Wolverine World Wide Q4 2025 Earnings Report

Wolverine World Wide EPS Results

• Actual EPS: $0.45
• Consensus EPS: $0.44
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.40

Wolverine World Wide Revenue Results

• Actual Revenue: $517.50 million
• Expected Revenue: $510.49 million
• Beat/Miss: Beat by +$7.01 million
• YoY Revenue Growth: +4.60%

Wolverine World Wide Announcement Details

• Quarter: Q4 2025
• Date: 2/26/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, February 26, 2026
• Conference Call Time: 8:30AM ET

Wolverine World Wide (NYSE:WWW) is a global designer, manufacturer, marketer and licensor of branded footwear, apparel and accessories. The company serves consumers through a portfolio of outdoor, athletic, lifestyle and work-oriented brands, with products sold through wholesale accounts, company-owned and third-party retail locations, and e-commerce channels.

Its principal brands include Merrell, which focuses on outdoor and trail footwear and apparel; Saucony, an athletic running and performance brand; Wolverine, known for work and lifestyle footwear; Chaco, which offers outdoor sandals and footwear; Sweaty Betty, a women’s activewear brand; and Bates, a provider of uniform and duty footwear. The company also maintains licensed footwear businesses associated with selected lifestyle and work brands.

Founded in 1883 and headquartered in Rockford, Michigan, Wolverine Worldwide sells its products in North America and international markets. The company has periodically reshaped its brand portfolio to concentrate on its core businesses. Chris Hufnagel serves as president and chief executive officer.

Wolverine World Wide Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Saucony delivered a record year (Q4 +24%) and the company expects it to grow in the low‑to‑mid teens in 2026, led by the strong debut of the Endorphin Azura (demand ahead of forecast), core‑franchise refreshes, and the brand’s largest annual marketing investment.
• Positive Sentiment: Wolverine reported FY2025 revenue of $1.874B (+7%) and adjusted EPS of $1.35 (up 53%), with ~300 bps gross‑margin expansion and $126M operating free cash flow that reduced net debt by $81M to $415M.
• Neutral Sentiment: Brand dynamics were mixed but improving — Merrell grew mid‑single digits with DTC momentum and new product launches, Sweaty Betty showed sequential improvement in the U.K./EMEA while the U.S. is being reset, and Wolverine is still down but showing product/marketing progress and is expected to be roughly flat in 2026.
• Negative Sentiment: Management flagged material trade‑policy headwinds for 2026 — an estimated unmitigated tariff impact of ~$60M (roughly +$50M vs. 2025) that contributes to guidance for gross margin of ~46% (down ~130 bps); the company plans pricing, cost and mix mitigation but expects tariff effects to become more pronounced later in the year.

Presentation

[Operator]

Greetings, welcome to the Wolverine World Wide Fourth 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 would like to ask a question, please press star and the number 1 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jared Filippone, Head of Investor Relations. You may begin.

[Jared Filippone, Head of Investor Relations at Wolverine World Wide]

Good morning, welcome to our fourth quarter fiscal 2025 conference call. On the call today are Chris Hufnagel, 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 fourth quarter and full year 2025, and guidance for fiscal year 2026. 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 and constant currency revenue growth rates, 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.

[Jared Filippone, Head of Investor Relations at Wolverine World Wide]

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 2026, 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. All revenue growth rates will be cited on a constant currency basis, unless otherwise stated. With that, I will now turn the call over to Chris Hufnagel.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Thanks, Jared. Good morning, everyone, and thank you for joining us on today's call. The fourth quarter marked the conclusion of a good year for Wolverine World Wide. We made substantial progress in advancing our strategy and further transforming the company while delivering solid financial results in the process. We delivered high-quality revenue growth in line with our value creation model, led by Merrell and Saucony, our two biggest brands. Merrell drove high single-digit growth for the year, while Saucony posted a record year with a 30% increase compared to 2024. I'm pleased with how our global teams navigated a turbulent year, executed our strategy with pace and distinction, and delivered top and bottom-line results that exceeded our expectations, highlighted by annual adjusted earnings per share up over 50% compared to the prior year, and further progress in strengthening our balance sheet.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

As we turn the page to the new year, I believe our brands, company, and team are better and stronger. Brand awareness and affinity are turning positively for Merrell, Saucony, Sweaty Betty, and Wolverine. We've taken market share in important categories. We've made encouraging progress in our DTC business, and we have well-defined plans in motion to again deliver mid-single-digit top-line growth, supported by our current order book, while continuing to expand profitability in the year ahead. Even with tariffs, and as we continue to responsibly invest in product innovation, demand creation, and modern tools and capabilities to drive the business this year and into the future. I want to start this call with an update on our biggest brands, their recent progress, and their plans for this year. Beginning with Merrell.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Merrell remains focused on modernizing the outside, developing more athletic, style-led, versatile performance and lifestyle footwear while elevating the brand around the world. In the fourth quarter, Merrell grew revenue 5% with balanced growth across regions and channels. Notably, DTC inflicted the growth with revenue up mid-single digits, even as we were less promotional in stores and online. The brand once again took market share in the U.S. hike category. Underpinning these results, we saw increases across key brand health metrics to finish the year, a positive indicator for the work we're doing to build better brands. Merrell's key performance franchise, the Moab Speed 2, nearly doubled sell-through year-over-year at U.S. Retail in the quarter, while the Moab 3 also continued to deliver solid growth. The Agility Peak 5 contributed good growth in trail running as well.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Similar to key performance franchises, the brand's latest expression of versatile lifestyle footwear, the Wrapt collection, continued to grow rapidly, with the iconic Jungle Moc also delivering solid growth. In 2026, Merrell plans to deliver newness across its key performance and lifestyle franchises, including fresh colors and materials, seasonal energy drops, and new styles to bolster the collections. Just a few weeks ago, the brand launched the new Agility Peak 6, delivering better fit, stability, and traction within the trail run category. Early sales are tracking very well relative to our expectations. Merrell also expects to introduce the new SpeedARC Peak later this summer, leveraging the brand's highly innovative and visually disruptive SpeedARC technology to further strengthen its trail run offerings.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

With positive momentum and a strong product pipeline, Merrell's entering the new year with an enhanced marketing strategy and demand creation plan for record investment to further elevate the brand. Next week, the team anticipates launching a new global platform, unifying its storytelling under one umbrella and advancing the brand's powerful purpose: to share the simple power of the outside with everyone. To entrench the brand's role in outdoor performance footwear, Merrell has secured title sponsorships of the Skyrunner World Series and Skyrunner National Series in the US, encompassing more than 20 of the most elite trail running races globally. In addition, the brand plans to build on its key city strategy in Tokyo and Paris, adding London and New York, with a focused blend of integrated events, activations, and retail presentations.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Merrell celebrates its 45th anniversary in 2026, and we expect this to be a milestone year for the brand. Shifting to Saucony. Saucony is uniquely positioned as a disruptive challenger brand at the intersection of the 2 of the fastest-growing categories in the market: performance and lifestyle running. To conclude the brand's record year in 2025, Saucony drove broad-based revenue growth across categories, regions, and channels, a total increase of 24% in the fourth quarter. Performance, the majority of the brand's business, was up over 20%, with lifestyle growing even faster. In the biggest quarter for DTC, the channel grew mid-teens. Importantly, Saucony saw further increases across brand health metrics, especially with runners. The brand continues to lead with pinnacle innovation with an Endorphin collection for elite runners, which again drove strong growth year-over-year at US Retail in the quarter.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

