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What changed in WOLVERINE WORLD WIDE INC /DE/'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of WOLVERINE WORLD WIDE INC /DE/'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+224 added−237 removedSource: 10-K (2023-12-30) vs 10-K (2022-12-31)

Top changes in WOLVERINE WORLD WIDE INC /DE/'s 2023 10-K

224 paragraphs added · 237 removed · 185 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe Company assists its licensees in designing products that are appropriate to each foreign market, yet consistent with global brand positioning. Pursuant to license or distribution agreements, third-party licensees and distributors either purchase goods directly from the Company and authorized third-party manufacturers or manufacture branded products themselves, consistent with Company standards.
Biggest changePursuant to license or distribution agreements, third-party licensees and distributors either purchase goods directly from the Company and authorized third-party manufacturers or manufacture branded products themselves, consistent with Company standards. Distributors and licensees are responsible for independently marketing and distributing the Company’s branded products in their respective territories, with product and marketing support from the Company.
Through Saucony's ® Run For Good brand platform and charitable foundation, Saucony ® is strengthening connections with consumers and elevating the positioning of the brand. The brand’s products are distributed primarily through leading run specialty and sporting goods retailers, as well as in Company owned Saucony ® retail stores and an eCommerce site.
Through Saucony ® Run For Good brand platform and charitable foundation, Saucony ® is strengthening connections with consumers and elevating the positioning of the brand. The brand’s products are distributed primarily through leading run specialty and sporting goods retailers, as well as in Company-owned Saucony ® retail stores and an eCommerce site.
Talent Recruitment, Retention and Development : The Company's talent strategy is focused on attracting top talent and continually developing, engaging, investing in and retaining top employees through a variety of retention and development efforts and world class corporate amenities. We strive to hire world class talent, while ensuring opportunities for growth and development for team members.
Talent Recruitment, Retention and Development : The Company's talent strategy is focused on attracting top talent and developing, engaging, investing in and retaining top employees through a variety of retention and development efforts and world class corporate amenities. We strive to hire world class talent, while ensuring opportunities for growth and development for team members.
This program focuses on sharpening participants' business leadership capabilities needed to grow the Company's businesses and people leadership capabilities needed to build, retain, and inspire top performing teams. As we continue to evolve and transform, the continued development of leaders is critical to our future success.
This program focuses on sharpening participants' business leadership capabilities needed to grow the Company's business and people leadership capabilities needed to build, retain, and inspire top performing teams. As we continue to evolve and transform, the continued development of leaders is critical to our future success.
Today, the Company sources and markets a broad range of footwear and apparel styles, including shoes, boots and sandals under many recognizable brand names, including Bates ® , Cat ® , Chaco ® , Harley-Davidson ® , Hush Puppies ® , HYTEST ® , Merrell ® , Saucony ® , Sperry ® , Sweaty Betty ® and Wolverine ® .
Today, the Company sources and markets a broad range of footwear and apparel styles, including shoes, boots and sandals under many recognizable brand names, including Bates ® , Cat ® , Chaco ® , Harley-Davidson ® , Hush Puppies ® , HYTEST ® , Merrell ® , Saucony ® , Sweaty Betty ® and Wolverine ® .
Available Information Information about the Company, including the Company’s Code of Business Conduct, Corporate Governance Guidelines, Director Independence Standards, Accounting and Finance Code of Ethics, Audit Committee Charter, Compensation Committee Charter and Governance Committee Charter, is available at its website at www.wolverineworldwide.com/investor- 10 relations/corporate-governance .
Available Information Information about the Company, including the Company’s Code of Business Conduct, Corporate Governance Guidelines, Director Independence Standards, Accounting and Finance Code of Ethics, Audit Committee Charter, Compensation Committee Charter and Governance Committee Charter, is available at its website at www.wolverineworldwide.com/investor-relations/corporate-governance .
The Company’s products are marketed worldwide in approximately 170 countries and territories through owned operations in the United States ("U.S."), Canada, the United Kingdom and certain countries in continental Europe and Asia Pacific.
The Company’s products are marketed worldwide in approximately 170 countries and territories through owned operations in the United States ("U.S."), Canada, the United Kingdom ("U.K.") and certain countries in continental Europe and Asia Pacific.
Merrell ® can be found across the globe, on Merrell.com, in key outdoor and sporting goods retail stores and in Company owned Merrell ® stores. 5 Saucony ® : Saucony ® is a purpose driven performance running brand with roots dating back to 1898. Saucony ® targets both elite and casual runners through award winning design, innovation and performance technology.
Merrell ® can be found across the globe, on Merrell.com, in key outdoor and sporting goods retail stores and in Company owned Merrell ® stores. 5 Saucony ® : Saucony ® is a leading purpose-driven performance running lifestyle brand with roots dating back to 1898. Saucony ® targets both elite and casual runners through award-winning design, innovation and performance technology.
HYTEST ® footwear is distributed primarily through a network of independently-owned Shoemobile ® mobile truck retail outlets providing direct sales of the Company’s occupational and work footwear brands to workers at industrial facilities and also through direct sales arrangements with large industrial customers. 3.
HYTEST ® footwear is distributed primarily through a network of independently-owned Shoemobile ® mobile truck 6 retail outlets providing direct sales of the Company’s occupational and work footwear brands to workers at industrial facilities and also through direct sales arrangements with large industrial customers.
The Company benchmarks its benefits regularly and keeps abreast of the most up-to-date and effective strategies in order to offer a comprehensive and competitive compensation and benefits package that is specific to the Company's employees’ respective geographic region of employment including annual incentive programs, long-term incentive programs and health and wellness benefits, such as the corporate headquarters' on-site, state-of-the-art fitness center, child care, and doggie day care facilities for employees.
The Company benchmarks its benefits regularly and keeps abreast of current and effective strategies in order to offer a comprehensive and competitive compensation and benefits package that is specific to the Company's employees’ respective geographic region of employment including annual incentive programs, long-term incentive programs and health and wellness benefits, such as the corporate headquarters' on-site, state-of-the-art fitness center, child care, and doggie day care facilities for employees.
Sourcing Division: The sourcing division earns third-party commission revenue by providing consulting services related to product development, production control, quality assurance, materials procurement, compliance and other services. Multi-brand Direct-to-Consumer Division: The multi-brand direct-to-consumer division includes retail stores that sell footwear and apparel from the Company's brand portfoli o and other brands.
Sourcing Division: The sourcing division earns third-party commission revenue by providing consulting services related to product development, production control, quality assurance, materials procurement, compliance and other services. Multi-brand Direct-to-Consumer Division: The multi-brand direct-to-consumer division includes retail stores that sell footwear and apparel from the Company's brand portfolio and other brands.
CAT ® , CATERPILLAR, their respective logos, "Caterpillar Corporate Yellow", as well as corporate product identity used herein, are registered trademarks of Caterpillar Inc. Bates ® : Bates ® Footwear is a leading supplier of tactical and uniform footwear for first responders, U.S. Military members and military members of several foreign countries.
CAT ® , CATERPILLAR, their respective logos, "Caterpillar Corporate Yellow", as well as corporate product identity used herein, are registered trademarks of Caterpillar Inc. Bates ® : Bates ® Footwear is a leading supplier of tactical and uniform footwear for first responders and U.S. Military members.
Civilian uniform users include police officers, fire fighters, security and emergency medical services workers, and others in light industrial occupations. Bates ® products are distributed through sporting goods chains, department stores, uniform specialty retailers, catalog retailers and online retailers.
Civilian uniform users include police officers, firefighters, security and emergency medical services workers, and others in light industrial occupations. Bates ® products are distributed through sporting goods chains, department stores, uniform specialty retailers, catalog retailers and online retailers.
The Company has developed safety protocols to enhance the health and safety of all employees. The Environmental, Health, & Safety Council is composed of representatives from across the Company and coordinates health and safety matters on a real time basis.
Health and Safety : The health and safety of the Company's employees is one of its highest priorities. The Company has developed safety protocols to enhance the health and safety of all employees. The Environmental, Health, & Safety Council is composed of representatives from across the Company and coordinates health and safety matters on a real time basis.
Financial information regarding the Company’s environmental remediation activities is found in Note 17 to the Company's Consolidated Financial Statements. 9 Human Capital Resources Employee Profile : As of December 31, 2022, the Company had approximately 4,300 domestic and foreign production, office and sales employees.
Financial information regarding the Company’s environmental remediation activities is found in Note 17 to the Company's Consolidated Financial Statements. Human Capital Resources Employee Profile : As of December 30, 2023, the Company had approximately 4,100 domestic and foreign production, office and sales employees.
The Company believes pigskin leather offers superior performance and other advantages over cowhide leather. The Company’s waterproof and stain resistant leathers are featured in some of the Company’s footwear lines and also sold to external footwear brands.
The Company believes pigskin leather offers superior performance and other advantages over cowhide leather. The Company’s waterproof and stain resistant leathers are featured in some of the Company’s footwear lines and also sold to external footwear brands. The Wolverine Leathers Division was sold in two seperate transactions in 2023.
The Company also markets Merrell ® and Wolverine ® brand apparel and accessories and licenses some of its brands for use on non-footwear products, including Hush Puppies ® apparel, eyewear, watches, socks, handbags and plush toys; Wolverine ® eyewear and gloves; Saucony ® apparel and Sperry ® apparel.
The Company licenses its Stride Rite ® brand under a global license arrangement. The Company also markets Merrell ® and Wolverine ® brand apparel and accessories and licenses some of its brands for use on non-footwear products, including Hush Puppies ® apparel, eyewear, watches, socks, handbags and plush toys; Wolverine ® eyewear and gloves; and Saucony ® apparel.
Substantially all of the units sourced by the Company are procured from numerous third-party manufacturers in the Asia Pacific region. The Company maintains offices in the Asia Pacific region to develop and facilitate sourcing strategies. The Company has established guidelines for each of its third-party manufacturers in order to monitor product quality, labor practices and financial viability.
The Company maintains offices in the Asia Pacific region to develop and facilitate sourcing strategies. The Company has established guidelines for each of its third-party manufacturers in order to monitor product quality, labor practices and financial viability.
Stride Rite ® Licensed Business: With a history dating back to 1919, Stride Rite ® is an industry leader in kids' footwear. The Company signed a multi-year license agreement in 2017 to license the Stride Rite ® brand.
Stride Rite ® Licensed Business: With a history dating back to 1919, Stride Rite ® is an industry leader in kids' footwear. The Company signed a multi-year license agreement in 2017 to license the Stride Rite ® brand. Wolverine Leathers Division: The Wolverine Leathers Division markets pigskin leather for use primarily in the footwear industry.
The Company has footwear marketing and distribution rights under the Cat® and Harley-Davidson® trademarks pursuant to license arrangements with the respective trademark owners. The Cat® license was recently renewed and the license term runs through December 31, 2028 and the Harley-Davidson® license term runs through December 31, 2023. Both licenses are subject to early termination for breach.
The Company has footwear marketing and distribution rights under the Cat ® and Harley-Davidson ® trademarks pursuant to license arrangements with the respective trademark owners. The Cat ® license was recently renewed and the license term runs through December 31, 2028 and the Harley-Davidson ® license term runs through December 31, 2024.
The Company protects its proprietary rights under applicable laws. Seasonality The Company experiences moderate fluctuations in sales volume during the year, as reflected in quarterly revenue. The Company expects current seasonal sales patterns to continue in future years.
The Company also holds many design and utility patents, copyrights and various other proprietary rights. The Company protects its proprietary rights under applicable laws. Seasonality The Company experiences moderate fluctuations in sales volume during the year, as reflected in quarterly revenue. The Company expects current seasonal sales patterns to continue in future years.
Today, Hush Puppies ® exists to inspire consumers to live life on the bright side. The Company believes that optimism is contagious and that by encouraging positivity it can help shape a better world. Hush Puppies ® footwear is distributed through wholesale and licensed channels, and through eCommerce sites.
The Company believes that optimism is contagious and that by encouraging positivity it can help shape a better world. Hush Puppies ® footwear is distributed through wholesale and licensed channels, and through eCommerce sites.
Lifestyle Group Sperry ® : Sperry ® was founded in 1935 by avid sailor, inventor and intrepid explorer Paul Sperry. The brand is fully rooted in the history of American style and continues to craft the tools for life’s memorable experiences on, off and by the water.
The Company also operated a performance leathers business, which was sold in 2023. Sperry ® : Sperry ® was founded in 1935 by avid sailor, inventor and intrepid explorer Paul Sperry. The brand is fully rooted in the history of American style and continues to craft the tools for life’s memorable experiences on, off and by the water.
During the 2022 fiscal year, the Company’s portfolio of brands was organized into the following three reportable segments. • Active Group, consisting of Merrell ® footwear and apparel, Saucony ® footwear and apparel, Sweaty Betty ® activewear, and Chaco ® footwear; • Work Group, consisting of Wolverine ® footwear and apparel, Cat ® footwear, Bates ® uniform footwear, Harley-Davidson ® footwear and HYTEST ® safety footwear; and • Lifestyle Group , consisting of Sperry ® footwear, Keds ® footwear, and Hush Puppies ® footwear and apparel.
The Company’s portfolio of brands are organized into the following reportable segments. • Active Group, consisting of Merrell ® footwear and apparel, Saucony ® footwear and apparel, Sweaty Betty ® activewear, and Chaco ® footwear; • Work Group, consisting of Wolverine ® footwear and apparel, Cat ® footwear, Bates ® uniform footwear, Harley-Davidson ® footwear and HYTEST ® safety footwear; Kids' footwear offerings from Saucony ® , Sperry ® , Keds ® , Merrell ® , Hush Puppies ® and Cat ® are included with the applicable brand.
The Other category consists of the Company’s leather marketing operations, sourcing operations that include third-party commission revenues, multi-branded direct-to-consumer retail stores and the Stride Rite ® licensed business.
