Wolverine World Wide, Inc.

Greetings and welcome to the Wolverine Worldwide Third Quarter Fiscal 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you'd like to ask a question, please press star and the number one on your telephone keypad. Once again, star one. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jared Filippone, Head of Investor Relations. Jared, you may begin.

Good morning, and welcome to our third quarter fiscal 2025 conference call. On the call today are Christoph Nagel, President and Chief Executive Officer, and Taryn Miller, Chief Financial Officer. Earlier this morning, we issued a press release announcing our financial results for the third quarter of 2025 and guidance for fiscal year 2025. The press release is available on many news sites and can be viewed on our corporate website at wolverineworldwide.com. This morning's press release and comments made during today's earnings call include non-GAAP financial measures. These non-GAAP financial measures, including references to the ongoing business, were reconciled to the most comparable GAAP financial measures in attached tables within the body of the release or on our investor relations page on our website, wolverineworldwide.com. I'd also like to remind you that statements describing the company's expectations, plans, predictions, and projections such as those regarding the company's outlook for fiscal year 2025, growth opportunities, and trends expected to affect the company's future performance made during today's conference call are forward-looking statements under U.S. securities laws. As a result, we must caution you that there are a number of factors that could cause actual results to differ materially from those described in the forward-looking statements. These important risk factors are identified in the company's SEC filings and in our press releases. Additionally, during the quarter, we elected to change our accounting policy for certain inventory from LIFO to FIFO. The majority of our distribution warehouse inventory was already accounted for using FIFO, and this change aligns all warehouse inventory under a consistent policy. The financial statements in today's release and the numbers referenced on the call reflect the impact of this accounting change for both the current and prior year periods, which have been retrospectively adjusted. With that, I will now turn the call over to Christoph Nagel.

Thanks, Jared. Good morning, everyone, and thanks for joining us on today's call. In the third quarter, we exceeded our expectations on both the top and bottom line. Revenue grew approximately 7% in line with our long-term target of mid to high single-digit growth and was again driven by our two largest brands, Merrill and Saucony. Healthy revenue growth coupled with another quarter of record gross margins and strong execution delivered adjusted earnings per share of 36 cents. Adjusted EPS grew at more than triple the rate of top line growth as we continue to prudently manage the business, balancing needed and important investment into the business while expanding profitability. Our strategy and discipline execution continues to deliver solid results, and our team remains focused on executing our brand building model with distinction, centered squarely on building awesome products, telling amazing stories, and driving the business. As I reflect on where our portfolio is today and where we need to go tomorrow, it's clear our brands are at three different stages of development. First, Merrill and Saucony are moving at pace, taking market share and generating consistent revenue growth around the world. Our aim here is to continue to thoughtfully manage these brands to sustainably scale them to their fullest potential. We've made real progress in elevating design and innovation within their product pipeline, as well as in strengthening their brand positioning through impactful marketing activations. For 2025, these two brands are expected to represent nearly two-thirds of the company's total revenue and record mid-teens year-over-year growth combined. Second, we believe Sweaty Betty has begun to turn the corner, the result of a lot of hard work in developing a new strategy and beginning to execute it over the past six months. The brand has delivered on the milestones that we believe are critical at this point in its evolution, which started with margin expansion and has transitioned to sequential improvement of year-over-year revenue trends. And finally, the Wolverine brand and our work group have not made the progress we anticipated. While I'm disappointed in our performance here, I believe we have a firm handle on the work that's necessary to get this business back on track. And importantly, we have new leadership in place. As of Monday, following a thorough search process, I'm pleased to announce Justin Cupps as our new work group president. Justin is a veteran leader with deep experience across a host of great footwear, apparel, and accessory brands. He's a strong addition to our leadership team. And for some context, work group revenue represents less than a quarter of the company's consolidated revenue and is now expected to finish the year down high single digits compared to 2024. In aggregate, I'm encouraged by the progress we've made and continue to make as a company. This year, we've elevated our teams and talent by adding excellent leadership like Justin, as well as new product design, merchandising, marketing, and sales talent across our brands. We've improved our processes, including our integrated business planning approach for more efficient demand and inventory management. We successfully completed the integration of Sweaty Betty's tools and processes into the company's ecosystem, advanced the adoption use of AI across the business, and developed plans to further elevate and modernize our e-commerce tools and platform next year. We've developed new muscle to drive impact in the global marketplace