The brand's core four franchises, the Ride, Guide, Hurricane, and Triumph, aimed squarely at the broader casual running opportunity, continue to contribute good growth as well. On the lifestyle side, Saucony continues to inject energy into the brand around the world. This past fall, the brand launched collaborations with Jae Tips and Engineered Garments, among others. In December, Saucony partnered with culture-shaping powerhouse, Westside Gunn, an influential retailer, Kith, to release a very special collaboration at Art Basel. The drop, featuring the Pro Grid Triumph 4, garnered global attention and drove record traffic to saucony.com and sold out in minutes. The brand continues to have a voice in the cultural discourse, in addition to innovating in performance running, and has strong plans in place once again for 2026.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

This year, Saucony expects to deliver new iterations for each of its core 4 franchises, starting with the Ride 19 launch last month, which has immediately become a top seller on saucony.com. With this year's updates, the Triumph 24 and Hurricane 26 are both slated to get new proprietary Incredilux foam, a high-end compound that delivers a luxurious ride with enhanced energy return, cushioning, and durability. Just 25 days ago, Saucony brought to market what we expect to be its biggest debut launch of all time to date, the all-new Endorphin Azura, fueled by a fully integrated global activation plan. The Azura is a lightweight super trainer with innovative geometry and advanced energy return foam to help the runner go fast every day, and delivers all this innovation for $150.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

The shoe represents a meaningful incremental opportunity for the brand and has been highly anticipated and well-received by the market and consumers. At this early stage, demand at saucony.com is already far ahead of forecast, and sell-through at retail, both here and abroad, has been exceptionally strong. On the lifestyle front, the Pro Grid Omni 9, Ride Millennium, and other key silhouettes are planned to see fresh colorways and materializations this year. The brand once again anticipates an impactful lineup of collaborations, including additional drops with Westside Gunn, Misses New York, Engineered Garments, and others. In addition, Saucony anticipates reintroducing archive styles like the Grid Paramount, Kinvara 1, and Gripper at Tier Zero retail to continue to drive newness and influence at the very top of the distribution pyramid.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

To capitalize on the momentum we've built, we plan to step up Saucony's brand-building efforts in 2026, making our largest annual marketing investment ever in the brand. Saucony plans to continue to sponsor key events like the London 10K, the Shoreditch Half Marathon, the Eiffel Tower 10K, and new this year, the Berlin 10K. Coming stateside with the Love Run Philadelphia Half Marathon in March, as well as organize its own events like The Maze, a series of exclusive run club races with recent installments in Seoul, New York City, and London. In addition, the brand anticipates expanding its key city strategy from Tokyo and London into Paris, with continued events and activations and the planned opening of a new pioneer store in Paris later this year.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

While we're investing in growing awareness and fueling brand heat, we continue to strengthen the brand's ground game as well, driving sell-through with point-of-sale and co-op activations and enhanced field support. Saucony possesses a significant global opportunity and continues to see momentum around the world. The brand has been able to marry performance and culture in a unique and compelling way, and we expect another year of double-digit growth in 2026. I now like to spend a few minutes on Sweaty Betty and Wolverine, two brands that gained traction as we closed the year. Starting with Sweaty Betty. The brand is focused on solidifying its positioning as one of the original activewear brands centered around empowering women through fitness and beyond. The brand drove mid-single-digit revenue growth in the fourth quarter, completing a full year of quarterly sequential improvement in year-over-year revenue performance.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

2025 was a pivotal year for Sweaty Betty as we reset the brand strategy. Encouragingly, the brand has built momentum in the UK, enhancing our product offering with more newness and driving the acceleration of DTC growth in the critical fourth quarter. We also made progress on expanding the brand's distribution outside of the UK with priority retailers and partners across Europe and into Asia Pacific. Importantly, we successfully strengthened the brand in its positioning, seeing meaningful gains in the fourth quarter across key brand health metrics, especially with younger consumers, the 5th consecutive quarter of improvement. Looking ahead to 2026, Sweaty Betty's product line continues to get stronger, powered by increased newness, better category diversification in outerwear and new bottom silhouettes, and a more focused strategy to go to market with greater impact.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

The brand storytelling continues to become bolder and more distinctly Sweaty Betty as well, in part with the launch of its new Born Sweaty campaign just last week. Finally, the brand is making good progress in evolving its global distribution footprint to scale more effectively and more efficiently over time. As a result, Sweaty Betty is well positioned to build on momentum in its home market, and it's seeing early benefits of expanding its international partnerships. While the US reset that we initiated in the third quarter of last year remains a near-term headwind as the brand establishes a healthier foundation for future growth. Finally, closing with our namesake brand, Wolverine. The Wolverine brand finished the year a little better than we anticipated entering the fourth quarter, down approximately 11%. As we shared in November, the brand's performance has taken longer than anticipated to turn around.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

However, I believe we diagnosed the challenges and appointed the right leadership to effectively run a better brand and business moving forward. I'm encouraged by both the progress we've made recently and the barely early results we are beginning to see in the marketplace. The product pipeline, which candidly had become tired, has improved. The team focused on developing more trend-right silhouettes to resonate with evolving consumer preferences, boosting innovation to strengthen more premium product offerings, and architecting better segmentation in the marketplace. The Rancher collection, with the Rancher Pro at a premium price point, has enabled the brand to capture opportunity in the important Western work category and drove significant growth at U.S. Retail in Q4. The Infinity System, the brand's pinnacle expression of its performance comfort technology, launched mid-year and performed well in the back half of the year.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

As a result of both new innovation and newfound strength in core offerings, the brand began to take back market share and work boots in the fourth quarter, our strongest quarter of share gains in nearly 5 years. In 2026, the team plans to build on this momentum, bolstering the brand's premium assortment further with the Loader franchise, extend its Western work offering into lifestyle with the new Wheatland collection, and expand its Infinity System technology with new iterations of the Alpha Infinity. Wolverine is stepping up its demand creation as well, investing up and down the marketing funnel. To expand reach, the brand partnered with country music star Jordan Davis throughout 2025 and was an exclusive presenting partner for Season 2 of Paramount+'s hit series, Landman. Partnership helped deliver tens of millions of impressions for the brand and drove new consumers to wolverine.com.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

The brand also enhanced its presence in social media. We're actively collaborating with influencers to support programs like the launch of the Infinity System and Landman, and has initiated a host of additional in-store Landman activations with key retailers. Encouragingly, the brand saw increases across key brand health metrics to close the year. With the product beginning to check and marketing efforts amplified, Wolverine's focus is now on recalibrating the marketplace, balancing inventories at retail and better aligning distribution to the brand's more premium leadership positioning. We expect this recalibration will take a couple of quarters, but we're seeing good progress as we enter the new year and anticipate Wolverine will deliver flat revenue in 2026 compared to 2025.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

I'd like to hand the call over to Taryn Miller to take you through our results for the fourth quarter and full year, along with our outlook for 2026 in more detail before I provide some key takeaways to close our prepared remarks. Taryn?