The Company also reports “Other” and “Corporate” categories. The Other category consists of Sperry ® footwear, Keds ® footwear, Hush Puppies ® footwear and apparel, the Company’s leather marketing operations, sourcing operations that include third-party commission revenues, multi-branded direct-to-consumer retail stores and the Stride Rite ® licensed business.
Active Group Merrell ® : Merrell ® believes in sharing the simple power of being outside – no matter who you are, where you come from, who you love, or how you move.
The Company's reportable segments and related brands are described in more detail below. 1. Active Group Merrell ® : Merrell ® believes in sharing the simple power of being outside – no matter who you are, where you come from, who you love, or how you move.
Harley-Davidson ® Footwear: Pursuant to a license arrangement with the Harley-Davidson Motor Company, Inc., the Company has footwear marketing and distribution rights for Harley-Davidson ® branded footwear.
Harley-Davidson ® Footwear : Pursuant to a license arrangement with the Harley-Davidson Motor Company, Inc., the Company has footwear marketing and distribution rights for Harley-Davidson ® branded footwear. Harley-Davidson ® branded footwear products include motorcycle, casual, fashion, work and western footwear for men, women and kids.
The Company’s brand marketing has an omni-channel approach and 7 includes various means of delivery, such as print and radio advertising, search engine optimization, social networking sites, event sponsorships, in-store point-of-purchase displays, promotional materials and sales and technical assistance. The Company operates branded eCommerce sites that the Company believes are effective marketing tools to consumers.
The Company’s brand marketing has an omni-channel, always-on approach and includes various means of delivery across digital, print and 7 radio, including advertising through event sponsorship, social networking sites, event sponsorships, in-store activation and sales and technical assistance. The Company operates branded eCommerce sites that the Company believes are effective tools for marketing and selling to consumers.
The Company’s owned trademarks include Hush Puppies®, Wolverine®, Bates®, Bounce®, Chaco®, HYTEST®, Merrell®, Sperry®, Saucony®, Stride Rite®, Sweaty Betty® , and related logos and design marks. The Company’s Wolverine Leathers Division markets its pigskin leathers under trademarks such as Silkee® and Weather-Tight® .
The Company’s owned trademarks include Hush Puppies ® , Wolverine ® , Bates ® , Bounce ® , Chaco ® , HYTEST ® , Merrell ® , Saucony ® , Stride Rite ® , Sweaty Betty ® , and related logos and design marks.
Harley-Davidson ® branded footwear products include motorcycle , casual, fashion, work and western footwear for men, women and kids. 6 Harley-Davidson ® footwear is sold globally through a network of independent Harley-Davidson ® dealerships and other retail outlets. Harley-Davidson ® is a registered trademark of H-D U.S.A., LLC.
Harley-Davidson ® footwear is sold globally through a network of independent Harley-Davidson ® dealerships and other retail outlets. Harley-Davidson ® is a registered trademark of H-D U.S.A., LLC.
Effective February 4, 2023 the Company sold the global Keds ® business to Designer Brands, Inc. (the "Buyer") pursuant to an Asset Purchase Agreement between the Company and the Buyer dated February 7, 2023. Hush Puppies ® : Launched in 1958, Hush Puppies ® has a history of bringing color and optimism to a boring, brown shoe category.
Effective February 4, 2023 the Company sold the global Keds ® business to Designer Brands, Inc. Hush Puppies ® : Launched in 1958, Hush Puppies ® has a history of bringing color and optimism to a boring, brown shoe category. Today, Hush Puppies ® exists to inspire consumers to live life on the bright side.
The Company believes that consumers identify its products by the Company’s trademarks and that its trademarks are valuable assets. The Company has a policy of registering its primary trademarks and vigorously defending its trademarks against infringement or other threats whenever practicable. The Company also holds many design and utility patents, copyrights and various other proprietary rights.
Both licenses are subject to early termination for breach. The Company believes that consumers identify its products by the Company’s trademarks and that its trademarks are valuable assets. The Company has a policy of registering its primary trademarks and vigorously defending its trademarks against infringement or other threats whenever practicable.
Keds ® : For over 100 years, Keds ® has been making timeless, comfortable, accessible footwear for consumers to step out into the world their way.
Effective January 10, 2024 the Company sold the global Sperry ® business to Authentic Brands Group LLC. Keds ® : For over 100 years, Keds ® has been making timeless, comfortable, accessible footwear for consumers to step out into the world their way.
Marketing The Company’s marketing strategy is to develop brand-specific plans and related promotional materials that foster a consistent message for each of the Company’s brands across the globe. Marketing campaigns and strategies vary by brand and are generally designed to target consumers in order to increase awareness of, and affinity for, the Company’s brands.
Marketing campaigns and strategies vary by brand and are generally designed to target consumers in order to increase awareness of, and affinity for, the Company’s brands.
Wolverine ® designs and creates footwear, apparel and accessories across three strategic territories: Work, Outdoor and Casual. The brand is best known for DuraShocks and Ultraspring comfort technology, as well as the Wolverine ® 1000 Mile collection of premium lifestyle boots handcrafted in the USA from archival patterns.
The brand is known for its heritage, durability, and best-in-class performance comfort technology, as well as the Wolverine ® 1000 Mile collection of premium lifestyle boots handcrafted in the USA from archival patterns.
We maintain an engaging modern recruitment marketing website to tell the Company's compelling story of opportunity and inclusion. Development starts on day one with an enriching day one experience designed to help employees start off on the right foot from the moment they begin their career with the Company.
Development starts on day one with an enriching day one experience designed to help employees 9 start off on the right foot from the moment they begin their career with the Company. The Company strives to be one of the best places to work.
Through the Sweaty Betty Foundation, the brand aims to give more girls access to activities they love, helping the next generation get and stay active for life. Chaco ® : Chaco ® has a rich, 30+ year history of creating footwear that’s “Fit For Adventure” of any kind, whether that’s exploring rivers, trails or swerving city streets.
Through the Sweaty Betty Foundation, the brand aims to give more girls access to activities they love, helping the next generation get and stay active for life. Chaco ® : For more than 30 years Chaco ® has been creating premium footwear for outdoor adventure in and out of water.
The reportable segments are engaged in designing, manufacturing, sourcing, marketing, licensing and distributing branded footwear, apparel and accessories. Revenue for the reportable segments includes revenue from the sale of branded footwear, apparel and accessories to third-party customers; revenue from third-party distributors, licensees and joint ventures; and revenue from the Company’s direct-to-consumer businesses.
Revenue for the reportable segments includes revenue from the sale of branded footwear, apparel and accessories to third-party customers; revenue from third-party distributors, licensees and joint ventures; and revenue from the Company’s direct-to-consumer businesses. T he Company’s reportable segments are determined based on how the Company internally reports and evaluates financial information used to make operating decisions.
The brand is focused on meeting the functional biomechanical needs of runners while delivering on their emotional style needs as well. Saucony innovations include Powerrun+, a cushioning technology system; PWRFOAM midsole, PWRTRAC outsole, and FormFit, an adaptive fit system.
The brand is focused on meeting the functional biomechanical needs of runners while delivering on their emotional style needs as well.
Chaco ® products are distributed primarily through specialty footwear retailers, the Chaco ® eCommerce site, and other leading online and brick and mortar retailers. 2. Work Group Wolverine ® : For more than 135 years, Wolverine ® has existed to support people who forge their own path: men and women who stop at nothing to build the future they want.
Work Group Wolverine ® : For more than 135 years, Wolverine ® has existed to support people who forge their own path: men and women who stop at nothing to build the future they want. Wolverine ® designs and creates footwear, apparel and accessories made to outfit those working in the core trades across the world.
The Company believes that its overall global manufacturing strategy provides the flexibility to properly balance the need for timely shipments, high quality products and competitive pricing. 8 The Company’s principal raw material is quality leather, which it purchases from a select group of domestic and foreign suppliers.
The Company believes that its overall global manufacturing strategy provides the flexibility to properly balance the need for timely shipments, high quality products and competitive pricing. 8 Trademarks, Licenses and Patents The Company holds a significant portfolio of registered and common law trademarks that identify its branded products and technologies.
Other Businesses In addition to its reportable segments, the Company operates a performance leather business, sourcing operations, a multi-brand direct-to-consumer business, and the licensing of its Stride Rite ® brand. Wolverine Leathers Division: The Wolverine Leathers Division markets pigskin leather for use primarily in the footwear industry.
Other Businesses In addition to its reportable segments, the Company operates sourcing operations, a multi-brand direct-to-consumer business, the licensing of its Stride Rite ® brand and Hush Puppies ® brand. The Company’s results included in Other also included Sperry ® , which was sold in 2024, and Keds ® , which was sold in 2023.
Distributors and licensees are responsible for independently marketing and distributing the Company’s branded products in their respective territories, with product and marketing support from the Company. Manufacturing and Sourcing The Company directly controls the majority of the units of footwear and apparel sourced under the Company’s brand names. The Company’s licensees directly control the balance.
Manufacturing and Sourcing The Company directly controls the majority of the units of footwear and apparel sourced under the Company’s brand names. The Company’s licensees directly control the balance. Substantially all of the units sourced by the Company are procured from numerous third-party manufacturers in the Asia Pacific region.
The Company seeks to maximize engagement and contribution of team members and the Company stays connected with team members across many experience touchpoints throughout the employee lifecycle, including a day one survey, a survey 90 days after they begin their career at the Company, regular pulse and check in surveys, and exit surveys.
The Company seeks to maximize engagement and contribution of team members and the Company stays connected with team members across many experience touchpoints throughout the employee lifecycle, including regular pulse and check in surveys. Insights from these surveys are valuable to understanding employees' needs, which helps us develop strategies to maintain positive employee well-being.
The Corporate category consists of the gain on the sale of the Champion trademarks in 2022 and unallocated corporate expenses, such as corporate employee costs, costs related to the COVID-19 pandemic, impairment of intangible assets and goodwill, reorganization activities, and environmental and other related costs.
The Corporate category consists of gains on the sale of businesses and trademarks, unallocated corporate expenses, such as corporate employee costs, corporate facility costs, reorganization activities, impairment of long-lived assets and environmental and other related costs. The reportable segments are engaged in designing, manufacturing, sourcing, marketing, licensing and distributing branded footwear, apparel and accessories.
The Company believes that joint ventures provide it with a more meaningful ownership stake and near-term brand impact in fast-growing markets than its traditional licensee and distributor arrangements. The Company continues to develop its international network of third-party licensees and distributors to market its branded products.
The Company divested its ownership interests in the China joint venture entities effective January 1, 2024. The Company continues to develop its international network of third-party licensees and distributors to market its branded products. The Company assists its licensees in designing products that are appropriate to each foreign market, yet consistent with global brand positioning.
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The Company licenses its Stride Rite ® brand under a global license arrangement.
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Widely recognized for award-winning technologies, Saucony ® innovations include PWRRUN™ PB, a beaded superfoam that delivers high-performance energy return; PWRRUN+™ a cushioning foam for a plush ride; SPEEDROLL™ Technology, a blend of premium foam and forward geometry to promote a faster transition; and PWRTRAC™, a trail-specific outsole rubber.
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Kids' footwear offerings from Saucony ® , Sperry ® , Keds ® , Merrell ® , Hush Puppies ® and Cat ® are included with the applicable brand. The Company also reports “Other” and “Corporate” categories.
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Originating as an innovation in the whitewater rafting world, Chaco ® is the vibrant outdoor brand designing footwear for all walks of life and for a lifetime of adventure. Chaco ® products are distributed primarily through specialty footwear retailers, the Chaco ® eCommerce site, and other leading online and brick and mortar retailers. 2.
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T he Company’s reportable segments are determined based on how the Company internally reports and evaluates financial information used to make operating decisions. The Company's reportable segments and related brands are described in more detail below. 1.
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The Company signed a multi-year license agreement in 2023 to license the Hush Puppies ® brand in the United States and Canada. The Company sold the rights to the Hush Puppies ® trademarks, patents, copyrights and domains in China, Hong Kong and Macau to its current sublicensee, Beijing Jiaman Dress Co., Ltd. The transaction closed on September 14, 2023.
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Originating as an innovation in the whitewater rafting world, Chaco ® now designs footwear for all walks of life in the outdoor and lifestyle communities. The brand's mission is to help people find their way, providing access to new people, places, and experiences that make them more confident in who they are and where they’re headed.
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Marketing The Company’s marketing strategy is to develop brand-specific plans and related promotional materials that drive consumer demand creation, fuel consumer obsession and foster a consistent message for each of the Company’s brands across the globe.
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That’s why Chaco ® creates footwear that comes with all-terrain versatility, a unique 360° fit, unmatched durability and signature LUVSEAT™ footbed arch support. The MyChacos custom sandal program provides customers an opportunity to express their funky individuality, while the ReChaco program helps reduce their impact on the places they explore by repairing used sandals.
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Our engaging recruitment marketing website tells a compelling story of opportunity and inclusion, and highlights the Company culture. With a focus on modern recruitment systems and strategies we aim to provide a seamless transition for new employees.
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The widespread availability of common upper materials and specialty leathers eliminates reliance by the Company on a single supplier.
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Diversity, Equity, and Inclusion: Wolverine Worldwide is committed to creating a diverse and inclusive culture where everyone feels a sense of belonging and being valued, and to building a team that is representative of everywhere the Company's employees work, live, and do business.
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The Company has a diversified supply base of raw pigskins and currently purchases a majority of the raw pigskins used for its Wolverine Leathers Division from one domestic source, which has been a reliable and consistent supplier to the Company for over 50 years.
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The Company started this journey in 2020, focusing on creating a framework, establishing relationships, and working with expert outside partners to lay a foundation on which to build. The Company's newly established internal DE&I office plans to continue and amplify the progress made to date to advance the Company's diversity, equity and inclusion goals.
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The Company purchases all of its other raw materials and component parts from a variety of sources and does not believe that any of these sources are a dominant supplier. Trademarks, Licenses and Patents The Company holds a significant portfolio of registered and common law trademarks that identify its branded products and technologies.
