ROCKFORD, Mich. — December 18, 2023 Wolverine World Wide Inc. announced strategic actions that further focus the company’s portfolio and advance its ongoing transformation into a consumer-obsessed growth company.
“We’ve taken fast, bold, and decisive actions to stabilize the company today, while working to transform Wolverine Worldwide for the future,” said Chris Hufnagel, president and CEO. “Our actions over the past four months have served to simplify our business model, reduce our cost structure, and strengthen our balance sheet. While our work isn’t done, we enter the new year with a clear vision for the future, enhanced ability to invest in our brands and platforms, and ultimately, a better position to deliver stronger returns for our shareholders.”
New Operating Model for Merrell and Saucony in China
Strategic actions announced today include evolving and optimizing the company’s successful Merrell and Saucony joint venture in China by entering into agreements for a total amount of $61 million to (a) accelerate an existing option to sell a minority ownership interest in the entity that owns the Saucony intellectual property in China to Xtep, its joint venture partner, and (b) sell the Company’s equity interest in the Merrell and Saucony joint venture entities to Xtep.
Wolverine Worldwide formed a joint venture with Xtep in 2019 to launch the Merrell and Saucony brands in China. Xtep is a powerful vertical player in the fast-growing sportswear market, with over 8,200 stores in Asia-Pacific, North America, and EMEA, and a strong network of distributors and shopping mall operators.
Under the joint venture agreement, Xtep held the option to purchase a 40-percent minority ownership interest in the entity that owns the Saucony intellectual property in China if the business met certain financial targets. Due to the early success and profitability of Saucony in China, the company and Xtep have agreed to accelerate the exercise of this purchase option.
The company and Xtep have also agreed for the company to sell its equity interest in the Merrell and Saucony joint venture entities to a wholly-owned subsidiary of Xtep, 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. This evolution underscores the growth prospects of these two brands in China, and is the result of the early success and maturity of the joint venture. The new operating model is expected to further leverage Xtep’s expertise and significant resources in China, unleashing the brands’ full potential in this key market while allowing Wolverine Worldwide to focus on brand-building by developing awesome products and telling amazing stories across its global footprint.
Selling Asia-based Leathers Business
Wolverine Worldwide has entered into a definitive agreement to sell its Asia-based Wolverine Leathers business to Interhides Public Company Limited, a current materials vendor of the Company, for approximately $9 million. This completes the company’s previously announced objective to sell its Wolverine Leathers business — further focusing the Company’s portfolio.
The actions announced today are in addition to the company’s previously-announced transactions, including:
- Selling Keds in February 2023 for over $90 million;
- Selling the Hush Puppies intellectual property in China, Hong Kong, and Macau in August 2023 for approximately $58.8 million; and
- Selling the U.S. Wolverine Leathers business in August 2023 for approximately $6 million;
The previously-announced strategic alternatives process for the company’s Sperry brand is ongoing.
Wolverine will provide more detail regarding these actions and other strategic initiatives at the Annual ICR Conference on January 8, 2024.
Posted: December 18, 2023
Source: Wolverine World Wide Inc.