[Taryn Miller, CFO at Wolverine World Wide]

Thank you, Chris, and welcome everyone. In 2025, we executed our strategy by advancing our product pipeline, accelerating marketing activation, and strengthening operations to support profitable growth. We delivered revenue growth, expanded margins, and further strengthened the balance sheet while navigating a dynamic trade policy environment. This performance reflects disciplined execution and positions us for sustained growth in 2026. I'll start today with our full year 2025 results, then cover fourth quarter performance, and conclude with our outlook for 2026. Fiscal 2025 revenue was $1.874 billion, an increase of 7% compared to 2024 on a reported basis. Revenue increased 6% on a constant currency basis as foreign currency provided a $14 million benefit. Additionally, the 53rd week contributed approximately 70 basis points to revenue growth, with the benefit largely concentrated in the DTC channel.

[Taryn Miller, CFO at Wolverine World Wide]

Gross margin was 47.3%, an increase of 300 basis points compared to the prior year, with the improvement largely driven by lower supply chain costs and a favorable mix shift towards more full price sales. The timing benefit from tariff mitigation efforts, net of higher tariff costs, provided a 50 basis point positive impact. Adjusted operating margin was 9%, an increase of 170 basis points compared to the prior year. Adjusted diluted earnings per share increased 53% to $1.35, compared to $0.88 in 2024. I'll now take you through the highlights from our fourth quarter. Revenue was $517 million, above the $506 million midpoint of our guidance.

[Taryn Miller, CFO at Wolverine World Wide]

The over delivery was driven primarily by the Active Group, with the Work Group also performing slightly better than expectations. Reported revenue growth was 5% compared to the prior year, or 3% on a constant currency basis, with foreign currency providing an $8 million benefit. The following channel, segment, and brand performance is provided on a constant currency basis. Wholesale revenue increased 3% compared to the prior year, driven by international growth. While the US was approximately flat, as Wolverine and the broader Work Group continued their marketplace reset. DTC revenue increased 4% compared to the prior year, including the benefit of the 53rd week driven by the strength in EMEA and solid performance in the US at Merrell and Saucony.

[Taryn Miller, CFO at Wolverine World Wide]

Active Group revenue increased 10% in the fourth quarter, ahead of our guidance of high single-digit growth, while Work Group revenue declined 12% and was slightly better than expected. Merrell revenue increased 5% in the quarter, driven by strong wholesale performance in EMEA and in the US, supported by continued market share gains and its key city strategy. DTC returned to growth both in the US and internationally, following a successful holiday season. Saucony revenue increased 24% in the quarter, driven by strong growth in both the US and internationally. Double-digit wholesale growth was supported by continued positive sell-through at retail. DTC grew in mid-teens, and both performance and lifestyle categories delivered meaningful gains. Sweaty Betty revenue increased 5% in the quarter, driven by growth in EMEA, DTC, and wholesale.

[Taryn Miller, CFO at Wolverine World Wide]

Results were supported by product newness, strength in outerwear, expanded international wholesale distribution, and the benefit of a 53rd week, partially offset by the brand's ongoing reset of the US market to a more premium DTC business. Wolverine revenue declined 11% in the quarter, reflecting the ongoing US marketplace recalibration. Retail sell-through trends were encouraging and supported market share gains, underscoring the brand's building strength in its core boot category. Consolidated gross margin for the fourth quarter was 47%, an increase of 340 basis points compared to the prior year and 70 basis points above our expectations. The year-over-year improvement reflects continued product cost savings, a favorable mix shift toward more full price sales, and an 80 basis point timing benefit from our tariff mitigation efforts net of higher tariff costs.

[Taryn Miller, CFO at Wolverine World Wide]

Adjusted operating margin was 11%, an increase of 110 basis points compared to the prior year and 50 basis points above our expectations. The improvement was driven by a continued gross margin expansion, which more than offset strategic investments and higher incentive compensation. As a result, adjusted diluted earnings per share increased 13% to $0.45, compared to $0.40 in the prior year and exceeded our outlook of $0.39-$0.44. Turning to the balance sheet. In 2025, we built on the progress made over the past two years, delivering solid cash flow, further strengthening the balance sheet, and improving financial flexibility. Operating free cash flow in 2025 was $126 million, above the $90 million midpoint of our guidance, largely due to working capital timing.

[Taryn Miller, CFO at Wolverine World Wide]

Improved profitability and better-than-expected operating free cash flow enabled us to reduce net debt by $81 million in 2025, ending the year at $415 million. As a result, we exited the year with bank-defined leverage of 2 times. Approximately 90% of our gross debt is now comprised of senior notes maturing in 2029, providing us with a well-positioned and flexible maturity profile. During the fourth quarter, we opportunistically repurchased approximately $15 million of our common stock at an average price of $16.13. The repurchase was intended to offset dilution from stock-based compensation and had no impact on 2025 earnings per share. We ended the year with approximately $135 million remaining under our current share repurchase authorization.

[Taryn Miller, CFO at Wolverine World Wide]

Turning to our outlook for 2026, which is anchored in a focused strategy to sustain momentum in our largest brands, while continuing to drive more consistent performance across the rest of the portfolio. For full year 2026, revenue is expected to be in the range of $1.96 billion-$1.985 billion, representing reported growth of approximately 5.2% at the midpoint. This includes an estimated $14 million foreign currency benefit compared to the prior year. The absence of the 53rd week is expected to be an approximately 70 basis point headwind to revenue growth, with the impact largely concentrated in our DTC business. On a constant currency basis and excluding the 53rd week in 2025, we expect revenue to grow approximately 5.2% at the midpoint.

[Taryn Miller, CFO at Wolverine World Wide]

In terms of phasing for 2026, we expect revenue growth to be slightly more first half weighted, with the majority of the foreign currency benefit expected in the first quarter, while the fourth quarter comparison reflects the absence of the 53rd week that benefited 2025. The following segment and brand outlook is provided on a constant currency basis. Active Group revenue is expected to increase mid-single digits, and Work Group revenue is expected to be approximately flat. Merrell revenue is expected to increase mid-single digits, supported by new product launches, including the Agility Peak 6, refreshes across core franchises in modern colorways and materials, and disciplined marketing investments.