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The Company encourages individuals to support these goals, including through internal Employee Resource Groups that connect, celebrate, and support communities across the organization. The Company offers employees a comprehensive diversity, equity, and inclusion learning program which includes learning about inclusive teams, inclusive leadership, and inclusive selection.
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The Company strives to be one of the best places to work.
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Insights from these surveys have been especially valuable as the COVID-19 pandemic evolves to understand employees' needs and to develop solutions to maintain a positive employee well-being.
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Diversity, Equity, and Inclusion : The Company's commitment to a diverse and inclusive workforce is reflected in the wide range of cultures, religions, ethnicities and nationalities, as well as varied professional and educational backgrounds currently represented in the Company's workforce.
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Because the Company believes in cultivating a well-rounded, diverse workforce, the Company continuously seeks out individuals who reflect and support this goal.
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We have further prioritized diversity and inclusion by hiring an expert partner to help us build a framework to promote an inclusive environment today and into the future in order to make the Company an even greater place to work.
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Over the past two years, the Company's major development focus has been implementing a comprehensive diversity, equity, and inclusion learning program which includes learning on inclusive teams, inclusive leadership, and inclusive selection. Health and Safety : The health and safety of the Company's employees is one of its highest priorities.
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The Company's focus on the health and safety of its workforce is also evidenced by the actions it has taken in response to the COVID-19 pandemic around the globe, including: • Increasing employees' work from home flexibility; • Adjusting attendance policies to encourage those who are sick to stay home; and • Increasing cleaning protocols.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

45 edited+11 added−6 removed142 unchanged
Biggest changePotential impacts to the Company’s business can be materially adversely affected by several factors related to the COVID-19 pandemic or another health crisis, including, but not limited to: • The inability of employees, suppliers and other business providers to carry out tasks at ordinary levels of performance as a result of safety measures taken to limit the spread of infectious disease outbreaks. • Outbreaks requiring the closure of retail stores operated by the Company or the Company's wholesale customers; • Decreased retail traffic resulting from social distancing measures, store closures, reduced operating hours, and/or changes in consumer behavior. • Negative effects on consumer spending due to general macroeconomic conditions, decreased disposable income and increased unemployment. • Wholesale and distributor customer order cancellations due to lower consumer demand. • Decline in the performance or financial condition of the Company’s major wholesale customers as a result of retail store closures, bankruptcy or liquidation. • Consumer demand for our products may be adversely impacted by economic conditions. • Disruption to the operations of the Company’s distribution centers and its third-party manufacturers because of facility closures, reductions in operating hours, labor or material shortages, travel limitations or mass transit disruptions. • Additional expenses related to mitigating the pandemic’s impact on regular operations. • Supply chain disruption effecting the Company's ability to receive and distribute goods as well as increases in supply chain costs.
Biggest changePotential impacts to the Company’s business can be materially adversely affected by several factors related to a health crisis, including, but not limited to: • The inability of employees, suppliers and other business providers to carry out tasks at ordinary levels of performance as a result of safety measures taken to limit the spread of infectious disease outbreaks. • Required closures of retail stores operated by the Company or the Company's wholesale customers as well as decreased retail traffic due to social distancing measures, store closures, reduced operating hours, and/or changes in consumer behavior. • Negative effects on consumer demand for our products as a result of decreased consumer spending due to general macroeconomic conditions, decreased disposable income and increased unemployment. • Wholesale and distributor customer order cancellations due to lower consumer demand. • Decline in the performance or financial condition of the Company’s major wholesale customers as a result of retail store closures, bankruptcy or liquidation. • Consumer demand for our products may be adversely impacted by economic conditions. 11 • Disruption to the operations of the Company’s distribution centers and its third-party manufacturers because of facility closures, reductions in operating hours, labor or material shortages, travel limitations or mass transit disruptions. • Additional expenses related to mitigating the impact of a health crisis on regular operations. • Supply chain disruption effecting the Company's ability to receive and distribute goods as well as increases in supply chain costs. • Increased cyber security risk due to the increase in the number of employees working remotely. • Volatility in the availability and prices for commodities for raw materials used in the Company's products and related inflationary pressures.
The Company’s quarterly sales and earnings can vary due to a number of factors, many of which are beyond the Company’s control, including the following: • In the wholesale business, sales of footwear depend on orders from major customers, who may change delivery schedules, change the mix of products they order or cancel orders without penalty. • Changes to the Company's estimated annual tax rate which is based on projections of its domestic and international operating results for the year, which the Company reviews and revises as necessary each quarter. 15 • The Company's earnings are also sensitive to a number of factors that are beyond the Company’s control, including certain manufacturing and transportation costs, changes in product sales mix, geographic sales trends, weather conditions, customer demand, consumer sentiment and currency exchange rate fluctuations.
The Company’s quarterly sales and earnings can vary due to a number of factors, many of which are beyond the Company’s control, including the following: • In the wholesale business, sales of footwear depend on orders from major customers, who may change delivery schedules, change the mix of products they order or cancel orders without penalty. • Changes to the Company's estimated annual tax rate which is based on projections of its domestic and international operating results for the year, which the Company reviews and revises as necessary each quarter. • The Company's earnings are also sensitive to a number of factors that are beyond the Company’s control, including certain manufacturing and transportation costs, changes in product sales mix, geographic sales trends, weather conditions, customer demand, consumer sentiment and currency exchange rate fluctuations.
Concerns regarding acts of terrorism or regional and international conflicts and concerns regarding public health threats, such as the COVID-19 pandemic, have created and may in the future create significant global economic and political uncertainties that may have adverse effects on consumer demand, acceptance of U.S. brands in international markets, foreign sourcing of products, shipping and transportation, product imports and exports and the sale of products in foreign markets, any of which could adversely affect the Company’s ability to source, manufacture, distribute and sell its products.
Concerns regarding acts of terrorism or regional and international conflicts and concerns regarding public health threats, such as COVID-19, have created and may in the future create significant global economic and political uncertainties that may have adverse effects on consumer demand, acceptance of U.S. brands in international markets, foreign sourcing of products, shipping and transportation, product imports and exports and the sale of products in foreign markets, any of which could adversely affect the Company’s ability to source, manufacture, distribute and sell its products.
Foreign currency exchange rate fluctuations may also adversely impact third parties that manufacture the Company’s products by increasing their costs of production and raw materials and making such costs more difficult to finance, thereby raising prices for the Company, its distributors and its licensees. The Company’s hedging strategy may not successfully mitigate the Company’s foreign currency exchange rate risk.
Foreign currency exchange rate fluctuations may 14 also adversely impact third parties that manufacture the Company’s products by increasing their costs of production and raw materials and making such costs more difficult to finance, thereby raising prices for the Company, its distributors and its licensees. The Company’s hedging strategy may not successfully mitigate the Company’s foreign currency exchange rate risk.
The annual cost of benefits can vary significantly depending on a number of factors, including changes in the assumed or actual rate of return on pension plan assets, a change in the discount rate or mortality assumptions used to determine the annual service cost related to the defined benefit plans, a change in the method or timing of meeting pension funding obligations and the rate of health care cost inflation.
The annual cost of benefits can vary significantly depending on a number of factors, including changes in the assumed or actual rate of return on pension plan assets, a change in the discount rate or mortality assumptions used to determine the annual service cost related to the defined benefit 18 plans, a change in the method or timing of meeting pension funding obligations and the rate of health care cost inflation.
The Company’s operations are subject to various federal, state and local laws and regulations relating to the protection of the environment, including those governing the discharge of pollutants into the air, soil and water, the management and disposal of solid and hazardous materials and wastes, employee exposure to hazards in the workplace, and the investigation and remediation of contamination resulting from releases of hazardous materials.
The Company’s operations are subject to various federal, state and local laws and regulations relating to the protection of the environment, including those governing the discharge of pollutants into the air, soil and water, the management and disposal of solid and hazardous materials and wastes, employee exposure to hazards in the workplace, and the investigation and 19 remediation of contamination resulting from releases of hazardous materials.
The effects of the CCPA governs the Company's data processing practices and policies. Additionally, other states have adopted, or are considering enacting, similar laws that may affect the Company's data processing practices and policies. 21 The Company operates in many different international markets and could be adversely affected by violations of the FCPA and similar worldwide anti-corruption laws.
The effects of the CCPA governs the Company's data processing practices and policies. Additionally, other states have adopted, or are considering enacting, similar laws that may affect the Company's data processing practices and policies. The Company operates in many different international markets and could be adversely affected by violations of the FCPA and similar worldwide anti-corruption laws.
If an audit, self-assessment or other test determines that the Company needs to take steps to remediate any deficiencies, the Company may be required to undertake remediation efforts, which may be costly or could result in periods of time during which the Company cannot accept payment cards.
If an audit, self-assessment or other test 20 determines that the Company needs to take steps to remediate any deficiencies, the Company may be required to undertake remediation efforts, which may be costly or could result in periods of time during which the Company cannot accept payment cards.
The Company cannot predict the timing, strength or duration of any economic slowdown or subsequent economic recovery, worldwide, in markets in which the Company operates, or in its industry. The Company is also subject to risks related to doing business in developing countries and economically volatile areas.
The Company cannot predict the timing, strength or duration of any economic slowdown or subsequent economic recovery, worldwide, in markets in which the Company operates, or in its industry. 16 The Company is also subject to risks related to doing business in developing countries and economically volatile areas.
An impairment charge could adversely affect the Company’s results of operations, such as the impairments recorded associated with the Sweaty Betty ® trade name and goodwill in fiscal 2022 and the Sperry ® trade name in fiscal 2022 and 2020. The Company’s current level of indebtedness could adversely affect the Company by decreasing business flexibility and increasing borrowing costs.
An impairment charge could adversely affect the Company’s results of operations, such as the impairments recorded associated with the Sweaty Betty ® trade name and goodwill in fiscal 2022. The Company’s current level of indebtedness could adversely affect the Company by decreasing business flexibility and increasing borrowing costs.
In fiscal 2022, the Company experienced a higher rate of wholesale customer cancellatinos as retail customers sought to manage higher inventory levels and supply chain disruption. Failure to fill wholesale customers’ orders in a timely manner could harm the Company’s relationships with its wholesale customers.
In fiscal 2022, the Company experienced a higher rate of wholesale customer cancellations as retail customers sought to manage higher inventory levels and supply chain disruption. Failure to fill wholesale customers’ orders in a timely manner could harm the Company’s relationships with its wholesale customers.
The COVID-19 pandemic or another health crisis may also affect the Company's operating and financial results in a manner that is not presently known to the Company or that the Company does not currently believe presents significant risks to its operations. Labor disruptions could adversely affect the Company’s business.
The occurrence of a health crisis may also affect the Company's operating and financial results in a manner that is not presently known to the Company or that the Company does not currently believe presents significant risks to its operations. Labor disruptions could adversely affect the Company’s business.
The Company’s financial success depends on its wholesale customers continuing to purchase its products. The Company does not typically have long-term contracts with its wholesale customers. Sales to the Company’s wholesale customers are generally on an order-to-order basis and are subject to rights of cancellation and rescheduling by the wholesale customers.
The Company does not typically have long-term contracts with its wholesale customers. Sales to the Company’s wholesale customers are generally on an order-to-order basis and are subject to rights of cancellation and rescheduling by the wholesale customers.
The imposition of such costs or restrictions in countries where the Company operates, as well as in countries where its third-party distributors and licensees operate, could result in increases in the cost of the Company’s products generally and adversely affect its sales and profitability. 17 Increases in the cost of raw materials, labor and services could adversely affect the Company’s results of operations.
The imposition of such costs or restrictions in countries where the Company operates, as well as in countries where its third-party distributors and licensees operate, could result in increases in the cost of the Company’s products generally and adversely affect its sales and profitability.
The Company also has substantial operating lease commitments for retail space. Due to the high fixed-cost structure associated with the Company’s brick and mortar direct-to-consumer operations, a decline in sales or the closure or poor performance of individual or multiple stores could result in significant lease termination costs, write-offs of equipment and leasehold improvements and employee-related costs.
Due to the high fixed-cost structure associated with the Company’s brick and mortar direct-to-consumer operations, a decline in sales or the closure or poor performance of individual or multiple stores could result in significant lease termination costs, write-offs of equipment and leasehold improvements and employee-related costs.
The Company’s attempts to protect its brands through approval rights over design, production processes, quality, packaging, merchandising, distribution, advertising and promotion of its licensed products may not be successful as the Company cannot completely control the use by its licensees of its licensed brands.
The Company’s attempts to protect its brands through approval rights over design, production processes, quality, packaging, merchandising, distribution, advertising and promotion of its licensed products may not be successful as the Company cannot completely control the use by its licensees of its licensed brands. The misuse of a brand by a licensee could adversely affect the value of such brand.
Changes in general economic conditions and/or the credit markets could have an adverse impact on the Company’s future results of operations and financial position.
Changes in general economic conditions and/or the credit markets affecting the Company's distributors, suppliers and retailers could adversely affect the Company’s results of operations and financial position. Changes in general economic conditions and/or the credit markets could have an adverse impact on the Company’s future results of operations and financial position.
Infectious disease outbreaks that are considered pandemics, such as the COVID-19 pandemic, have had and could continue to have a material adverse effect on the company's business. The Company's business could be adversely affected by infectious disease outbreaks, such as the COVID-19 pandemic.
Pandemics, including COVID-19 and other infectious disease outbreaks have had and could continue to have a material adverse effect on the company's business. The Company's business could be adversely affected by infectious disease outbreaks.
The carrying value of other intangibles represents the fair value of trade names and other acquired intangibles as of the acquisition date. Goodwill and other acquired intangibles expected to contribute indefinitely to the Company’s cash flows are not amortized but must be evaluated by the Company at least annually for impairment.
Goodwill and other acquired intangibles expected to contribute indefinitely to the Company’s cash flows are not amortized but must be evaluated by the Company at least annually for impairment.
The misuse of a brand by a licensee could adversely affect the value of such brand. 13 Disruption of the Company’s eCommerce platform or other information technology systems could adversely affect the Company’s business. The Company’s information technology systems, including its eCommerce platform, are critical to the operations of its business.
