited-Liability Company (Employee Involvement) (Great Britain) Regulations 2009; paragraphs (c) and (d) of section 147(3) of the Equality Act 2010; the Posted Workers (Enforcement of Employment Rights) Regulations 2016.
18.2You confirm that:
18.2.1you have received advice from the Adviser (who is a relevant independent adviser within the meaning of the provisions referred to in Clause 18.1) as to the terms and effect of this Agreement and in particular its effect on your ability to pursue your rights before an Employment Tribunal; and
18.2.2you will procure that the Adviser completes and signs the Certificate in Schedule 2.
19.WITHOUT PREJUDICE
19.1Notwithstanding that this Agreement is marked “without prejudice and subject to contract” when the Agreement has been dated and signed by/on behalf of the parties and is accompanied by the Certificate in Schedule 2 duly completed and signed by the Adviser it will become an open and binding agreement between the parties.
19.2This Agreement may be executed in any number of counterparts, each of which will constitute an original, but which will together constitute one agreement.
20.GOVERNING LAW AND JURISDICTION
20.1This Agreement is governed by the law of England and Wales and any dispute is subject to the exclusive jurisdiction of the courts and tribunals of England and Wales.
SCHEDULE 1
CLAIMS
All and any claims:
(a)in respect of outstanding pay, including for pay in lieu of notice, wrongful dismissal, outstanding holiday pay, breach of contract; for bonus or other incentive pay or unlawful deductions from wages;
(b)arising out of a contravention, or alleged contravention of section 8, 13, 15, 18(1), 21(1), 28, 80G(1), 80H(1)(b), 80(1), 92 or 135 or of Part V, VI, VII, VIII, IX or X of the Employment Rights Act 1996 or any regulations made thereunder including but not limited to any claim relating to: the protection from suffering detriment in employment under Part V; or unfair dismissal under Part X including those circumstances where the dismissal is to be regarded as unfair for the purposes of that Part for the reasons set out in sections 98A to 105 (inclusive); or in respect of any right, benefit or entitlement to maternity, paternity, adoption, shared parental, parental or other leave secured by Part VIII; or in relation to a request for flexible working under Part VIIIA; or the right to written reasons for dismissal under Part IX;
(c)any claim under the Equality Act 2010 in respect of prohibited conduct relating to any of the protected characteristics under the Equality Act 2010 including but not limited to any claim for: direct or indirect discrimination, victimisation or harassment; discrimination arising from disability; or any failure to make reasonable adjustments; including any claim of instructing, causing, inducing or aiding a contravention of the Equality Act 2010.
(d)any claim for equality of terms under the Equal Pay Act 1970 or the Equality Act 2010;
(e)any claim under Part II of the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000;
(f)any claim under Part II of the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002;
(g)any claim arising out of a contravention, or alleged contravention of any section of the Trade Union and Labour Relations (Consolidation) Act 1992 including any claim for a protective award under section 68A, 87, 137, 145A, 145B, 146, 168, 168A, 169, 170, 174 and 192 and paragraph 156 of Schedule A1;
(h)any claim under section 11 of the Employment Relations Act 1999 in respect of the right to be accompanied;
(i)any claim under the Data Protection Act 1998, EU General Data Protection Regulation (EU) 2016/679, UK General Data Protection Regulation or the Data Protection Act 2018, as applicable;
(j)any claim for a redundancy payment (whether statutory or contractual);
(k)any claim under the Working Time Regulations 1998;
(l)under the National Minimum Wage Act 1998;
(m)any claim under any provision of directly applicable European Union law; and
(n)any claim not referred to in paragraphs (a) to (m) above where the non-referral arises as a direct result of the United Kingdom having left the European Union pursuant to the European Union (Withdrawal) Act 2018 (as amended)
SCHEDULE 2
ADVISER’S CERTIFICATE
I confirm that:
1.I am a relevant independent adviser (as defined in the provisions referred to in Clause 18.2 of the Agreement between ISABEL SORIANO CORRAL (the Employee) and WOLVERINE EUROPE LIMITED to which this Certificate is annexed).
2.I have advised the Employee of the terms and the effect of the Agreement and in particular its effect on the Employee’s ability to pursue a claim before an Employment Tribunal.
3.There is in force a contract of insurance covering the risk of a claim by the Employee in respect of loss arising in consequence of the advice.
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| Adviser’s signature |
/s/ Kimberly Shaw |
| Adviser’s name |
KIMBERLY SHAW |
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| Title* |
Partner - Solicitor |
| Adviser’s business address |
Charterhouse Law LTD |
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150 Minories |
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London |
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EC3N 1LS |
* Eg: solicitor, barrister, authorised litigator, advocate, fellow of ILEX, officer/employee/member of named trade union or advice centre worker To Whom It May Concern,
SCHEDULE 3
LETTER OF REFERENCE
Re: Employment details for – Isabel Soriano Corral
I am writing to confirm the employment details of Isabel Soriano Corral.
I can confirm that Isabel was employed with us at Wolverine from 25 June 2018 to 3 March 2026, most recently in the role of President (International) Wolverine Worldwide.
Yours faithfully,
SCHEDULE 4
LETTER OF REAFFIRMATION
Dated [ ]
Dear [ ]
I refer to the settlement agreement dated [DATE] between myself and Wolverine Europe Limited (the “Employer”) pursuant to which it was agreed that my employment with the Employer would end on the Termination Date set out. As my employment has now ended, I am writing to you in accordance with Clause 15 of the settlement agreement to confirm the points below except for claims excluded by Clause 16.3 of the settlement agreement.