[Taryn Miller, CFO at Wolverine World Wide]

We also expect improved DTC performance, with the momentum generated in the fourth quarter carrying into the new year on a healthier foundation. Saucony is expected to drive outsized and broad-based growth in the low to mid-teens, with gains across both performance, which makes up the majority of the brand's revenue, and lifestyle. In performance, the recent Endorphin Azure launch and the planned refresh of all the four franchises in 2026, supported by continued marketing investment and ground game activations, are expected to drive global growth. Lifestyle growth is expected to be led by international markets, particularly in EMEA, where we are seeing healthy demand supported by key city activations. In the U.S., following expanded distribution, 2026 is focused on optimizing the footprint through sharper assortments and marketing to support full price sell-through and sustainable long-term growth.

[Taryn Miller, CFO at Wolverine World Wide]

Sweaty Betty revenue is expected to decline low single digits, with growth in its EMEA DTC business and expanding distribution in select international markets, more than offset by the absence of the fifty-third week and the ongoing transition of its U.S. business toward a more premium DTC model. Within the Work Group, Wolverine revenue is expected to be approximately flat, with performance anticipated to improve in the second half of the year as the brand continues to recalibrate the U.S. marketplace and the benefits of improved product and marketing builds throughout the year. Before turning to gross margin, I'll walk through the tariff assumptions underlying our outlook. Our 2026 guidance reflects the continuation of the tariff rates that went into effect in August 2025.

[Taryn Miller, CFO at Wolverine World Wide]

Based on that assumption, we now estimate the full year unmitigated impact from higher tariffs to be approximately $60 million, or an incremental $50 million versus 2025. Any tariff rate reduction would impact the second half of the year. If the recently announced 15% tariff rate were to be implemented and remain in place through the end of 2026, we estimate it would reduce the 2026 tariff impact by approximately $5 million-$7 million relative to our current guidance. We are closely monitoring recent trade policy developments. We will evaluate potential changes as clarity improves. Gross margin is expected to be approximately 46%, down 130 basis points compared to 2025.

[Taryn Miller, CFO at Wolverine World Wide]

The decline is being driven by higher tariff costs, an estimated 300 basis point unmitigated impact, partially offset by pricing and other mitigation actions, a favorable mix shift towards more full price sales and product cost savings. Adjusted operating margin is expected to be approximately 9.1%, up 10 basis points compared to last year, reflecting the impact of higher tariffs on gross margin that is anticipated to be more than offset by operating leverage from revenue growth, cost discipline across the organization, and continued efficiency improvements. We continue to make disciplined investments in our brands, primarily in marketing and key capabilities. Interest and other expenses are projected to be approximately $23 million, down from $28 million last year due to the reduction in net debt. The effective tax rate is projected to be approximately 18%.

[Taryn Miller, CFO at Wolverine World Wide]

As a result, adjusted diluted earnings per share is expected to be in the range of $1.35-$1.50, compared to $1.35 in 2025. We have not assumed any future share repurchases in our 2026 outlook. Operating free cash flow is expected to be in the range of $105 million-$120 million, with approximately $20 million of capital expenditures. Moving to our first quarter outlook. Revenue is expected to be in the range of $445 million-$450 million, representing reported growth of approximately 8.5% at the midpoint compared to the prior year.

[Taryn Miller, CFO at Wolverine World Wide]

On a constant currency basis, revenue is expected to increase 5.1% at the midpoint, with most of the full-year foreign currency impact anticipated to occur in the first quarter. Active Group revenue is expected to be up high single digits, and the Work Group is expected to be down mid-single digits compared to the prior year. Gross margin in the first quarter is expected to be approximately 47.5%, down 10 basis points compared to last year. This includes an approximate 260 basis point unmitigated tariff impact. First quarter gross margin is expected to be higher than the full year average, as Q1 typically benefits from favorable channel mix. As the year progresses, tariff impacts are expected to become more pronounced, while the year-over-year benefit from mitigation actions implemented in the second half of last year anticipated to moderate.

[Taryn Miller, CFO at Wolverine World Wide]

Adjusted operating margin is expected to be approximately 6.6%, an increase of 30 basis points compared to last year, as pricing, product cost savings, and SG&A leverage are anticipated to more than offset tariff headwinds. Adjusted diluted earnings per share is expected to be in the range of $0.20-$0.22, compared to $0.19 last year. In summary, 2025 was a year of meaningful progress. We delivered revenue growth, expanded margins, generated strong cash flow, and strengthened the balance sheet, while continuing to invest in our brand-building model and the capabilities that support consistent execution across the portfolio. We look ahead to 2026, we recognize the operating environment remains dynamic. While there is more work to do, our strategy is sound, our investment priorities are clear, and we enter the year from a stronger financial and operational foundation.

[Taryn Miller, CFO at Wolverine World Wide]

With that, let me turn the call back to Chris before we open it up for questions.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Thanks, Taryn. In the year ahead, we anticipate building upon the good work we've done to date and continue to transform the company to become great builders of global brands. We're focused squarely on building awesome products, obsessing over design to deliver innovative, trend-right performance and lifestyle products that help make our consumers' lives better. Telling amazing stories, amplifying marketing activations to raise our brand's awareness and deepen our emotional connections to consumers, and importantly, driving the business each and every day. I'm pleased the heavy lift of the turnaround is behind us with our transformation now well underway. Our balance sheet is stronger and our business is much healthier. Our streamlined portfolio, enabled by our platform of lean centers of excellence, is focused on brands rooted in authenticity, product innovation, and category leadership.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

We believe our brands are well aligned with long-term macro consumer trends at their core and uniquely positioned to extend into broader adjacent lifestyle opportunities. Our biggest brands are growing around the world, and Sweaty Betty and Wolverine are getting better each day. Finally, our teams are motivated, aligned, and squarely focused on our consumers in executing our brand-building model with pace and distinction, working together as One Wolverine to make every day better. I would like to close by expressing my sincere thanks to our teams around the world for their work last year, not only delivering solid financial results, but also building better brands and a better Wolverine Worldwide in the process. You've been great, and I'm excited to see what we can do together in the year ahead as we write the next chapter in our company's history.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

With that, thank you to all for taking the time to be with us this morning, and we're happy to take your questions. Operator?

[Operator]

At this time, if you would like to ask a question, press star, then the 1 on your telephone keypad. To withdraw your question, simply press star 1 again. We kindly ask that you limit yourself to 1 question and return to the queue for any follow-ups. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Jonathan Komp with Baird. Please go ahead.