Disruption of the Company’s eCommerce platform or other information technology systems could adversely affect the Company’s business. The Company’s information technology systems, including its eCommerce platform, are critical to the operations of its business.
An increase in the Company’s effective tax rate or negative determinations by domestic or foreign tax authorities could have an adverse effect on the Company’s results of operations and financial position.
Increases in costs for commodities, equipment, services and materials used in production could have a negative impact on the Company’s results of operations and financial position. An increase in the Company’s effective tax rate or negative determinations by domestic or foreign tax authorities could have an adverse effect on the Company’s results of operations and financial position.
The Company's operations have become increasingly centralized and dependent upon automated information technology processes. In addition, a portion of the Company’s business operations is conducted electronically, increasing the risk of attack or interception that could cause loss or misuse of data, system failures or disruption of operations.
In addition, a portion of the Company’s business operations is conducted electronically, increasing the risk of attack or interception that could cause loss or misuse of data, system failures or disruption of operations.
These conditions following the onset of the COVID-19 pandemic led to a decline in discretionary spending by consumers that had a negative 11 effect on the Company's financial condition and results of operations in 2020. There can be no assurance that these conditions will not recur and negatively affect the Company's financial condition and results of operations in future periods.
These conditions following the onset of the COVID-19 pandemic led to a decline in discretionary spending by consumers that had a negative effect on the Company's financial condition and results of operations in 2020.
In addition, changes in the channels of distribution, such as the continued growth of eCommerce and related competitive pressures, and the sale of private label products by major retailers, could have an adverse effect on the Company’s results of operations and financial position.
In addition, changes in the channels of distribution, such as the continued growth of eCommerce and related competitive pressures, and the sale of private label products by major retailers, could have an adverse effect on the Company’s results of operations and financial position. 12 The Company’s direct-to-consumer operations continue to require substantial investment and commitment of resources and are subject to numerous risks and uncertainties.
In addition, consumer traffic may be reduced as a result of extreme weather conditions and a decrease in shopping traffic could have an adverse effect on the Company’s results of operations and financial position. 16 Changes in general economic conditions and/or the credit markets affecting the Company's distributors, suppliers and retailers could adversely affect the Company’s results of operations and financial position.
In addition, consumer traffic may be reduced as a result of extreme weather conditions and a decrease in shopping traffic could have an adverse effect on the Company’s results of operations and financial position.
The COVID-19 pandemic has negatively affected the global economy, disrupted consumer spending and global supply chains, and significantly increased the volatility and disruption of financial markets both globally and in the U.S.
As we saw with the initial phase of the COVID-19 pandemic, outbreaks of disease can negatively affected the global economy, disrupt consumer spending and global supply chains, and significantly increased the volatility and disruption of financial markets both globally and in the U.S.
The Company regularly assesses the likelihood of outcomes resulting from these examinations to determine the adequacy of its provision for income taxes and establishes reserves for potential adjustments that may result from these examinations. The final determination of any of these examinations could have an adverse effect on the Company’s results of operations and financial position.
The Company regularly assesses the likelihood of outcomes resulting from these examinations to determine the adequacy of its provision for income taxes and establishes reserves for potential adjustments that may result from these examinations.
Legal and Regulatory Risks If the Company is unsuccessful in establishing and protecting its intellectual property, the value of its brands could be adversely affected. The Company’s ability to remain competitive depends upon its continued ability to secure and protect trademarks, patents and other intellectual property rights in the U.S. and internationally for all of the Company’s lines of business.
The Company’s ability to remain competitive depends upon its continued ability to secure and protect trademarks, patents and other intellectual property rights in the U.S. and internationally for all of the Company’s lines of business.
The Company’s efforts to maintain and improve its competitive position by monitoring and timely and appropriately responding to changes in consumer preferences, increasing brand awareness and enhancing the style, comfort and perceived value of its products may not be successful.
The Company’s success depends in part on its ability to maintain its brands’ positive images, and the ability to anticipate, understand and respond to changing footwear and apparel trends and consumer preferences in a timely manner. 10 The Company’s efforts to maintain and improve its competitive position by monitoring and timely and appropriately responding to changes in consumer preferences, increasing brand awareness and enhancing the style, comfort and perceived value of its products may not be successful.
In addition, the Company expends costs and management resources to complete divestitures and manage post-closing arrangements. Any failures or delays in completing divestitures could have an adverse effect on the Company’s financial results and ability to execute its strategy. 14 The Company’s international operations may be affected by legal, regulatory, political and economic risks.
Any failures or delays in completing divestitures could have an adverse effect on the Company’s financial results and ability to execute its strategy. The Company’s international operations may be affected by legal, regulatory, political and economic risks. The Company’s ability to conduct business in new and existing international markets is subject to legal, regulatory, political and economic risks.
The Company’s direct-to-consumer operations continue to require substantial investment and commitment of resources and are subject to numerous risks and uncertainties. The Company’s direct-to-consumer operations, including its brick and mortar locations as well as its eCommerce and mobile channels, require substantial fixed investment in equipment and leasehold improvements, information systems, cyber-security infrastructure, inventory and personnel.
The Company’s direct-to-consumer operations, including its brick and mortar locations as well as its eCommerce and mobile channels, require substantial fixed investment in equipment and leasehold improvements, information systems, cyber-security infrastructure, inventory and personnel. The Company also has substantial operating lease commitments for retail space.
The Company’s ability to comply with any financial covenants could be materially affected by events beyond its control and the Company may be unable to satisfy any such requirements.
The Company’s ability to comply with any financial covenants could be materially affected by events beyond its control and the Company may be unable to satisfy any such requirements. If the Company fails to comply with these covenants, it may need to seek waivers or amendments of such covenants, seek alternative or additional sources of financing or reduce its expenditures.
An impairment of goodwill or other intangibles could have an adverse impact to the Company’s results of operations. The carrying value of goodwill represents the fair value of acquired businesses in excess of identifiable assets and liabilities as of the acquisition date.
The carrying value of goodwill represents the fair value of acquired businesses in excess of identifiable assets and liabilities as of the acquisition date. The carrying value of other intangibles represents the fair value of trade names and other acquired intangibles as of the acquisition date.
In addition, regardless of the outcome of any litigation or regulatory proceedings, such proceedings are expensive and may require that the Company devote substantial resources and executive time to the defense of such proceedings. 20 Provisions of Delaware law and the Company’s certificate of incorporation and bylaws could prevent or delay a change in control or change in management that could be beneficial to the Company’s stockholders.
In addition, regardless of the outcome of any litigation or regulatory proceedings, such proceedings are expensive and may require that the Company devote substantial resources and executive time to the defense of such proceedings.
The Company’s ability to conduct business in new and existing international markets is subject to legal, regulatory, political and economic risks. These include: • the burdens of complying with foreign laws and regulations, including trade and labor restrictions; • compliance with U.S. and other countries’ laws relating to foreign operations, including the U.S.
These include: • the burdens of complying with foreign laws and regulations, including trade and labor restrictions; • compliance with U.S. and other countries’ laws relating to foreign operations, including the U.S.
The Company relies on its networks, databases, systems and processes, as well as those of third parties such as vendors, to protect its proprietary information and information about its customers, employees and vendors. The Company’s customers and associates have a high expectation that the Company will adequately safeguard and protect their sensitive personal information.
The protection of the Company’s customer, associate and Company data is critically important to the Company. The Company relies on its networks, databases, systems and processes, as well as those of third parties such as vendors, to protect its proprietary information and information about its customers, employees and vendors.
If the Company is unable to hire and retain employees capable of performing at a high level, its business, including cash flows, results of operations, employee satisfaction, and reputation, could be adversely affected. 12 A significant reduction in wholesale customer purchases of the Company’s products, wholesale customers seeking more favorable terms or canceling orders, or the failure of wholesale customers to pay for the Company’s products in a timely manner could adversely affect the Company’s business.
If the Company is unable to hire and retain employees capable of performing at a high level, its business, including cash flows, results of operations, employee satisfaction, and reputation, could be adversely affected.
The Company’s inability or failure to meet, or the perceived failure to meet, such stakeholders’ expectations, as well as adverse incidents, could negatively impact the Company’s stock price, results of operations, or reputation and increase the cost of capital. 19 The Company’s and its vendors’ databases containing personal information and payment card data of the Company’s customers, employees and other third parties could be breached, which could subject the Company to adverse publicity, litigation, fines and expenses.
The Company’s inability or failure to meet, or the perceived failure to meet, such stakeholders’ expectations, as well as adverse incidents, could negatively impact the Company’s stock price, results of operations, or reputation and increase the cost of capital.
In addition, the Company’s distribution capacity depends upon the timely performance of services by third parties, including the transportation of products to and from the Company’s distribution facilities. If the Company encounters problems affecting its distribution system, its results of operations and its ability to meet customer expectations, manage inventory, complete sales and achieve operating efficiencies could be adversely affected.
If the Company 13 encounters problems affecting its distribution system, its results of operations and its ability to meet customer expectations, manage inventory, complete sales and achieve operating efficiencies could be adversely affected. The Company faces risks associated with its growth strategies including acquiring and disposing of businesses.
If the Company is unable to comply with bank and payment card industry standards, its operations could be adversely affected. The protection of the Company’s customer, associate and Company data is critically important to the Company.
The Company’s and its vendors’ databases containing personal information and payment card data of the Company’s customers, employees and other third parties could be breached, which could subject the Company to adverse publicity, litigation, fines and expenses. If the Company is unable to comply with bank and payment card industry standards, its operations could be adversely affected.
There can be no assurance that future divestitures will occur, or if a transaction does occur, there can be no assurance as to the potential value created by the transaction. The process of exploring strategic alternatives or selling a business could cause uncertainty and negatively impact our ability to attract, retain and motivate key employees.
These transactions may involve challenges and risks. There can be no assurance that future divestitures will occur, or if a transaction does occur, there can be no assurance as to the potential value created by the transaction.
Consumer preferences and, as a result, the popularity of particular designs and categories of footwear and apparel, generally change over time. The Company’s success depends in part on its ability to maintain its brands’ positive images, and the ability to anticipate, understand and respond to changing footwear and apparel trends and consumer preferences in a timely manner.
Consumer preferences and, as a result, the popularity of particular designs and categories of footwear and apparel, generally change over time.
A decline in disposable income and consumer spending has adversely affected demand for the Company’s products, and could further adversely affect demand and Company's results of operations. The Company operates in competitive industries and markets. The Company competes with a large number of wholesalers, and retailers of footwear and apparel, and direct-to-consumer footwear and apparel companies.
If inflationary pressures continue, and the Company is unable to pass along price increases or further reduce costs, the Company's results of operations will be negatively impacted. The Company operates in competitive industries and markets. The Company competes with a large number of wholesalers, and retailers of footwear and apparel, and direct-to-consumer footwear and apparel companies.
If the Company fails to comply with these covenants, it may need to seek waivers or amendments of such covenants, seek alternative or additional sources of financing or 18 reduce its expenditures. The Company may be unable to obtain such waivers, amendments or alternative or additional financing on favorable terms or at all.
The Company may be unable to obtain such waivers, amendments or alternative or additional financing on favorable terms or at all. Legal and Regulatory Risks If the Company is unsuccessful in establishing and protecting its intellectual property, the value of its brands could be adversely affected.
From time to time, the Company may seek to sell one or more businesses, or sell or license one or more brands.
From time to time, the Company may seek to sell one or more businesses, or sell or license one or more brands. For example, as part of the Company’s strategy to invest in brands that offer the greatest opportu nities for growth, on January 10, 2024 the Company closed the sale of the global Sperry ® business.
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The extent to which the COVID-19 pandemic, or other health crises impacts the Company’s business, operations and financial results, including the duration and magnitude of such effects, will depend on numerous factors outside of the Company's control, such as, the duration and scope of the pandemic or other health crisis and effectiveness of containment efforts; the negative impact on global and regional economies and economic activity, including the duration and magnitude of its impact on unemployment rates, consumer discretionary spending and levels of consumer confidence; and actions governments, businesses and individuals may take in response to the pandemic or other health crisis.
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Outbreaks of disease, and actions taken in response to an outbreak, have in the past materially negatively impacted, and could in the future materially negatively impact, the Company's workforce as well as its business, operations, and financial results in many ways, both directly and indirectly.
Removed
Disruptions in the supply chain related to the COVID-19 pandemic have had an adverse effect and may continue to have an adverse effect on the Company's ability to meet consumer demand and financial results. • Increased cyber security risk due to the increase in the number of employees working remotely. • Volatility in the availability and prices for commodities for raw materials used in the Company's products and related inflationary pressures.
Added
A significant reduction in wholesale customer purchases of the Company’s products, wholesale customers seeking more favorable terms or canceling orders, or the failure of wholesale customers to pay for the Company’s products in a timely manner could adversely affect the Company’s business. The Company’s financial success depends on its wholesale customers continuing to purchase its products.
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The Company faces risks associated with its growth strategies including acquiring and disposing of businesses.
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In addition, the Company’s distribution capacity depends upon the timely performance of services by third parties, including the transportation of products to and from the Company’s distribution facilities.
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As part of the Company’s strategy to ensure that it is investing in parts of its business that offer the greatest opportunities to achieve growth, the Company is currently seeking to sell its Wolverine Leathers Division, and the Company on February 7, 2023 closed the sale of the Keds® business. These transactions may involve challenges and risks.
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The process of exploring strategic alternatives or selling a business could cause uncertainty and negatively impact our ability to attract, retain and motivate key employees. In addition, the Company expends costs and management resources to complete divestitures and manage post-closing arrangements.
Removed
Increases in costs for commodities, equipment, services and materials used in production could have a negative impact on the Company’s results of operations and financial position. The Company purchases a majority of the pigskin hides used in its leathers operations from a single domestic source pursuant to short-term contracts.