with our key city strategy, and we fostered a new culture centered around growth and winning together. In addition to the above, we expect to deliver solid financial results for the year. The midpoint of our guidance reflects revenue growth of approximately 6%, an increase in adjusted earnings per share of approximately 50%, compared to 2024. Before I turn the call over to Taryn Miller to provide greater detail on our third quarter results and outlook for the year, I'd like to share some additional insights on our brands and their continued progress. I'll start with Saucony, which grew 27% in the third quarter. Saucony is uniquely positioned as a disruptive challenger brand at the intersection of two of the fastest-growing categories in the market, performance and lifestyle running, and the brand continues to win in these highly competitive arenas. In the third quarter, Saucony grew performance-run revenue by strong double digits globally compared to last year, and again took market share in the important U.S.-run specialty channel, powered in part by the brand's core four franchises, the Ride, Guide, Hurricane, and Triumph, which target its movemaker consumers. While the brand successfully tapped into this broader market opportunity, it continues to maintain a strong focus on pinnacle innovation for elite runners with its Endorphin franchise. The collection includes the Endorphin Speed for serious training, the Endorphin Pro for race day, and the Endorphin Elite Super Shoe for ultimate performance. In 2026, the brand plans to introduce the all-new Endorphin Azura, a premium non-plated trainer targeting a larger consumer segment and growing opportunity within the market. In addition to further elevating franchises within the core four, with innovation incubated within the aforementioned endorphin series. On the lifestyle side, Saucony drove strong revenue growth globally and took significant market share here in the U.S. as we continue to focus on prudently growing this segment of the business around the world. The brand's deep product archive enables it to authentically capitalize on a variety of different trends. The ProGrid Omni 9 and Ride Millennium, two of the brand's retrospect silhouettes, again drove significant growth in Q3, While classics like the Jazz Original and Shadow 5000 are encouragingly beginning to spark interest for 2026 with influential Tier 0 and Tier 1 retailers. Saucony continues to fuel brand heat with culturally relevant collabs, releasing new drops over the past few months, including 316, Keith Haring, J Tips, and Engineered Garments. Saucony collaborated with Metagirl on a release last quarter as well, which successfully leaned into the brand's significant opportunity with women. the beginning of a deeper anticipated partnership with the influential designer going forward. In addition, the brand plans on dropping its first collaboration, prominent creator West Side Gun in December, with an expanded relationship and more drops expected next year. Saucony's brand is strong around the world, and we continue to invest in the brand in the last quarter, in part through our key city strategy. Saucony continues to leverage Tokyo and the Asia Pacific region, with a flagship store open in Harajuku earlier this year, and is on track to open a host of new stores more broadly in China with our partner there. We expect that APAC will be the fastest growing region in the world for the brand this year. In Europe, Saucony took over central London as a title sponsor of the London 10K in July, as I detailed at our last call, and followed this up with its sponsorship of the shortage 10K in September. Bookends to a powerful quarter for the brand in London and more broadly in the EMA region, which as a whole is on track to deliver strong double-digit revenue growth this year, with momentum heading into 2026. Looking ahead, Saucony plans to expand its key strategy to Paris, sponsoring the Eiffel Tower 10K next month, and opening our next Pioneer store there in 2026. Brand interest continues to ramp up globally, and affinity for the brand continues to increase with runners, and more specifically, the younger consumer. While we continue to have success here in our home market, I'm equally excited about the global potential of the brand. Saucony's positioning within the fast-growing run lifestyle market is unique, and a compelling combination of heritage and authenticity, coupled with best-in-class innovation and developing cultural relevance, and the brand is setting the pace. 2025 is proving to be a great year for Saucony, which is on track to deliver all-time record revenue and profit as a brand. Moving to Merrill, which grew revenue 5% in the third quarter, driving increases in most regions and in both the performance and lifestyle sides of its business. Merrill, the category leader in hike, remains focused on mountain riding and trail, as an authentic outdoor lifestyle brand with more athletic and more versatile product design and innovation. In the third quarter, the brand accelerated its long-running market share gains in its core height category in the U.S., having taken share in 11 of the last 12 quarters, a category which encouragingly again improved sequentially to flat year over year. The Moab Speed II, which is becoming a force on the trail, and the world's number one hiker, the Moab III, both continue to drive growth at U.S. retail. The Agility Peak 5 drove strong growth in the trail running side. Looking ahead to the next spring, Merrill plans to introduce the new Agility Peak 6, combining plush Float Pro foam cushioning with aggressive Vibram MegaGrip traction. Merrill's lifestyle business grew strong double digits in the third quarter, driven by a strong ramp-up of its disruptive wrap collection, along with steady growth from the iconic easy-on-easy-off jungle mock at U.S. retail. In 2026, we anticipate the brand's lifestyle product pipeline will take a meaningful step