[Jonathan Komp, Senior Research Analyst at Robert W. Baird]

Yeah. Hi, good morning. Thank you. I want to ask about the outlook for Saucony for the year. A very healthy growth projected again. Could you give a little more context specifically on the domestic business, you know, the drivers that you see across performance and lifestyle? If you could, any color on how distribution might play out year-over-year for the year, any color there? Just separately, you know, related, you know, unrelated question on tariffs. Are you changing any of your practices given the ruling with IEEPA tariffs? Are there scenarios that, you know, you accelerate any purchases or try to take advantage of lower rates here temporarily? Thank you.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Sure. Thanks, John. I'll tackle the Saucony question first, and then we can talk about tariffs at the end. Saucony remains, I think, a very compelling growth story in total. Following a record year in 2025, we're looking at low to mid-teen growth in 2026, and that growth is really broad-based, performance and lifestyle, domestic and international. Performance piece is a very encouraging part of that business, the biggest piece of the business. We just launched the Endorphin Azura, which we think is going to be the biggest debut launch in the history of the brand at this time, and we're refreshing the brand's core four franchises, the Ride, Guide, Triumph, and Hurricane. The Ride just launched, and it's well ahead of our expectations out of the gate.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

We're coupling a very strong product pipeline with a record year of investments, going after our key city strategy and doubling down, because that has proved very beneficial around the world. Sponsoring events, the London 10K, the Shoreditch Half Marathon, the Eiffel Tower 10K, adding the Berlin 10K, and then bringing it stateside with the Philadelphia Love Half Marathon, and then our own events, like The Maze. Going further with the Run as One campaign, and then importantly, investing in the ground game, in POS and activation at retail, so we can do better on the sales floor where consumers are engaging in the business. On the lifestyle side, it's a strategically important piece of the business, but smaller than the performance piece in total, and going to grow this year.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

After a very good year last year, domestically, we gained 130, 140 basis points of market share in lifestyle in the U.S. respectively. We remain encouraged by that. Key styles are the ProGrid Omni 9, the Ride Millennium, and then importantly, a really strong cadence of collaborations again this year. Westside Gunn, Minted New York, Engineered Garments, and they're really targeting that Tier Zero account base, which we've had success with. Regional strength, I think it's important to note, you know, it's not just a U.S. story. Very strong growth in EMEA. Pleased with how we're doing in China, and Asia Pacific as well. Encouraging trends relative to our DTC business.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

I think in total, if you're looking to evaluate the Saucony story, you have to look beyond a category or a channel and look at the global growth we're trying to drive at a sustainable level, and I think we are pleased with the progress. As it relates to your question about the domestic business, the lifestyle piece, like I noted, is a smaller piece of the business, albeit important. We expect lifestyle to drive growth internationally this year, and it's expected to grow faster than the performance piece of the business. There's been a lot of attention paid to that US athletic specialty channel, which we talked about on the last call.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

We anticipate doors this year, while it'll be down to second half of 25, will be flat from the first half of this year to the second half of this year, as we've taken the learnings from that rollout and applied them going forward. I think in total, we remain bullish on the Saucony prospects. Obviously, very pleased with an all-time record year last year, and then to be able to guide to low- to mid-teens growth this year and to see that growth really broad-based. There's not one category, one channel driving the growth. It really is across the board. Very optimistic about the Saucony brand, what we can go do.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

I still maintain, I think there's a great global potential for that business to be a very big, powerful player in the category and certainly very meaningful to Wolverine World Wide in total. As it relates to tariffs, I'll let Taryn talk a little bit about that, but obviously, it remains a very fluid situation. Obviously, with the Supreme Court decision late last week, and then the news out of the administration at the end of last week and then this week, we continue to monitor it. I'm very pleased with how we reacted to tariffs coming out of Liberation Day last year. I think the muscle we built in the turnaround, how we worked to be nimble and agile and work collectively together as One Wolverine helped us navigate a very turbulent year last year.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

I'm really pleased with the work that we did across the organization, the brands, the corporate centers, our global supply chain, and how we navigated that. I think we will continue that forward into this year as well. We're staying very close to it. We're trying to glean as many insights as we can on a daily basis and then work to move the organization appropriately to make sure we can both protect and deliver consistent results for the shareholders.

[Taryn Miller, CFO at Wolverine World Wide]

John, as Chris noted, the tariff environment does remain dynamic, but our mitigation strategy, which you asked about, is unchanged, and it builds on the actions that we began in 2025 and that we're advancing further in 2026 as it relates to the pricing actions, the product cost savings, the focus on that full price discipline and discretionary savings. Our mitigation strategy is unchanged. Specifically, to your question about any planned acceleration of inventory, I would say, given the recent change to the 15%, the incremental tariff that was communicated, not implemented yet, and the continued policy uncertainty, we aren't planning any material changes to our normal inventory receipts at this time.

[Jonathan Komp, Senior Research Analyst at Robert W. Baird]

That's all very helpful. Thank you.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Thank you, John.

[Operator]

Your next question comes from the line of Mitch Kummetz with Seaport Research. Please go ahead.

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

Yes, thanks for taking my questions. Chris, on Saucony, the plan for 2026 US lifestyle, it wasn't clear to me in your response to Jonathan's question if you expect US lifestyle to be up for the year. I know you talked about the door count, which is helpful. I'm curious what you're seeing kind of in those go-forward doors that you added last year that you are, you know, continuing to sell into. Are you seeing growth there? How are you seeing that? Are they taking more product? Are they taking a broader assortment? I do have a follow-up.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Yeah, sure. Thanks, Mitch. Yeah, I think we continue to see strength in U.S. lifestyle around the lifestyle assortment that we have. Again, the majority of doors that we opened over the past couple of years, those doors have checked and met expectations. A subset didn't, and we are working quickly to rationalize those doors to make sure that the learnings that we've taken, we can apply to go-forward doors, and build a base from which to grow again. U.S. lifestyle globally will be up for the brand this year, and we anticipate it being up for this year.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

US lifestyle will contract this year, just based on lapping that door count. We view that as a one-year lapping that door expansion, and then moving forward and building a healthier base going forward.

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

You mentioned some things happening at sort of Tier Zero accounts. I'm curious, you mentioned some franchises, so I wasn't clear to me what those were. Look, when you think about your lifestyle business, sort of Retro Tech versus classics, are you seeing, like, at the Tier Zero level, are you seeing more momentum in one or the other? If there is potentially, like, an uptick in classics, does that, you know, does that mean much in terms of kind of eventually that translating to more kind of mainstream lifestyle accounts?