Added
A decline in disposable income and consumer spending has adversely affected demand for the Company’s products, and could further adversely affect demand and Company's results of operations. If the Company reduces the prices of its products, offers additional promotions or increases marketing efforts due to decreases in consumer spending, the Company's profitability could decline.
Removed
If this source fails to continue to supply the Company with raw pigskin or supplies the Company with raw pigskin on less favorable terms, the Company’s cost of raw materials for its leathers operations could increase and, as a result, have a negative impact on the Company’s results of operations and financial position.
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The Company is subject to inflationary pressures, including increased costs in many aspects of our business, such as the cost of raw materials, transportation, and labor, which the Company may not be able to offset with cost savings or price increases on its 15 products.
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For example, conflicts in the Middle East, heightened tensions in the Red Sea and disruption of the Suez Canal shipping channels may cause supply chain disruptions and increase shipping costs.
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Increases in the cost of raw materials, labor and services could adversely affect the Company’s results of operations.
Added
The final determination of any of these examinations could have an adverse effect on the Company’s results of operations and financial position. 17 An impairment of goodwill or other intangibles could have an adverse impact to the Company’s results of operations.
Added
The Company’s customers and associates have a high expectation that the Company will adequately safeguard and protect their sensitive personal information. The Company's operations have become increasingly centralized and dependent upon automated information technology processes.
Added
Provisions of Delaware law and the Company’s certificate of incorporation and bylaws could prevent or delay a change in control or change in management that could be beneficial to the Company’s stockholders.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company operates its distribution operations primarily through a leased distribution facility of approximately 720,000 square feet in Beaumont, California; an owned distribution facility of approximately 520,000 square feet in Louisville, Kentucky; a leased distribution center of approximately 468,000 square feet in Howard City, Michigan; a leased distribution center of approximately 242,000 square feet in Ontario, Canada and a leased distribution center of approximately 125,000 square feet in Heerhugowaard, Netherlands.
Biggest changeThe Company operates its distribution operations primarily through a leased distribution facility of approximately 720,000 square feet in Beaumont, California; a leased distribution facility of approximately 520,000 square feet in Louisville, Kentucky; a leased distribution center of approximately 468,000 square feet in Howard City, Michigan; a leased distribution center of approximately 242,000 square feet in Ontario, Canada and a leased distribution center of approximately 125,000 square feet in Heerhugowaard, Netherlands.
Item 2. Properties The Company operates its domestic administration, sales and marketing operations primarily from an owned facility of approximately 307,000 square feet in Rockford, Michigan, as well as leased facilities of approximately 102,000 square feet in Waltham, Massachusetts and 80,000 square feet in the United Kingdom.
Item 2. Properties The Company operates its domestic administration, sales and marketing operations primarily from an owned facility of approximately 307,000 square feet in Rockford, Michigan, as well as leased facilities of approximately 84,700 square feet in Waltham, Massachusetts and 80,000 square feet in the United Kingdom.
The Company also leases or owns offices, showrooms and other facilities throughout the U.S., Canada, the United Kingdom, continental Europe, Hong Kong and China to meet its operational requirements. In addition, the Company operates 154 retail stores primarily through leases with various third-party landlords in the U.S., United Kingdom, and Canada that collectively occupy approximately 350,000 square feet.
The Company also leases or owns offices, showrooms and other facilities throughout the U.S., Canada, the United Kingdom, continental Europe, Hong Kong and China to meet its operational requirements. In addition, the Company operates 166 retail stores primarily through leases with various third-party landlords in the U.S., United Kingdom, and Canada that collectively occupy approximately 388,000 square feet.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeHufnagel has served the Company as President, Active Group since November 2022, and has served as President of the Merrell brand since September 2019. From July 2018 through September 2019, he served as President, CAT Footwear. From January 2013 through July 2018, he served as Senior Vice President and Head of Corporate Strategy. Amy M.
Biggest changeHufnagel has served the Company as Chief Executive Officer since August 2023, and as President since May 2023. From November 2022 through May 2023, he was the President, Active Group. From September 2019 through November 2022 he served as President of the Merrell ® brand. From July 2018 through September 2019, he served as President, Cat ® Footwear.
Item 4. Mine Safety Disclosures Not applicable. Supplemental Item. Information about our Executive Officers The following table lists the names and ages of the Executive Officers of the Company and their positions held with the Company as of January 31, 2023.
Item 4. Mine Safety Disclosures Not applicable. Supplemental Item. Information about our Executive Officers The following table lists the names and ages of the Executive Officers of the Company and their positions held with the Company as of January 31, 2024.
The information provided below the table lists the business experience of each such Executive Officer for at least the past five years. All Executive Officers serve at the pleasure of the Board of Directors of the Company, or, if not appointed by the Board of Directors, at the pleasure of management. Name Age Positions held with the Company Brendan L.
The information provided below the table lists the business experience of each such Executive Officer for at least the past five years. All Executive Officers serve at the pleasure of the Board of Directors of the Company, or, if not appointed by the Board of Directors, at the pleasure of management. Name Age Positions held with the Company Christopher E.
From February 2016 through February 2017, he served as President, Wolverine Outdoor & Lifestyle Group. From June 2014 through February 2016, he served as Senior Vice President and President, International Group . PART II
From June 2014 through February 2016, he served as Senior Vice President and President, International Group . PART II
Hoffman 54 President and Chief Executive Officer Christopher E. Hufnagel 50 President, Active Group Amy M. Klimek 49 Executive Vice President, Global Human Resources Reginald M. Rasch 52 Senior Vice President, General Counsel and Secretary Isabel Soriano 52 President, International Michael D. Stornant 56 Executive Vice President, Chief Financial Officer and Treasurer James D.
Hufnagel 51 President and Chief Executive Officer Amy M. Klimek 50 Executive Vice President, Global Human Resources Reginald M. Rasch 53 Senior Vice President, General Counsel and Secretary Isabel Soriano 53 President, International Michael D. Stornant 57 Executive Vice President, Chief Financial Officer and Treasurer James D. Zwiers 56 Executive Vice President and President, Global Operations Group Christopher E.
Stornant has served the Company as Executive Vice President, Chief Financial Officer and Treasurer since June 2015. From January 2013 through June 2015, he served as Vice President, Corporate Finance. James D. Zwiers has served the Company as Executive Vice President since February 2017 and President, Global Operations Group since January 2021.
From January 2013 through June 2015, he served as Vice President, Corporate Finance. James D. Zwiers has served the Company as Executive Vice President since February 2017 and President, Global Operations Group since January 2021. From February 2016 through February 2017, he served as President, Wolverine Outdoor & Lifestyle Group.
From June 2018 to May 2021, she served as Vice President and Managing Director of EMEA. From April 2014 to June 2018, she served as Vice President and General Manager for Vans, Timberland and Kipling in South America at VF Corporation, a publicly traded footwear and apparel retailer. Michael D.
From April 2014 to June 2018, she served as Vice President and General Manager for Vans, Timberland and Kipling in South America at VF Corporation, a publicly traded footwear and apparel retailer. Michael D. Stornant has served the Company as Executive Vice President, Chief Financial Officer and Treasurer since June 2015.
Klimek has served the Company as Executive Vice President, Global Human Resources since May 2016. From October 2014 to May 2016, she served as Vice President of Human Resources. Reginald M. Rasch has served the Company as Senior Vice President, General Counsel and Secretary since January 2023.
From January 2013 through July 2018, he served as Senior Vice President and Head of Corporate Strategy. Amy M. Klimek has served the Company as Executive Vice President, Global Human Resources since May 2016. From October 2014 to May 2016, she served as Vice President of Human Resources. Reginald M.
From May 2021 through November 2022, he was the Chief Legal Officer and Corporate Secretary of Party City Holdco Inc., a publicly traded party goods company in North America. Mr.
Rasch has served the Company as Senior Vice President, General Counsel and Secretary since January 2023. From May 2021 through November 2022, he was the Chief Legal Officer and Corporate Secretary of Party City Holdco Inc., a publicly traded party goods company. Mr.
Rasch was employed by Rakuten, a global technology conglomerate that focuses heavily on eCommerce, digital advertising and data intelligence, from 2005 to May 2021, where he held positions of increasing responsibilities in Rakuten Americas including Head of Legal and Secretary from 2016 to May 2021. Isabel Soriano has served the Company as President, International since June 2021.
Rasch was employed by Rakuten, a global technology conglomerate, from 2005 to May 2021, where he was the Rakuten Americas Head of Legal and Secretary from 2016 to May 2021. 23 Isabel Soriano has served the Company as President, International since June 2021. From June 2018 to May 2021, she served as Vice President and Managing Director of EMEA.
Removed
Zwiers 55 Executive Vice President and President, Global Operations Group Brendan L. Hoffman has served the Company as Chief Executive Officer since January 2022 and as President since September 2020. From October 2015 through August 2020, he was the Chief Executive Officer and President of Vince Holding Corp., a publicly-traded global apparel brand and retailer. 22 Christopher E.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThis Stock Performance Graph shall not be deemed to be incorporated by reference into the Company’s SEC filings and shall not constitute soliciting material or otherwise be considered filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. 23 Five-Year Cumulative Total Return Summary The following table provides information regarding the Company’s purchases of its own common stock during the fourth quarter of fiscal 2022.
Biggest changeThis Stock Performance Graph shall not be deemed to be incorporated by reference into the Company’s SEC filings and shall not constitute soliciting material or otherwise be considered filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
The 24 Company’s employee stock compensation plans provide that the shares delivered or attested to, or withheld, shall be valued at the closing price of the Company’s common stock on the date the relevant transaction occurs. Item 6. Reserved
The Company’s employee stock compensation plans provide that the shares delivered or attested to, or withheld, shall be valued at the closing price of the Company’s common stock on the date the relevant transaction occurs. Item 6. Reserved
The Company currently expects that comparable cash dividends will be paid in future quarters in fiscal 2023.
The Company currently expects that comparable cash dividends will be paid in future quarters in fiscal 2024.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s common stock is traded on the New York Stock Exchange under the symbol “WWW.” The number of stockholders of record on February 10, 2023, was 673. A quarterly dividend of $0.10 per share was declared on February 8, 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s common stock is traded on the New York Stock Exchange under the symbol “WWW.” The number of stockholders of record on February 9, 2024, was 654. A quarterly dividend of $0.10 per share was declared on February 7, 2024.
Since that date, the Company repurchased $146.9 million of common stock. The annual amount of any stock repurchases is restricted under the terms of the Company's amended senior credit facility and senior notes indenture.
Since that date, the Company repurchased $146.9 million of common stock. The annual amount of any stock repurchases is restricted under the terms of the Company's amended senior credit facility and senior notes indenture. The common stock repurchase program expired on September 11, 2023.
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Amount that May Yet Be Purchased Under the Plans or Programs Period 10 (October 2, 2022 to November 5, 2022) Common Stock Repurchase Program (1) — $ — — $ 366,524,492 Employee Transactions (2) 16,581 $ 17.18 Period 11 (November 6, 2022 to December 3, 2022) Common Stock Repurchase Program (1) — $ — — $ 366,524,492 Employee Transactions (2) 193 $ 11.20 Period 12 (December 4, 2022 to December 31, 2022) Common Stock Repurchase Program (1) — $ — — $ 366,524,492 Employee Transactions (2) 3,424 $ 10.74 Total for the Fourth Quarter Ended December 31, 2022 Common Stock Repurchase Program (1) — $ — — $ 366,524,492 Employee Transactions (2) 20,198 $ 16.03 (1) On September 11, 2019, the Company’s Board of Directors approved a common stock repurchase program that authorized the repurchase of $400.0 million of common stock over a four-year period, incremental to the $113.4 million available as of that date for repurchases under the previous program.
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Amount that May Yet Be Purchased Under the Plans or Programs Period 10 (October 1, 2023 to November 4, 2023) Common Stock Repurchase Program (1) — $ — — $ — Employee Transactions (2) 2,269 $ 7.93 Period 11 (November 5, 2023 to December 2, 2023) Common Stock Repurchase Program (1) — $ — — $ — Employee Transactions (2) 3,897 $ 8.40 Period 12 (December 3, 2023 to December 30, 2023) Common Stock Repurchase Program (1) — $ — — $ — Employee Transactions (2) — $ — Total for the Fourth Quarter Ended December 30, 2023 Common Stock Repurchase Program (1) — $ — — $ — Employee Transactions (2) 6,166 $ 8.22 (1) On September 11, 2019, the Company’s Board of Directors approved a common stock repurchase program that authorized the repurchase of $400.0 million of common stock over a four-year period, incremental to the $113.4 million available as of that date for repurchases under the previous program.
Added
Five-Year Cumulative Total Return Summary 24 The following table provides information regarding the Company’s purchases of its own common stock during the fourth quarter of fiscal 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe Corporate category consists of the gain on the sale of the Champion trademarks in 2022 and unallocated corporate expenses, such as corporate employee costs, costs related to the COVID-19 pandemic, impairment of intangible assets and goodwill, reorganization activities, and environmental and other related costs. 27 The reportable segment results for years 2022 and 2021 are as follows: Fiscal Year (In millions) 2022 2021 Change Percent Change REVENUE Active Group $ 1,570.2 $ 1,319.6 $ 250.6 19.0 % Work Group 590.5 548.8 41.7 7.6 % Lifestyle Group 447.5 477.0 (29.5) (6.2) % Other 76.6 69.5 7.1 10.2 % Total $ 2,684.8 $ 2,414.9 $ 269.9 11.2 % OPERATING PROFIT (LOSS) Active Group $ 198.4 $ 229.5 $ (31.1) (13.6) % Work Group 102.5 103.8 (1.3) (1.3) % Lifestyle Group 48.1 67.5 (19.4) (28.7) % Other 11.8 8.1 3.7 45.7 % Corporate (569.2) (253.2) (316.0) (124.8) % Total $ (208.4) $ 155.7 $ (364.1) (233.8) % Further information regarding the reportable segments can be found in Note 18 to the Company's Consolidated Financial Statements.