forward. We're introducing trend right low profile silhouettes with the relay, modern iterations on the jungle mock, lifestyle materializations of the speed arc collection, and a consistent flow of energy enhancing collaborations. While we're further distancing ourselves from the competition hike, we know a significant global opportunity exists in outdoor inspired footwear, apparel, and accessories. In the third quarter, Merrill drove increases in brand interest and affinity, particularly with women, and the brand's key strategy continues to feed momentum for the brand around the world, as it has done for Saucony. Merrill's Urban Hike Guide activation, which included media, events, collabs, and influencers, drove brand heat in Paris and contributed to another quarter of solid growth in broader EMEA. Turning to Sweaty Betty, which outpaced our expectations in the third quarter, with revenue down 4% versus the prior year. The team is aligned around a clear strategy and is executing with a high level of conviction and increased confidence as we reinvigorate Sweaty Betty as one of the original activewear brands focused on empowering women through fitness and beyond. Our efforts started with reestablishing Sweaty Betty's premium brand positioning, which underpins our entire strategy. Bold and distinctive storytelling behind the Wear the Damn Shorts campaign in the second quarter and the Weather Whatever campaign last quarter have came to reinforce the brand's uniquely Sweaty Betty female-focused positioning. As a result, brand awareness and affinity continue to increase in the quarter, with noteworthy gains among younger consumers and more premium buyers. At the same time, gross margins expanded once again as the brand continues to strengthen both its product pipeline and positioning in the marketplace. Along with the improved business results, we're also making meaningful progress against the three killers of our brand's new strategy. First, we're delivering growth within our DTC business in Sweaty Betty's home market, with both e-commerce and stores growing in the third quarter. We started to elevate the brand's product line by introducing more newness, enabling a fresher offering with trend-right design and more thoughtful assortments, diversifying the brand's leadership in bottoms and expanding outerwear. This effort has produced some encouraging results, with pants and outerwear both up very strong double digits across our DTC business in the quarter. Within our digital channels, we remain focused on enhancing the consumer experience. One example is the new Sweaty Betty app, which we launched last quarter, where consumers are converting at a higher rate and spending more per transaction. In brick and mortar, we've taken action over the past few months to further optimize our retail footprint, relocating three stores, opening one new store, and closing a store. The new locations are performing well, and before the year is done, we plan to open five more new stores. Second, we're making early progress in expanding distribution in certain key markets. We've launched a brand-new partnership in China and opened a pop-up store in Shanghai, opened a second store with our partner in New Zealand, and developed plans to open additional stores in Australia and India next year. In the third quarter, the brand's international third-party business was up meaningfully, along with the email wholesale business, albeit both still on small basis. Third, we're resetting our U.S. operations, focused on a full-price, more premium online GDC business. We anticipate this transition will take some time and put some pressure on the brand's global growth numbers in the near term, but we believe it's necessary. This pivot is in motion, with the business mix already shifting to more full-price premium selling. We're making progress in resetting the overall sweaty-butty business, And we believe the brand product marketing team are strong. We've seen improvement in year over year top line trends and expect this to continue in the brand's critical final quarter of the year. And now finishing with Wolverine, which was down 8% in the quarter with a broader work group down 3%. Wolverine's performance remains inconsistent. Our return to running a better brand and business is taking longer than we initially anticipated. This said, we believe we have diagnosed the challenges. and effectively using our proven playbook and return the brand to steady growth in the future. The addition of Justin cups to the team is a win for the company. And I anticipate they'll accelerate the need to progress here. We're already well on the way to strengthen Wolverine's product pipeline, enabling more thoughtful segmentation, the marketplace and bolstering Chen right products and premium price point offerings with collections like the rancher pro the USA built workshop wedge and the all new infinity system, the brand's pinnacle expression of its performance comfort technology. Wolverine is in the process of amplifying its storytelling as well. The brand is partnering with country music star Jordan Davis this year on a variety of activations, featuring both in-line and dedicated products. I'm excited to announce this morning that Wolverine will be an exclusive presenting partner for season two of the Paramount Plus series Landman, with a premiere in just a couple of weeks on November 16th. Both of these partnerships align well with the Wolverine's brand and extend its reach significantly with consumers. As the product and marketing improvements begin to take root, we plan to focus on recalibrating the marketplace, better balancing inventories and aligned distribution with the brand's category leadership role, more premium positioning, and go-forward strategy. More to come on this as we enter the new year. I'd like to hand it over to Taryn Miller to take you through our third quarter results and outlook for the remainder of 2025 in greater detail. Taryn?