[Chris Hufnagel, President and CEO at Wolverine World Wide]

That's a great question. I appreciate you asking about fashion and trend because that is really what we're competing in this piece of the Saucony business. Retro Tech remains healthy. I think 3 of the top 5 styles in the fourth quarter were Retro Tech styles, and I think 4 of the top 5 growth styles in the fourth quarter were Retro Tech styles. It remains a healthy piece of the business. At the same time, we're gaining share in that category, up over 100 basis points in both. I think we are thinking about where the world moves next and then the diversification of the product line.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

I'll be very honest, I'm really lucky that Saucony is a 100-plus-year-old brand that has an amazing archive from which to pull from to react to trends. Not all brands have that privilege, we do. We are trying to bring newness and diversification to the line. I think Tier Zero, those great retailers, those trendsetters that edit and curate where the world moves, you know, they're thinking about what is next and what can be next, and we're showing them other products from the archive that are certainly resonating with them. It doesn't mean that the big commercial opportunity in Retro Tech is over... because we're still capitalizing on that.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

At the same time, we have to make sure that we stay in tune to where trend and fashion is going and out in front of those retailers, and importantly, the very influential customers they serve.

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

That's helpful. Thanks.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

I'm getting choked up, eh?

[Operator]

Your next question comes from the line of Peter McGoldrick with Stifel. Please go ahead.

[Peter McGoldrick, Vice President, Equity Research at Stifel]

Hi, good morning. Thanks for taking my question. I was curious if you can help us think about the makeup of revenue growth in 2026. It's really encouraging to see the improvement in DTC. Can you quantify what's embedded in your DTC outlook and the pace of direct consumer engagement across your brand portfolio?

[Taryn Miller, CFO at Wolverine World Wide]

As regards to DTC, you know, we talked about the improvements that we saw in the fourth quarter, as that has been a focus in terms of improving the performance in the holiday season, and encouraged by the improvement we saw in that fourth quarter. Looking into 2026, we didn't give specifics in terms of DTC versus wholesale, but I would say that, you know, we would expect growth, in both DTC and wholesale contributing to the business.

[Peter McGoldrick, Vice President, Equity Research at Stifel]

Could you give any color across the brands, is it Merrell or Saucony leading that, any outsized performance relative to the brand guidance that you represented for 2026?

[Taryn Miller, CFO at Wolverine World Wide]

I wouldn't call any specific brand out. I mean, the approach that our team is taking, you know, Chris talked about how we're looking across the portfolio when we're building out capabilities, and the team came together and demonstrated that in the fourth quarter, looking into the holiday, in terms of what were the learnings that we're applying, whether it's Saucony, whether it's Merrell, whether it's Sweaty Betty, or the Work Group. We have a healthier foundation in total across the business. As I look at DTC, the only thing I would call out is DTC in the fourth quarter of 2026 will have an absence of a 53rd week.

[Taryn Miller, CFO at Wolverine World Wide]

As I said in my prepared remarks, the 53rd week does have a bigger impact on DTC, given just the nature of that business model of always on when you think of e-commerce and in the stores.

[Peter McGoldrick, Vice President, Equity Research at Stifel]

Okay, very helpful. Thank you.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Thanks, Peter.

[Operator]

Your next question comes from the line of Anna Andreeva with Piper Sandler. Please go ahead.

[Anna Andreeva, Managing Director and Senior Research Analyst at Piper Sandler]

Great. Thank you so much for taking our question. Nice results. To Taryn, on the guide for 2026. You guys have been in investment mode for, I guess a good portion of 2 years now. Can you break down the sources of leverage implied in the 2026 guide? How should we think about marketing within that? I think you mentioned a marketing campaign at Saucony coming up. Can you just talk about the durability of SG&A leverage in the context of your longer term margins? Chris, sorry if we missed this, on Sweaty Betty growing mid-single digits in 4Q, how did the business perform in the core markets in the U.S. and U.K.? I think you said still in the reset mode in the U.S.

[Anna Andreeva, Managing Director and Senior Research Analyst at Piper Sandler]

Maybe talk about specific initiatives to return the brand to stabilization and then growth. Thank you so much.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Sure. Sure, I'll go first, and answer the Sweaty Betty question, and then have Taryn talk to you about investment and leverage. I think we're pleased with Sweaty Betty's performance in the fourth quarter. You know, we the business. Again, I think the important thing is how we've redefined and reset that strategy, really focusing on the home market. I think that the business checked in the fourth quarter, we're pleased, less promotional. I think the messaging is resonating. We're seeing increases in brand health metrics, and then importantly, we're seeing new category diversification working well for that brand. Outerwear, new bottom silhouettes are certainly encouraging.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

In the UK, which is a fairly tough trading environment right now, and certainly a fiercely competitive category in which that team operates. Pleased with the product pipeline, pleased with the DTC performance, pleased that the heavy lift of the integration is now behind us, and that team is really laser-focused. I think this year, moving forward, I spent time with the team just a couple of weeks ago reviewing product and marketing, and I think that they are very well lined up and situated really well for this year, both on the product piece, but it's really getting back to sort of their distinctive voice, this sort of distinctly Sweaty Betty, this rebellious roots.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

I think that Born Sweaty campaign is a perfect amplification and manifestation of that approach. In the U.S., frankly, you know, after the acquisition, we became very promotional, and it was really damaging to the brand in total, and we didn't have the financial wherewithal to make all of the needed investments around the world that were planned. We're, we've worked to sort of reset and retrench that U.S. business, becoming less promotional, becoming more full price, becoming more premium, and thinking about that in the longer term. We're coupling that reset in the U.S. with doubling down on the U.K. business and then plugging Sweaty Betty into our international business and really beginning to grow across EMEA and in Asia Pacific.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

I'm really pleased with the progress that team has made. I'm very happy with the strategy and certainly the results in the fourth quarter and how we're thinking about 2026, give me increased confidence about that brand and what it can mean to the portfolio.

[Taryn Miller, CFO at Wolverine World Wide]

Anna, for SG&A, the leverage that we're guiding to in 2026 really reflects the work we've been doing as part of our broader strategy, which is making those targeted investments that we've talked about the last 2 years in our brands and in our key capabilities to support growth. While we've been making those investments, we've also been continuing to drive efficiencies across the rest of the organization. More specifically, a meaningful portion of the leverage comes from scale efficiencies on that higher revenue base. As we've made those investments in the brand and in those capabilities of growing the revenue, we're getting scale efficiencies there. The leverage from that, from the majority, where we're seeing the leverage is across the majority of our cost structure outside of those 4 brand-building investments.

[Taryn Miller, CFO at Wolverine World Wide]

It's not just one area, it's been broad-based as we've been looking for those efficiencies in the business. We're also benefiting from the targeted cost actions that we took in 2025, that we brought and carried into 2026 on a structural basis. I think how I would summarize it is that SG&A leverage in 2026 is driven by a combination of the scale efficiencies and the targeted cost actions that we've been taking over the last two years, that we had called out that it would be key to our value creation model. The final point regarding your specific question on marketing, we have made over the last couple of years, needed investments into marketing and building that brand awareness, building out the brand building model.

[Taryn Miller, CFO at Wolverine World Wide]

I would expect in 2026 that it would remain fairly consistent, as a % of revenue, as where it was in 2025.