Biggest changeThe reportable segment results for years 2023 and 2022 are as follows: Fiscal Year (In millions) 2023 2022 Change Percent Change REVENUE Active Group $ 1,439.1 $ 1,570.2 $ (131.1) (8.3) % Work Group 480.6 590.5 (109.9) (18.6) % Other 323.2 524.1 (200.9) (38.3) % Total $ 2,242.9 $ 2,684.8 $ (441.9) (16.5) % OPERATING PROFIT (LOSS) Active Group $ 140.3 $ 198.4 $ (58.1) (29.3) % Work Group 58.1 102.5 (44.4) (43.3) % Other 32.8 59.9 (27.1) (45.2) % Corporate (299.4) (569.2) 269.8 47.4 % Total $ (68.2) $ (208.4) $ 140.2 67.3 % Further information regarding the reportable segments can be found in Note 18 to the Company's Consolidated Financial Statements.
Management evaluates the potential that the Company will be able to realize its gross deferred tax assets and assesses the need for valuation allowances on a quarterly basis. 34 On a periodic basis, the Company estimates the full year effective tax rate and records a quarterly income tax provision in accordance with the projected full year rate.
Management evaluates the potential that the Company will be able to realize its gross deferred tax assets and assesses the need for valuation allowances on a quarterly basis. On a periodic basis, the Company estimates the full year effective tax rate and records a quarterly income tax provision in accordance with the projected full year rate.
The Company evaluates the probability a tax position will be effectively sustained and the appropriateness of the amount recognized for uncertain tax positions based on factors including changes in facts or circumstances, changes in tax law, settled audit issues and new audit activity.
The Company evaluates the probability a tax position will be effectively sustained and the appropriateness of the amount recognized for uncertain tax positions based on 34 factors including changes in facts or circumstances, changes in tax law, settled audit issues and new audit activity.
The average cost of inventory is used for finished product inventories of the Company’s direct-to- 32 consumer business and Sweaty Betty ® inventory. The Company has applied these inventory cost valuation methods consistently from year to year.
The average cost of inventory is used for finished product inventories of the Company’s direct-to-consumer business and Sweaty Betty ® inventory. The Company has applied these inventory cost valuation methods consistently from year to year.
A discussion of a comparison of the Company's results of operations and liquidity and capital resources for fiscal 2021 and 2020 has been omitted from this Form 10-K but may be found in Item 7.
A discussion of a comparison of the Company's results of operations and liquidity and capital resources for fiscal 2022 and 2021 has been omitted from this Form 10-K but may be found in Item 7.
The Company expects to meet its contractual obligations through its typical sources of liquidity in the normal course of business, such as cash from operating activities, and believes it has the financial resources to satisfy these contractual obligations.
The Company expects to meet its contractual obligations through its customary sources of liquidity in the normal course of business, such as cash from operating activities, and believes it has the financial resources to satisfy these contractual obligations.
Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts. Revenue recognized during the year ended December 31, 2022 related to the Company’s contract liabilities was nominal. Inventory The Company values its inventory at the lower of cost or net realizable value.
Overall, these reserves reflect the Company’s best estimates of the amount of consideration to 32 which it is entitled based on the terms of the respective underlying contracts. Revenue recognized during the year ended December 30, 2023 related to the Company’s contract liabilities was nominal. Inventory The Company values its inventory at the lower of cost or net realizable value.
Estimated future interest payments on outstanding debt obligations are based on interest rates as of December 31, 2022. Actual cash outflows may differ significantly due to changes in underlying interest rates. (2) Purchase obligations related primarily to inventory and capital expenditure commitments.
Estimated future interest payments on outstanding debt obligations are based on interest rates as of December 30, 2023. Actual cash outflows may differ significantly due to changes in underlying interest rates. (2) Purchase obligations related primarily to inventory and capital expenditure commitments.
The Amendment provides for a debt capacity of up to an aggregate debt amount (including outstanding term loan principal and revolver commitment amounts in addition to permitted incremental debt) not to exceed $2.0 billion unless certain specified conditions set forth in the amended senior credit facility are met.
The credit agreement provides for a debt capacity of up to an aggregate debt amount (including outstanding term loan principal and revolver commitment amounts in addition to permitted incremental debt) not to exceed $2.0 billion unless certain specified conditions set forth in the Credit Agreement are met.
As of December 31, 2022, the Company was in compliance with all covenants and performance ratios under the Credit Agreement. The Company’s debt at December 31, 2022 totaled $1,158.0 million, compared to $966.8 million at January 1, 2022. The Company expects to use the current borrowings to fund organic growth initiatives, reduce debt, pay dividends and for general corporate purposes.
As of December 30, 2023, the Company was in compliance with all covenants and performance ratios under the Credit Agreement. The Company’s debt at December 30, 2023 totaled $920.8 million, compared to $1,158.0 million at December 31, 2022. The Company expects to use the current borrowings to fund organic growth initiatives, pay dividends and for general corporate purposes.
Pension expense is also impacted by the expected long-term rate of return on plan assets, which the Company has determined to be 6.87% and 6.75% for fiscal 2022 and 2021, respectively.
Pension expense is also impacted by the expected long-term rate of return on plan assets, which the Company has determined to be 6.88% and 6.87% for fiscal 2023 and 2022, respectively.
The Company’s brands are marketed in approximately 170 countries and territories at December 31, 2022, including through owned operations in the U.S., Canada, the United Kingdom and certain countries in continental Europe and Asia Pacific.
The Company’s brands are marketed in approximately 170 countries and territories at December 30, 2023, including through owned operations in the U.S., Canada, the United Kingdom and certain countries in continental Europe and Asia Pacific.
In other regions (Latin America, portions of Europe and Asia Pacific, the Middle East and Africa), the Company relies on a network of third-party distributors, licensees and joint ventures. At December 31, 2022, the Company oper ated 154 retail stores in the U.S., United Kingdom, and Canada an d 63 direct-to-consumer eCommerce sites.
In other regions (Latin America, portions of Europe and Asia Pacific, the Middle East and Africa), the Company relies on a network of third-party distributors, licensees and joint ventures. At December 30, 2023, the Company oper ated 166 retail stores in the U.S., United Kingdom, and Canada an d 56 direct-to-consumer eCommerce sites.
The bonds selected are listed as high grade by at least two recognized ratings agency and are non-callable, currently purchasable and non-prepayable. The calculated discount rate was 5.56% at December 31, 2022, compared to 3.09% at January 1, 2022.
The bonds selected are listed as high grade by at least two recognized ratings agency and are non-callable, currently purchasable and non-prepayable. The calculated discount rate was 5.30% at December 30, 2023, compared to 5.56% at December 31, 2022.
(4) The total amount of unrecognized tax benefits on the consolidated balance sheet at December 31, 2022 is $9.0 million . At this time, the Company is unable to make a reasonably reliable estimate of the timing of payments in individual years beyond 12 months due to uncertainties in the timing of tax audit outcomes.
(4) The total amount of unrecognized tax benefits on the consolidated balance sheet at December 30, 2023 is $2.6 million. At this time, the Company is unable to make a reasonably reliable estimate of the timing of payments in individual years beyond 12 months due to uncertainties in the timing of tax audit outcomes.
The Company declared cash dividends of $0.40 per share in each of 2022 and 2021. Dividends paid totaled $32.8 million and $33.5 million for 2022 and 2021 , respectively. A quarterly dividend of $0.10 per share was declared on February 8, 2023 to shareholders of record on April 3, 2023.
The Company declared cash dividends of $0.40 per share in each of 2023 and 2022 . Dividends paid totaled $32.6 million and $32.8 million for 2023 and 2022 , respectively. A quarterly dividend of $0.10 per share was declared on February 7, 2024 to shareholders of record on April 1, 2024.
If the actual results differ from the estimates and judgments used, the amounts recorded in the Consolidated Financial Statements may be exposed to potential impairment of the intangible assets and goodwill as discussed in the "Goodwill and Indefinite-Lived Intangibles" section below. Refer to Note 19 “Business Acquisitions” for additional discussion.
If the actual results differ from the estimates and judgments used, the amounts recorded in the Consolidated Financial Statements may be exposed to potential impairment of the intangible assets and goodwill as discussed in the "Goodwill and Indefinite-Lived Intangibles" section below.
The operating profit decrease was due to a 150 basis point decrease in gross margin and revenue decreases, partially offset by a $0.4 million decrease in selling, general and administrative costs.
The operating profit decrease was due to revenue decreases and a 180 basis point decrease in gross margin, partially offset by a $2.6 million decrease in selling, general and administrative costs.
Cash Flows The following table summarizes cash flow activities: Fiscal Year Ended (In millions) December 31, 2022 January 1, 2022 Net cash provided by (used in) operating activities (178.9) 86.8 Net cash provided by (used in) investing activities 54.6 (437.3) Net cash provided by (used in) financing activities 107.1 169.3 Additions to property, plant and equipment (36.5) (17.6) Depreciation and amortization 34.6 33.2 Operating Activities The principal source of the Company’s operating cash flow is net earnings, including cash receipts from the sale of the Company’s products, net of costs of goods sold.
Cash Flows The following table summarizes cash flow activities: Fiscal Year Ended (In millions) December 30, 2023 December 31, 2022 Net cash provided by (used in) operating activities 121.8 (178.9) Net cash provided by investing activities 171.6 54.6 Net cash provided by (used in) financing activities (246.3) 107.1 Additions to property, plant and equipment (14.6) (36.5) Depreciation and amortization 35.1 34.6 Operating Activities The principal source of the Company’s operating cash flow is net earnings, including cash receipts from the sale of the Company’s products, net of costs of goods sold.
The Company had $569.3 million of borrowing capacity available under the Revolving Facility as of December 31, 2022. Cash and cash equivalents located in foreign jurisdictions totaled $114.9 million as of December 31, 2022. Cash flow from operating activities is expected to be sufficient to meet the Company’s working capital needs for the foreseeable future.
The Company had $688.4 million of borrowing capacity available under the Revolving Facility as of December 30, 2023. Cash and cash equivalents located in foreign jurisdictions totaled $161.8 million as of December 30, 2023. Cash flow from operating activities is expected to be sufficient to meet the Company’s working capital needs for the foreseeable future.
RESULTS OF OPERATIONS The following is a discussion of the Company’s results of operations and liquidity and capital resources. This section should be read in conjunction with the Company’s consolidated financial statements and related notes, which are included in Item 8 of this Annual Report on Form 10-K.
This section should be read in conjunction with the Company’s consolidated financial statements and related notes, which are included in Item 8 of this Annual Report on Form 10-K.
D uring 2022 and 2021, the Company made paymen ts of $15.0 and $12 .9 million towards the total cap, respectively. Due to the uncertainty of the timing and amounts related to the Company's other environmental remediation costs, they have been excluded from this table. See Note 17 to the Company's Consolidated Financial Statements for additional information.
During 2023 and 2022, the Company made payments of $6.4 million and $15.0 million towards the total cap, respectively. Due to the 30 uncertainty of the timing and amounts related to the Company's other environmental remediation costs, they have been excluded from this table. See Note 17 to the Company's Consolidated Financial Statements for additional information.
As of December 31, 2022, the Company has a reserve of $74.1 million, of which $49.8 million is expected to be paid in the next 12 months and is recorded as a current obligation in other accrued liabilities, with the remaining $24.3 million recorded in other liabilities and expected to be paid over the course of up to 25 years.
As of December 30, 2023, the Company has a reserve of $57.9 million, of which $31.3 million is expected to be paid in the next 12 months and is recorded as a current obligation in other accrued liabilities, with the remaining $26.6 million recorded in other liabilities and expected to be paid over the course of up to 25 years.
Environmental and other related costs were $56.3 million and $73.9 million in 2022 and 2021, respectively. See Note 17 to the Company's Consolidated Financial Statements for further discussion. INTEREST, OTHER AND TAXES Net interest expense was $47.3 million in 2022 compared to $37.4 million in 2021.
Environmental and other related costs were $8.4 million and $56.3 million in 2023 and 2022, respectively. See Note 17 to the Company's Consolidated Financial Statements for further discussion of environmental remediation costs. 27 INTEREST, OTHER AND TAXES Net interest expense was $63.5 million in 2023 compared to $47.3 million in 2022.
The maturity date of the loans under the Senior Credit Facilities was extended to October 21, 30 2026.
The maturity date of the loans under the Senior Credit Facilities is October 21, 2026.
The Work Group’s operating profit decreased $1.3 million, or 1.3%, in 2022 compared to 2021. The operating profit decrease was due to a 240 basis point decrease in gross margin and by a $2.9 million increase in selling, general and administrative costs, partially offset by revenue increases.
Other operating profit decreased $27.1 million, or 45.2%, in 2023 compared to 2022. The operating profit decrease was due to revenue decreases partially offset by a 30 basis point increase in gross margin and a $50.9 million decrease in selling, general and administrative costs.
The Company has established a reserve for estimated environmental remediation costs based upon an evaluation of currently available facts with respect to each individual affected site.
A detailed discussion of environmental remediation costs is found in Note 17 to the Company's Consolidated Financial Statements. The Company has established a reserve for estimated environmental remediation costs based upon an evaluation of currently available facts with respect to each individual affected site.
The Other category consists of the Company’s leather marketing operations, sourcing operations that include third-party commission revenues, multi-branded direct-to-consumer retail stores and the Stride Rite ® licensed business.
The Company also reports “Other” and “Corporate” categories. The Other category consists of Sperry ® footwear, Keds ® footwear, Hush Puppies ® footwear and apparel, the Company’s leather marketing operations, sourcing operations that include third-party commission revenues, multi-branded direct-to-consumer retail stores and the Stride Rite ® licensed business.
The Company expects to disburse payments during 2023 equal to the remainder of the established accrual. Developments may occur that could materially change the Company’s current cost estimates. The Company adjusts recorded liabilities as further information develops or circumstances change.
Developments may occur that could materially change the Company’s current cost estimates. The Company adjusts recorded liabilities as further information develops or circumstances change.
