Wolverine Closes PLG Deal, Raises Estimates

As Wolverine World Wide Inc. today closed its May acquisition of the labels in Collective Brands Inc.’s Performance & Lifestyle Group, the firm also raised estimates for how much the new business will add to earnings per share in 2013 and 2014.

Rockford, Mich.-based Wolverine now expects the combined businesses of Sperry Top-Sider, Saucony, Keds and Stride Rite to contribute between 35 cents and 50 cents a share to fiscal 2013 income, and between 60 cents and 80 cents a share to 2014 income.

The company previously expected accretion to earnings of between 25 cents and 40 cents a share in fiscal 2013, and 50 cents to 70 cents a share in fiscal 2014.

Speaking to analysts on a conference call Tuesday, Wolverine SVP and CFO Donald Grimes said the increase in outlook is due to the strong momentum in the business and a better understanding of the timing and magnitude of expected net synergies.

“We’re more optimistic about the ultimate synergy realization … as we get deeper and deeper into our integration planning,” said Grimes. “2013 will represent another year of double-digit top-line growth, and double-digit operating income growth for PLG, with the expectation that would continue in 2014.”

In terms of driving the top line, Grimes added the plan is to accelerate international expansion for PLG brands, especially Sperry Top-Sider, which is up 20 percent year-to-date.

“We will increase the pace of our Sperry Top-Sider concept store opening, growing from 18 concept stores today to approximately 100 within the next five years … and support the development of the Sperry brand into a complete lifestyle brand, capitalizing on the recent expansion of that brand into adjacent categories such as apparel, bags, eyewear and watches,” he said.

The firm also intends to leverage Saucony’s strong position in the minimalist footwear category — particularly in the specialty running channel — to drive improved top- and bottom-line performance, as well as aggressively expand Keds outside the U.S.

With the close of the transaction, Wolverine will completely retire its $410 million share of Collective’s interest-bearing debt. It also completed a $1.48 billion financing structure for the deal.

Wolverine’s shares jumped 2.7 percent in Tuesday morning trading following the investor call.

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