[Anna Andreeva, Managing Director and Senior Research Analyst at Piper Sandler]

Appreciate it. Very helpful, and best of luck, guys.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Thanks, Anna.

[Operator]

Your next question comes from the line of Mauricio Serna with UBS. Please go ahead.

[Mauricio Serna, Equity Research Analyst at UBS]

Great. Thank you. Thanks for taking my questions, and congratulations on the results. First question on the Endorphin Azura. Maybe could you elaborate on, a little bit more on what gives you confidence about, you know, this franchise long-term opportunities? Do you think it could drive more distribution over time? The second point more, you know, to Taryn, maybe could you talk a little bit more about the cadence of the tariff impact on gross margin? I think you alluded to, you know, more meaningful impact or bigger impact as the year progressed. I just want to understand, like, in terms of, like, cadence, like, which quarter should be the most impacted and so forth. Thank you so much.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Sure. Thanks, Mauricio. We're bullish on the Azura. I think the team did a very nice job identifying an opportunity in the marketplace, and then importantly, building a beautiful product that performs. It was really well anticipated by the marketplace, given everything that we had built into it, and all of the initial reaction to it. I think we're even more encouraged by the initial response to it. It's important, it's not just a domestic response, but we're hearing feedback both domestically and globally. Ahead of expectations, a good launch at saucony.com, beginning to feed into retail here in the U.S., and we're encouraged by that.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

I love the fact that we've, as Saucony, a leader in innovation and bringing elite products to elite runners, our ability to take innovation and democratize that, and identify white space in the marketplace, and then build a beautiful shoe at a $150 price point, is a testament to that product team, and certainly the opportunity we think that it possesses in the marketplace. I do think it opens up additional distribution for us, you know, places that we may not have great exposure to today. Pleased with the Azura. Again, we anticipate it to be the single biggest debut launch in the history of the brand, to date, because we're going to try to do it again.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Certainly pleased initially out of the gate, with Azura and what it can mean to the Endorphin franchise and the broader Saucony brand.

[Taryn Miller, CFO at Wolverine World Wide]

To the tariff question and the phasing of that, based on our guidance of approximately $60 million of full-year unmitigated impact, we would expect more of that already coming through in the first quarter, reflected in the guide, that in the first quarter, we said it would be unmitigated around 260 basis point impact to gross margins, and on the full year, around 300. That indicates that the unmitigated impact will start to come through more in the second quarter and into the back half of the year. The reason Q1 is a little lower than the average is primarily related to the composition of the inventory that's flowing through the P&L in the quarter, and that includes some differences in brand mix and sourcing mix as well.

[Taryn Miller, CFO at Wolverine World Wide]

Somewhat, to somewhat degree, as you'll recall, there were different tariff rates last year, too. Why Q1 is lower is more, somewhat lower, is a combination of that brand mix and sourcing mix.

[Mauricio Serna, Equity Research Analyst at UBS]

Got it. Is it fair to assume that it goes all the way to Q4 of this year, the tariff impact?

[Taryn Miller, CFO at Wolverine World Wide]

Yes.

[Mauricio Serna, Equity Research Analyst at UBS]

Thank you.

[Taryn Miller, CFO at Wolverine World Wide]

The $60 million.

[Mauricio Serna, Equity Research Analyst at UBS]

Yeah.

[Taryn Miller, CFO at Wolverine World Wide]

Like I said, being that 300 basis point impact, we have assumed it through the end of the year.

[Mauricio Serna, Equity Research Analyst at UBS]

Great. Thank you so much.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Thanks, Mauricio.

[Operator]

Your next question comes from the line of Laurent Vasilescu with BNP. Please go ahead.

[Laurent Vasilescu, Managing Director and Senior Equity Analyst at BNP Paribas Exane]

Good morning. Thank you very much for taking my question. I wanted to follow up on Saucony. On the last call, it was mentioned that new doors was a third of Saucony's third quarter growth. Curious to know how much it was for 4Q. Then slide 9, it details your global distribution network, but it, this quarter, it removed a list of key accounts like DTLR, Foot Locker, JD, which was detailed in the 3 key slides. Curious to know, you know, why was that the case? Are there any accounts, Chris, that you are actually exiting for FY 2026? Then I've got a question following up, Taryn, on the FIFO accounting treatment.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Can you repeat the second half of I got a little lost on the first part of your, the door count question?

[Laurent Vasilescu, Managing Director and Senior Equity Analyst at BNP Paribas Exane]

Sure, sure, Chris. For sure, 4Q, what, like, what was the like for like? The second question really was around the fact that, you know, your slide nine, in your presentation this morning, it used to give you the list of, like, a key account, and it doesn't show it. I'm curious to know, of that 1,300 doors, are you exiting out any of those accounts? Just if you can, for the audience, can quantify, is it, like, 300 doors, is it 400 doors you're exiting out? That would be very helpful. Thank you, Chris.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

We anticipate for U.S. Saucony Lifestyle to be in about 1,000 doors in the first half of 2026 and the second half of 2026. The retailers that make up those door counts include the likes of JD, DTLR, Foot Locker, Champs, Journeys, Nice. That is that expansion, and how we're thinking about those door counts, specifically.

[Laurent Vasilescu, Managing Director and Senior Equity Analyst at BNP Paribas Exane]

Wonderful. Thank you, Chris, for answering the question. Appreciate it. Then, Taryn, your 3Q 10-Q shows that 3Q EPS was boosted by $0.02 or about 7%, with the FIFO accounting change, which helped your gross margin, I think about almost 50 bits. Curious to know how much the FIFO change helps your 4Q gross margin and EPS, and how do we think about that change in accounting, as we think about, you know, 1Q, 2Q? Because I would think, you know, when you change to FIFO, it's helpful in an inflationary environment with tariffs. Thank you very much.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Thanks, Laurent.

[Taryn Miller, CFO at Wolverine World Wide]

Yeah, Laurent. You'll recall that we made the change in the third quarter.

[Laurent Vasilescu, Managing Director and Senior Equity Analyst at BNP Paribas Exane]

Yep.

[Taryn Miller, CFO at Wolverine World Wide]

The majority of our inventory was already on FIFO accounting. Actually, earlier in the year, we had had part of when we were looking at how do we simplify, how do we more standardize when we look for efficiencies, part of it was related to the inventory accounting in terms of why did we have it two ways. There was an effort to put the minority of the business in line with the majority of it to move to FIFO, which we did in the third quarter. What is displayed in the tables, and Jared can expand, is just an explanation of if we had not done it. I think what's important to call out is that in the guidance that we gave in November, we had already made that accounting change and contemplated the impact.

[Jared Filippone, Head of Investor Relations at Wolverine World Wide]

Yeah, Laurent.

[Laurent Vasilescu, Managing Director and Senior Equity Analyst at BNP Paribas Exane]

How much?

[Jared Filippone, Head of Investor Relations at Wolverine World Wide]

Yeah.