Fiscal Year (In millions, except per share data) 2022 2021 Percent Change Revenue $ 2,684.8 $ 2,414.9 11.2 % Cost of goods sold 1,614.4 1,385.0 16.6 % Gross profit 1,070.4 1,029.9 3.9 % Selling, general and administrative expenses 906.4 817.8 10.8 % Gain on sale of trademarks (90.0) — — Impairment of goodwill and intangible assets 428.7 — — Environmental and other related costs, net of recoveries 33.7 56.4 (40.2) % Operating profit (loss) (208.4) 155.7 (233.8) % Interest expense, net 47.3 37.4 26.5 % Debt extinguishment and other costs — 34.3 (100.0) % Other expense (income), net (2.8) 3.7 (175.7) % Earnings (loss) before income taxes (252.9) 80.3 (414.9) % Income tax expense (benefit) (63.8) 13.3 (579.7) % Net earnings (loss) (189.1) 67.0 (382.2) % Less: net loss attributable to noncontrolling interests (0.8) (1.6) 50.0 % Net earnings (loss) attributable to Wolverine World Wide, Inc. $ (188.3) $ 68.6 (374.5) % Diluted earnings (loss) per share $ (2.37) $ 0.81 (392.6) % REVENUE Revenue was $2,684.8 million for 2022, representing an increase of 11.2% compared to the prior year's revenue of $2,414.9 million.
Fiscal Year (In millions, except per share data) 2023 2022 Percent Change Revenue $ 2,242.9 $ 2,684.8 (16.5) % Cost of goods sold 1,370.4 1,614.4 (15.1) % Gross profit 872.5 1,070.4 (18.5) % Selling, general and administrative expenses 856.2 906.4 (5.5) % Gain on sale of businesses, trademarks and long-lived assets (90.4) (90.0) (0.4) % Impairment of long-lived assets 185.3 428.7 (56.8) % Environmental and other related costs (income), net of recoveries (10.4) 33.7 (130.9) % Operating profit (loss) (68.2) (208.4) 67.3 % Interest expense, net 63.5 47.3 34.2 % Other expense (income), net 2.5 (2.8) 189.3 % Earnings (loss) before income taxes (134.2) (252.9) 46.9 % Income tax expense (benefit) (95.0) (63.8) (48.9) % Net earnings (loss) (39.2) (189.1) 79.3 % Less: net earnings (loss) attributable to noncontrolling interests 0.4 (0.8) 150.0 % Net earnings (loss) attributable to Wolverine World Wide, Inc. $ (39.6) $ (188.3) 79.0 % Diluted earnings (loss) per share $ (0.51) $ (2.37) 78.5 % REVENUE Revenue was $2,242.9 million for 2023, representing a decline of 16.5% compared to the prior year's revenue of $2,684.8 million.
The decrease in gross margin in the current year period was due to unfavorable product mix and higher promotional activity in the Company's direct to consumer channel and increased closeout sales in the wholesale channel.
The decrease in gross margin in the current year was due to increased closeout sales, product mix and unfavorable average selling price and higher promotional activity in the Company’s direct-to-consumer channel. The decrease in selling, general and administrative expenses in 2023 was primarily due to lower advertising costs and selling expenses.
Please refer to Item 1A, “Risk Factors” for a more complete discussion of the risks the Company encounters in our business. 25 2022 FINANCIAL OVERVIEW • Revenue was $2,684.8 million for 2022, representing an increase of 11.2% compared to the prior year's revenue of $2,414.9 million. • Gross margin for 2022 was 39.9%, a decrease of 270 basis points from 2021. • The effective tax rate in 2022 was 25.2%, compared to 16.6% in 2021. • Diluted loss per share in 2022 was $2.37, compared to diluted earnings per share of $0.81 in 2021. • The Company declared cash dividends of $0.40 per share in 2022 and 2021. • Cash flow used in operating activities was $178.9 million for 2022 and cash flow provided by operating activities was $86.8 million for 2021. • Compared to the prior year, inventory increased $379.7 million, or 103.9% .
Please refer to Item 1A, “Risk Factors” for a more complete discussion of the risks the Company encounters in our business. 2023 FINANCIAL OVERVIEW • Revenue was $2,242.9 million for 2023, representing a decrease of 16.5% compared to the prior year's revenue of $2,684.8 million. • Gross margin for 2023 was 38.9%, compared to 39.9% in 2022. • The effective tax rate in 2023 was 70.7%, compared to 25.2% in 2022. • Diluted loss per share in 2023 was $0.51, compared to diluted loss per share of $2.37 in 2022. • The Company declared cash dividends of $0.40 per share in 2023 and 2022. • Cash flow provided by operating activities was $121.8 million in 2023 and cash flow used in operating activities was $178.9 million in 2022. • Compared to the prior year, inventory decreased $371.6 million, or 49.9%, as of year-end. 26 RESULTS OF OPERATIONS The following is a discussion of the Company’s results of operations and liquidity and capital resources.
The increase was driven by higher impairment of intangible assets ($428.7 million), Sweaty Betty ® operating expenses included contribution through the one-year anniversary of the acquisition ($60.2 million), higher general and administrative costs ($26.6 million), higher selling costs ($10.4 million), higher distribution costs ($9.5 million), higher advertising costs ($6.0 million), higher Sweaty Betty ® integration costs ($2.0 million), and higher product development costs ($1.1 million), partially offset by the gain recorded on the sale of the Champion trademarks for footwear in the United States and Canada ($90.0 million), lower environmental and other related costs, net of recoveries ($22.7 million), lower incentive compensation costs ($20.0 million), and lower acquisition costs ($7.5 million).
The decrease was driven by lower impairment of long-lived assets ($243.4 million), the gain on the sale of businesses, trademarks, and long-lived assets ($90.4 million), lower advertising costs ($51.4 million), lower environmental and other related costs, net of recoveries ($44.1 million), lower incentive compensation costs ($22.1 million), lower selling costs ($9.6 million), lower product development costs ($4.8 million), lower distribution costs ($4.7 million), and lower Sweaty Betty ® integration costs ($2.0 million), partially offest by the prior year gain recorded on the sale of the Champion trademarks for footwear in the United States and Canada ($90.0 million), higher reorganization costs ($36.8 million), higher divestiture costs ($5.1 million), and higher general and administrative costs ($2.1 million).
Working capital balances were unfavorably impacted by an increase in inventories of $428.9 million, a decrease in accounts receivable of $84.5 million, and an increase in other operating assets of $21.1 million, partially offset by an increase in accounts payable of $62.6 million and an increase in other operating liabilities of $26.1 million.
Working capital balances were favorably impacted by a decrease in inventories of $286.5 million and a decrease in accounts receivable of $2.8 million, partially offset by an increase in other operating assets of $16.8 million, a decrease in accounts payable of $65.6 million and a decrease in other operating liabilities of $36.6 million.
Any excess cash flow from operating activities is expected to be used to fund organic growth initiatives, reduce debt, pay dividends and for general corporate purposes. The Company may purchase up to an additional $366.5 million of shares under its existing common stock repurchase program, which expires in 2023.
Any excess cash flow from operating activities is expected to be used to fund organic growth initiatives, reduce debt, pay dividends and for general corporate purposes. The Company did not repurchase shares during 2023 and repurchased $81.3 million of shares in 2022. The common stock repurchase program expired in September 2023.
The Company paid $7.7 million and $14.1 million in 2022 and 2021, respectively, in connection with shares or units withheld to pay employee taxes related to awards under stock incentive plans and received $1.4 million and $17.1 million in proceeds from the exercise of stock options in 2022 and 2021, respectively.
The Company paid $5.8 million and $7.7 million in 2023 and 2022, respectively, in connection with shares or units withheld to pay employee taxes related to awards under stock incentive plans. The Company received $31.2 million and $7.0 million from noncontrolling interests in 2023 and 2022, respectively.
LIQUIDITY AND CAPITAL RESOURCES Fiscal Year (In millions) 2022 2021 Cash and cash equivalents (1) $ 135.5 $ 161.7 Debt 1,158.0 966.8 Available Revolving Facility (2) 569.3 769.2 (1) Cash and cash equivalents at the end of the year in the Consolidated Statements of Cash Flows includes $4.0 million of Wolverine Leathers business related cash and cash equivalents that are classified as held for sale as of December 31, 2022 that are not included in cash and cash equivalents in the Consolidated Balance Sheets.
LIQUIDITY AND CAPITAL RESOURCES Fiscal Year (In millions) 2023 2022 Cash and cash equivalents (1) $ 184.6 $ 135.5 Debt 920.8 1,158.0 Available Revolving Facility (2) 688.4 569.3 (1) Cash and cash equivalents at the end of the year in the Consolidated Statements of Cash Flows includes $5.6 million and $4.0 million of cash and cash equivalents that are classified as held for sale as of December 30, 2023 and December 31, 2022, respectively, that are not included in cash and cash equivalents in the Consolidated Balance Sheets. 29 (2) Amounts are net of both borrowings, if any, and outstanding standby letters of credit issued in accordance with the terms of the Revolving Facility.
Wholesale revenue is recognized for products sourced by the Company when control transfers to the customer generally occurring upon the purchase, shipment or delivery of branded products or to the customer.
Control of the Company's goods and services, and associated revenue, are transferred to customers at a point in time. The Company’s contract revenue consist of wholesale revenue and direct-to-consumer revenue. Wholesale revenue is recognized for products sourced by the Company when control transfers to the customer generally occurring upon the purchase, shipment or delivery of branded products to the customer.
Corporate Corporate expenses increased $316.0 million in 2022 compared to 2021 primarily due to the impairment of intangible assets related to the Sperry ® trade name and Sweaty Betty ® trade name and goodwill ($428.7 million), reorganization and integration activities ($9.6 million), and higher employee costs ($7.8 million), partially offset by the gain recorded on the sale of the Champion trademarks for footwear in the United States and Canada ($90.0 million), lower environmental and other related costs ($22.7 million), and lower incentive compensation costs ($19.2 million).
Corporate Corporate expenses decreased $269.8 million in 2023 compared to 2022 primarily due to lower impairment of long-lived and intangible assets ($243.4 million), the gain on sale of businesses, trademarks, and long-lived assets ($90.4 million), lower environmental and other related costs ($44.1 million), lower incentive compensation costs ($14.5 million), and lower employee costs ($11.4 million), partially offset by the 2022 gain recorded on the sale of the Champion trademarks for footwear in the United States and Canada ($90.0 million), and higher reorganization activities ($36.8 million).
Cash from operations during 2022 was lower compared to 2021, due primarily to an increase in net working capital representing a use of cash of $274.4 million.
Cash from operations during 2023 was higher compared to 2022, due primarily to a decrease in net working capital representing a source of cash of $168.0 million.
The Company had the following contractual obligations due by period at December 31, 2022: (In millions) Total Less than 1 year 1-3 years 3-5 years More than 5 years Long-term debt obligations (1) $ 1,446.3 $ 489.4 $ 135.4 $ 234.7 $ 586.8 Operating lease obligations 236.5 38.6 60.8 47.1 90.0 Purchase obligations (2) 423.1 423.1 — — — Pension (3) — — — — — Supplemental Executive Retirement Plan 44.9 3.9 8.3 8.8 23.9 Municipal water improvements (3) 31.9 31.9 — — — TCJA transition obligation 28.1 7.0 21.1 — — Total (4) $ 2,210.8 $ 993.9 $ 225.6 $ 290.6 $ 700.7 (1) Includes principal and interest payments on the Company’s long-term debt.
The Company had the following contractual obligations due by period at December 30, 2023: (In millions) Total Less than 1 year 1-3 years 3-5 years More than 5 years Long-term debt obligations (1) $ 1,088.7 $ 352.7 $ 127.2 $ 44.0 $ 564.8 Operating lease obligations 210.7 35.2 58.8 44.4 72.3 Purchase obligations (2) 241.8 241.8 — — — Supplemental Executive Retirement Plan 45.7 4.1 9.0 9.4 23.2 Municipal water improvements (3) 25.5 12.2 10.4 2.9 — TCJA transition obligation 21.0 9.3 11.7 — — Total (4) $ 1,633.4 $ 655.3 $ 217.1 $ 100.7 $ 660.3 (1) Includes principal and interest payments on the Company’s long-term debt.
Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended January 1, 2022, filed with the SEC on February 24, 2022.
Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 23, 2023. Known Trends Impacting Our Business Macroeconomic conditions and supply chain disruptions continue to adversely affect the Company’s business results.
Active Group The Active Group’s revenue increased $250.6 million, or 19.0%, in 2022 compared to 2021. The revenue increase was driven by an increase of $116.9 million from Merrell ® , $94.3 million from Sweaty Betty ® , $29.1 million from Saucony ® , and $10.3 million from Chaco ® .
Active Group The Active Group’s revenue decreased $131.1 million, or 8.3%, in 2023 compared to 2022. The revenue decline was driven by a decrease of $88.4 million from Merrell ® , $25.3 million from Chaco ® , $9.6 million from Saucony ® and $7.8 million from Sweaty Betty ® .
The Company would not be required to quantitatively determine the fair value unless the Company determines, based on the qualitative assessment, that it is more likely than not that its fair value is less than the carrying value.
The Company would not be required to quantitatively determine the fair value unless the Company determines, based on the qualitative assessment, that it is more likely than not that its fair value is less than the carrying value. 33 The Company performs its annual testing for goodwill and indefinite-lived intangible asset impairment at the beginning of the fourth quarter of the fiscal year for all reporting units.
The increase in selling, general and administrative expenses in 2022 was primarily due to higher advertising costs, labor and distribution costs and employee costs. 28 Lifestyle Group The Lifestyle Group’s revenue decreased $29.5 million, or 6.2%, in 2022 compared to 2021.
The decrease in selling, general and administrative expenses in 2023 is primarily due to lower advertising costs, selling expenses and employee costs. Work Group The Work Group’s revenue decreased $109.9 million, or 18.6%, in 2023 compared to 2022.