I confirm that:
1.The termination of my employment in accordance with the terms set out in the settlement agreement is without any admission of liability by the Employer or the Group (as defined in the settlement agreement) and shall be in full and final settlement of all and any claims that I have or may have against the Employer or the Group or any of its or their current or former offices or employees, whether contractual, statutory or otherwise (and whether known or unknown) arising out of or in connection with my employment or its termination except for claims excluded by clause
16.3 of the settlement agreement.
2.On or after the Termination Date, I have taken further legal advice from the Adviser (as defined in the settlement agreement) as to the terms of this letter and its effect on my ability to pursue my rights before an employment tribunal.
3.Without prejudice to the generality of paragraph 1 above, the waiver in this letter relates to all or any claims specified in Schedule 1 to the settlement agreement and confirms that the only claims that I have or may have against the Employer, the Group or its or their officers or employees relating to my employment with the Employer or its termination are specified in that Schedule.
4.To the extent that they are relevant, the conditions regulating compromise agreements, settlement agreements and compromise contracts under the instruments and provisions referred to at Clause 18.1 of the settlement agreement have been satisfied and met.
5.The Adviser has signed a copy of the attached certificate or a letter in the form of the adviser’s certificate (which may be provided on headed paper) to confirm that they have provided the advice referred to in paragraph 2 above.
6.There are no matters or circumstances that give rise or may give rise to any claims by me against the Employer or the Group in connection with my employment or its termination, always excluding those claims listed in Clause 16.3 of the settlement agreement, which have arisen since the Termination Date or, if there are any such matters, I agree to waive such claims. If so required by the Employer, I will enter into any further documentation necessary to give full effect to this intention.
7.I warrant as at the Termination Date in the same terms as set out at clauses 12.1.1 – 12.1.2 and
12.1.4 of the settlement agreement and note that the settlement agreement is conditional on such warranty and I also warrant that I have not retained any software or computer programs, documents or copies (electronically or otherwise) which belong to the Employer or any company in the Group or to which the Employer or any company in the Group is entitled.
Yours faithfully
………………………………….
ISABEL SORIANO CORRAL
ADVISER’S CERTIFICATE
I confirm that:
I am a relevant independent adviser (as defined in the provisions referred to in Clause
1.1of the settlement agreement dated [insert date] between Isabel Soriano Corral and Wolverine Europe Limited.
(a)I have advised the Employee of the terms and the effect of the letter to which this certificate is attached and in particular its effect on the Employee’s ability to pursue a claim before an Employment Tribunal.
(b)There is in force a contract of insurance covering the risk of a claim by the Employee in respect of loss arising in consequence of the advice.
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| Adviser’s name |
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| Title* |
......................................................... |
| Adviser’s business address |
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SCHEDULE 5
LETTER OF RESIGNATION
The Directors
[Name of all relevant WWW entities]
[DATE]
[Name of all relevant WWW entities] (“the Companies”)
I, Isabel Soriano Corral, resign from my position as director of the Companies with immediate effect and acknowledge that:
1.I have no claim whatsoever outstanding against either the Companies any member of the Group or any of their respective officers and employees; and
2.to the extent that any such claim exists or may exist, I irrevocably waive such claim and release the Companies, each Group Company and each of their respective officers and employees from any liability whatsoever in respect of such claim.
The officers and employees of the Companies and each Group Company have the right to enforce this Deed in accordance with the provisions of the Contracts (Rights of Third Parties) Act 1999.
Please arrange for particulars of my resignation to be filed with the Registrar of Companies.
This document is executed as a deed and delivered on the date stated at the beginning of this document.
Signed as a deed by )
ISABEL SORIANO )
in the presence of: )
Witness Signature:
Witness Name:
Witness Address:
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SIGNED by Jennifer J. Miller: |
| /s/ Jennifer J. Miller |
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| Duly authorised to sign for and on behalf of |
| WOLVERINE EUROPE LIMITED |
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SIGNED by Isabel Soriano Corral: |
| /s/ Isabel Soriano Corral |
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| Employee |
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EX-31.1
5
a2025-q1exhibit311.htm
EXHIBIT-31.1 CEO CERTIFICATION
Document
Exhibit 31.1
CERTIFICATION
I, Christopher E. Hufnagel, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Wolverine World Wide, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 8, 2025
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| /s/ Christopher E. Hufnagel |
| Christopher E. Hufnagel |
| President and Chief Executive Officer |
| Wolverine World Wide, Inc. |
EX-31.2
6
a2025-q1exhibit312.htm
EXHIBIT-31.2 CFO CERTIFICATION
Document
Exhibit 31.2
CERTIFICATION
I, Taryn L. Miller, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Wolverine World Wide, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 8, 2025
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| /s/ Taryn L. Miller |
| Taryn L. Miller |
| Chief Financial Officer and Treasurer |
| Wolverine World Wide, Inc. |
EX-32
7
a2025-q1exhibit32.htm
EXHIBIT-32 OFFICER CERTIFICATIONS
Document
Exhibit 32
CERTIFICATIONS
Solely for the purpose of complying with 18 U.S.C. § 1350, each of the undersigned hereby certifies in his capacity as an officer of Wolverine World Wide, Inc. (the “Company”) that the Quarterly Report of the Company on Form 10-Q for the quarter ended March 29, 2025 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such report fairly presents, in all material respects, the financial condition of the Company at the end of such period and the results of operations of the Company for such period.
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| Date: |
May 8, 2025 |
/s/ Christopher E. Hufnagel |
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Christopher E. Hufnagel |
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President and Chief Executive Officer |
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(Principal Executive Officer) |
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/s/ Taryn L. Miller |
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Taryn L. Miller |
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Chief Financial Officer and Treasurer |
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(Principal Financial Officer) |
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