[Laurent Vasilescu, Managing Director and Senior Equity Analyst at BNP Paribas Exane]

Yeah.

[Jared Filippone, Head of Investor Relations at Wolverine World Wide]

Yeah,

[Laurent Vasilescu, Managing Director and Senior Equity Analyst at BNP Paribas Exane]

Yes

[Jared Filippone, Head of Investor Relations at Wolverine World Wide]

There will be.

[Laurent Vasilescu, Managing Director and Senior Equity Analyst at BNP Paribas Exane]

How much was the benefit?

[Jared Filippone, Head of Investor Relations at Wolverine World Wide]

On four Q? Is that the question?

[Laurent Vasilescu, Managing Director and Senior Equity Analyst at BNP Paribas Exane]

Yeah, how much was it for Q4? It will be in the 10-K, obviously, that's, I think it's 5 a little later. For the audience, how much was it in terms of EPS benefit for Q4?

[Jared Filippone, Head of Investor Relations at Wolverine World Wide]

Yeah, I would say, obviously, based on our guidance in November, this was, you know, already implied, so no impact on results versus guidance. In the quarter, just so you know, we'll have a full year table. We provided the tables in 3Q call. Doing the math, it's on the COGS line, it's about $1.4 million or so.

[Laurent Vasilescu, Managing Director and Senior Equity Analyst at BNP Paribas Exane]

Okay. Thank you very much. Best of luck.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Yep. Thanks, Lauren.

[Operator]

Your next question comes from the line of Sam Poser with Williams Trading. Please go ahead.

[Sam Poser, Senior Equity Analyst at Williams Trading LLC]

Thank you for taking my question. I wanted to follow up on. You say that, well, I'm just trying to decipher how much bigger, like, what % is the lifestyle business versus the performance business within Saucony? You know, can you give us some idea of the differential?

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Yeah.

[Sam Poser, Senior Equity Analyst at Williams Trading LLC]

Performance is bigger.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

We talked about that last call. Performance is the majority of the business or a lion's share of the Saucony business. Lifestyle is a smaller segment.

[Sam Poser, Senior Equity Analyst at Williams Trading LLC]

At any degree? I mean, is it 60, 40, or, I mean.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

We've been consistent. The performance is the lion share of the business in Saucony, Sam.

[Sam Poser, Senior Equity Analyst at Williams Trading LLC]

Secondly, in the US, maybe I'm not sure if it's overseas, you have a third party, managing or a third-party sales team selling your lifestyle product. I'm wondering why that is and why you haven't brought that in-house. You know, because I think if you had brought that in-house, you might not have had the 1,300 stores, and you might have avoided some issues.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

I think that the model which we use, a combination of in-house sales teams, along with agents and agencies, is not unique to us, especially in growing businesses. The partners that we do have, we retained for, they bring a certain expertise to the business. I think we're obviously continuing to evaluate those relationships going forward and get to a normal course of business. I think so far, the relationships have served us well.

[Sam Poser, Senior Equity Analyst at Williams Trading LLC]

All right. Thank you very much.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Thanks, Sam.

[Operator]

Your final question comes from the line of Ashley Owens with KeyBanc Capital Markets. Please go ahead.

[Ashley Owens, Vice President and Senior Equity Research Analyst at KeyBanc Capital Markets]

Hi. Great. Thanks for taking our question. Maybe just to start, given Saucony's low double-digit plan for the first quarter, anything you can say on the guardrails you've set with accounts on initial buys versus chase to ensure that pull, not push model holds through the first half? Secondly, talked a lot about improving that full price mix within the portfolio. you know, as you look at the early 2026 reads, how is the consumer absorbing those higher AURs? Any categories within active that you are seeing greater elasticity? What are the areas you believe you can still lean into some more premiumization? Thank you.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Sure. Thanks for the question, Ashley. I think, as we think about growing the success that we've had in Saucony, sort of where it was 2 years ago, to posting an all-time record year last year, again, with low to mid-teens growth anticipated for this year, I do think we think really closely about distribution decisions. both domestically and internationally. I think that's a big part of the Saucony story that hopefully is coming through, that it is not just a U.S. story or a single category or a single couple of shoe story. It really is broad-based growth. We do think about that. Accounts that we open up, what we offer them.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

I think in the past, historically, we probably haven't done as good a job as a company as sort of thinking about segmentation, distribution, and who gets what. I think that is part of our new global brand building model and the discipline we've tried to enact over the past couple of years, and that is certainly a piece of that. At the same time, with a global business, we learn a lot. We're always trying to learn both what's happening within brands in different parts of the world, at the same time, sharing learnings from brands across the other brands in the portfolio.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

I think our EMEA business, I think that team has done a really great job, specifically in Merrell, Saucony, growing those brands, and then certainly think about how they think about the marketplace and distribution and segmentation. Those are all things that we're paying close attention to. We do think we're at a special moment in Saucony's history. Certainly pleased with the progress we've made. At the same time, I think there's a much bigger opportunity that we need to go chase.

[Taryn Miller, CFO at Wolverine World Wide]

Regarding your question on what we're seeing in terms of the market and the pricing action. While our price increases, they've only been in market for a little over 2 quarters, generally, the market response has been in line with our expectations, and I think that's reflected in we were looking at fourth quarter in the busy holiday season, and that came in line with our expectations in terms of the performance. Across the business, we have taken deliberate actions, and that includes the pricing that you're referring to that offset the tariffs and improve our cost structure. We've also been innovating our products and investing in the marketing so that we can achieve more of that full price selling.

[Taryn Miller, CFO at Wolverine World Wide]

I think that that healthier source from product mix, improved full price realization, and the disciplined channel execution that Chris spoke to, all of those, we're looking at contributions in terms of the growth. I would say so far, what we've seen is in line with our expectations.

[Ashley Owens, Vice President and Senior Equity Research Analyst at KeyBanc Capital Markets]

Super helpful color. Thank you, and best of luck for the year.

[Chris Hufnagel, President and CEO at Wolverine World Wide]

Thanks, Ashley.

[Operator]

That concludes our question and answer session. Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Participants

Executives

• Chris Hufnagel, President and CEO
• Jared Filippone, Head of Investor Relations
• Taryn Miller, CFO

Analysts

• Anna Andreeva, Managing Director and Senior Research Analyst at Piper Sandler
• Ashley Owens, Vice President and Senior Equity Research Analyst at KeyBanc Capital Markets
• Jonathan Komp, Senior Research Analyst at Robert W. Baird
• Laurent Vasilescu, Managing Director and Senior Equity Analyst at BNP Paribas Exane
• Mauricio Serna, Equity Research Analyst at UBS
• Mitch Kummetz, Senior Analyst at Seaport Research Partners
• Peter McGoldrick, Vice President, Equity Research at Stifel
• Sam Poser, Senior Equity Analyst at Williams Trading LLC