The Active Group's revenue increase was driven by an increase of $116.9 million from Merrell ® , $94.3 million from Sweaty Betty ® , $29.1 million from Saucony ® , and $10.3 million from Chaco ® .
The Active Group's revenue decline was driven by a decrease of $88.4 million from Merrell ® , $25.3 million from Chaco ® , $9.6 million from Saucony ® and $7.8 million from Sweaty Betty ® .
All prior period disclosures have been retrospectively adjusted to reflect the new reportable segments. • Active Group, consisting of Merrell ® footwear and apparel, Saucony ® footwear and apparel, Sweaty Betty ® activewear, and Chaco ® footwear; • Work Group, consisting of Wolverine ® footwear and apparel, Cat ® footwear, Bates ® uniform footwear, Harley-Davidson ® footwear and HYTEST ® safety footwear; and; • Lifestyle Group , consisting of Sperry ® footwear, Keds ® footwear, and Hush Puppies ® footwear and apparel.
REPORTABLE SEGMENTS The Company’s portfolio of brands are organized into the following reportable segments. • Active Group, consisting of Merrell ® footwear and apparel, Saucony ® footwear and apparel, Sweaty Betty ® activewear, and Chaco ® footwear; • Work Group, consisting of Wolverine ® footwear and apparel, Cat ® footwear, Bates ® uniform footwear, Harley-Davidson ® footwear and HYTEST ® safety footwear; Kids' footwear offerings from Saucony ® , Sperry ® , Keds ® , Merrell ® , Hush Puppies ® and Cat ® are included with the applicable brand.
The Company performs its annual testing for goodwill and indefinite-lived intangible asset impairment at the beginning of the fourth quarter of the fiscal year for all reporting units. In the fourth quarter of 2022, after completion of the annual impairment testing, the Company recorded a $48.4 million impairment charge for Sweaty Betty ® goodwill.
In the fourth quarter of 2022, after completion of the annual impairment testing, the Company recorded a $48.4 million impairment charge for Sweaty Betty ® goodwill. The Company did not recognize any impairment charges for goodwill during 2023 and 2021.
The change in revenue reflected a 19.0% increase from the Active Group, a 7.6% increase from the Work Group and a 6.2% decline from the Lifestyle Group.
The change in revenue reflected a 8.3% decline from the Active Group, an 18.6% decline from the Work Group and a 38.3% decline from Other.
The Work Group’s revenue increase was driven by an increase of $32.1 million from Cat ® and $20.1 million from Wolverine ® , partially offset by a decrease of $9.2 million from Bates ® .
The Work Group’s revenue decline was driven primarily by a decrease of $46.3 million from Wolverine ® , $40.2 million from Cat ® , $15.9 million from Harley-Davidson ® and $6.5 million from Bates ® .
The decrease is due primarily to cash used by operating activities of $178.9 million, share repurchases of $81.3 million, additions to property, plant, and equipment of $36.5 million, cash dividends paid of $32.8 million, and shares acquired related to employee stock plans of $7.7 million, partially offset by net revolver borrowings of $200.0 million, cash received from the sale of the Champion trademark of $90.0 million, proceeds from company-owned life insurance policies of $30.5 million, and contributions from noncontrolling interests of $7.0 million.
The increase is due primarily to proceeds from the sale of businesses, trademarks, long-lived assets and other assets of $188.9 million, cash provided by operating activities of $121.8 million and contributions from noncontrolling interests of $31.2 million, partially offset by net revolver payments of $120.0 million, long-term debt payments of $118.3 million, cash dividends paid of $32.6 million, additions to property, plant, and equipment of $14.6 million and shares acquired related to employee stock plans of $5.8 million.
Interest expense increased in the current year due to higher average principal balances of variable rate debt and higher average interest rates on the Company’s variable rate debt, partially offset by lower interest rates on the Company's senior notes.
Interest expense increased in the current year due to higher average principal balances of variable rate debt and higher average interest rates on the Company’s variable rate debt. Other expense was $2.5 million in 2023 compared to other income of $2.8 million in 2022. The effective tax rate in 2023 was 70.7%, compared to 25.2% in 2022.
The Company did not recognize any impairment charges for goodwill during years 2021 and 2020. In the fourth quarter of 2022, the Company recognized impairment charges of $191.0 million for the Sperry ® trade name and $189.3 million for the Sweaty Betty ® trade name. No impairment charges were recognized for the Company's intangible assets during 2021.
In the third quarter of 2023, after completion of impairment testing, the Company recorded a $38.3 million impairment charge for the Sperry ® trade name. In the fourth quarter of 2022, the Company recognized impairment charges of $191.0 million for the Sperry ® trade name and $189.3 million for the Sweaty Betty ® trade name.
In the fourth quarter of 2020, the Company recorded a $222.2 million impairment charge for the Sperry ® trade name. Refer to Note 4, “Goodwill and Other 33 Intangibles” for additional discussion on the Sweaty Betty ® goodwill impairment and the Sweaty Betty ® and Sperry ® trade name impairments.
No impairment charges were recognized for the Company's intangible assets during 2021. Refer to Note 4, “Goodwill and Other Intangibles” for additional discussion of the Sweaty Betty ® goodwill impairment and the Sweaty Betty ® and Sperry ® trade name impairments.
The decrease in gross margin in the current year period was due to unfavorable product mix and higher promotional activity in the Company's direct to consumer channel and increased closeout sales in the wholesale channel.
The operating profit decrease was due to revenue decreases and a 200 basis point decrease in gross margin partially offset by a $26.9 million decrease in selling, general and administrative costs. The decrease in gross margin in the current year period was primarily due to increased closeout sales and higher promotional activity in the Company’s wholesale and direct-to-consumer channels.
Operating cash flows included non-cash add back for the impairment of intangible assets of $428.7 million, depreciation and amortization expense adjustment of $34.6 million, stock-based compensation expense adjustment of $33.4 million, deferred income tax adjustment of $105.7 million, gain on sale of the Champion trademark of $90.0 million, environmental and other related costs, net of cash payments and recoveries received cash outflow of $23.0 million, and pension expense adjustment of $9.3 million.
Operating cash flows included non-cash add back for the impairment of long-lived assets of $185.3 million, depreciation and amortization expense adjustment of $35.1 million, stock-based compensation expense adjustment of $15.2 million, deferred income tax adjustment of $95.8 million, gain on sale of business, trademarks and long-lived assets of $90.4 million, environmental and other related costs, net of cash payments and recoveries received cash outflow of $55.1 million, and pension expense adjustment of $0.7 million. 31 Investing Activities The Company made capital expenditures of $14.6 million and $36.5 million in years 2023 and 2022, respectively, for building improvements, eCommerce site enhancements, new retail stores, distribution operations improvements and information system enhancements.
The Company recognized tax benefits in 2022 which increased the tax benefit recognized from the pretax loss, resulting in a higher effective tax rate. In 2021, the Company also recognized tax benefits which reduced the tax expense on pretax income, resulting in a lower effective tax rate.
In 2023 the Company recognized more tax benefits compared to 2022 primarily related to the generation and utilization of a capital loss. The tax benefits increased the tax benefit recognized from the pretax loss, resulting in a higher effective tax rate in 2023.
The Lifestyle Group’s revenue decline was driven by a decrease of $33.4 million from Sperry ® and $7.8 million from Keds ® , partially offset by an increase of $11.7 million from Hush Puppies ® . International revenue represented 41.8%, and 34.8% of total reported revenues in 2022 and 2021, respectively.
The decline in Other revenue was primarily driven by a decrease of $87.0 million from Sperry ® , $84.7 million from Keds ® and $21.6 million from the performance leathers business. International revenue represented 45.7%, and 41.8% of total reported revenues in 2023 and 2022, respectively. Changes in foreign exchange rates increased revenue by $3.4 million during 2023.
The Term Facility requires quarterly principal payments with a balloon payment due on October 21, 2026. On August 26, 2021, the Company issued $550.0 million aggregate principal debt amount of 4.000% senior notes due on August 15, 2029. Related interest payments are due semi-annually beginning February 15, 2022.
The Revolving Facility allows the Company to borrow up to an aggregate amount of $1.0 billion. The Company’s $550.0 million 4.0% senior notes issued on August 26, 2021 are due on August 15, 2029. Related interest payments are due semi-annually. The senior notes are guaranteed by substantially all of the Company’s domestic subsidiaries.
The Sperry ® and Keds ® declines were primarily driven by supply chain issues and softer consumer demand in both the U.S. wholesale and direct-to-consumer sales channels.
The Sperry ® decrease was primarily driven by softer consumer demand in U.S. wholesale and softer boot sales in the direct-to-consumer channels. The Keds ® decrease is due to the divestiture of the business effective February 4, 2023. The performance leathers business decrease is due to the divestiture of the U.S. leathers business effective August 23, 2023.
During the fourth quarter of 2022, the Company announced changes to its reportable segments as a result of changes in how its Chief Operating Decision Maker, the Company's Chief Executive Officer, allocates resources to and assess performance of the Company's operating segments.
Prior to the fourth quarter of 2023, Sperry ® , Keds ® , and Hush Puppies ® financial results were reported in the Lifestyle Group. The Lifestyle Group is no longer a reportable segment based upon how the Chief Operating Decision Maker, the Company's Chief Executive Officer, allocates resources to and assesses performance of the Company's operating segments.
The revenue increase was driven by an increase of $32.1 million from Cat ® and $20.1 million from Wolverine ® , partially offset by a decrease of $9.2 million from Bates ® . The Cat ® increase was primarily due to the strength of the life and work product categories.
The revenue decline was primarily driven by a decrease of $46.3 million from Wolverine ® , $40.2 million from Cat ® , $15.9 million from Harley-Davidson ® and $6.5 million from Bates ® .
Note 17 to the Company's Consolidated Financial Statements also includes a detailed discussion of environmental litigation matters. The Company has established an accrual in the amount of $40.5 million, and made related payments of $50.1 million, with respect to certain of these matters for the year ended December 31, 2022, as discussed in Note 17.
Note 17 to the Company's Consolidated Financial Statements also includes a detailed discussion of environmental litigation matters. As of December 30, 2023, the Company had recorded liabilities of $2.7 million for certain of these environmental litigation matters which are recorded as other accrued liabilities in the consolidated condensed balance sheets.
As a result, this amount is not included in the table above. Financing Arrangements On October 21, 2021, the Company entered into a 2021 Replacement Facility Amendment and Reaffirmation Agreement (the “Amendment”) to the Company's Credit Facility (as amended and restated, the "Credit Agreement").
As a result, this amount is not included in the table above. Financing Arrangements The Company’s credit agreement provides for a term loan A facility (the “Term Facility”) and for a revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Senior Credit Facilities”).
The Company implemented selective price increases by brand and product to partially offset the effects of inflation on the Company’s financial results. The Company expects to continue to evaluate future pricing of its products.
These impacts were partially offset by selective price increases taken in prior quarters by certain brands and products. The Company expects to continue to evaluate future pricing of its products. In addition, the strengthening of the U.S. dollar relative to other major currencies negatively impacted the Company’s financial results in fiscal year 2023.
The current year activity includes additional investment in the Company’s China joint venture of $2.8 million and proceeds received from the sale of the Champion trademarks of $90.0 million. Financing Activities The current year debt activity includes net borrowings under the Revolving Facility of $200.0 million and $30.5 million in proceeds from company-owned life insurance policies.
The current year activity includes proceeds from the sale of businesses and trademarks of $188.9 million. Financing Activities The current year debt activity includes net payments under the Revolving Facility of $120.0 million and payments on long-term debt of $118.3 million.
Changes in foreign exchange rates decreased revenue by $70.0 million during 2022. Direct-to-consumer revenue increased by $64.1 million, or 10.2% during 2022 compared to 2021. GROSS MARGIN For 2022, the Company’s gross margin was 39.9%, compared to 42.6% in 2021.
Direct-to-consumer revenue decreased by $109.4 million, or 15.8% during 2023 compared to 2022. GROSS MARGIN For 2023, the Company’s gross margin was 38.9%, compared to 39.9% in 2022. The gross margin decrease was primarily driven by unfavorable supply chain costs in the Company’s wholesale channel and unfavorable average selling price and product costs changes in the Company’s direct-to-consumer channel.
As a result, the Company planned fiscal 2022 product purchases based on the assumption that extended inventory transit times would continue throughout the year. However, during the third quarter of 2022, inventory transit times improved ahead of plan, resulting in challenges managing the timing of inventory flow.
During the third quarter of 2022, inventory transit times improved ahead of plan, resulting in challenges managing the timing of inventory flow, which caused the Company to have excess inventory. Elevated inventory levels have resulted, and continue to result, in storage and processing capacity pressures at the Company’s U.S. distribution centers.
Removed
On July 31, 2021, the Company entered into a definitive agreement to acquire 100% of the outstanding shares of Lady of Leisure InvestCo Limited. The acquisition was completed on August 2, 2021 for $417.4 million, net of acquired cash of $7.4 million.
Added
Effective February 4, 2023, the Company completed the sale of the Keds ® business. In the third quarter of fiscal 2023, the Company entered into a multi-year licensing agreement of the Hush Puppies ® brand in the United States and Canada.
Removed
Lady of Leisure InvestCo Limited owns the Sweaty Betty ® brand and activewear business, a premium women’s activewear brand. The acquisition was funded with cash on hand and borrowings under the Company’s Revolving Facility, as defined below. The following discussion includes a comparison of the Company's results of operations and liquidity and capital resources for fiscal 2022 and 2021.
Added
In addition, the Company completed the sale of Hush Puppies ® trademarks, patents, copyrights, and domains in China, Hong Kong, and Macau. 25 Effective August 23, 2023, the Company completed the sale of the U.S. Leathers business and effective December 28, 2023, the Company completed the sale of the Asia-based Leathers business.
Removed
Additional information about the reorganization of the Company's reportable segments can be found in the Company's Current Report on Form 8-K/A filed with the SEC on November 10, 2022. Known Trends Impacting Our Business Macroeconomic conditions and supply chain disruptions and the COVID-19 pandemic continue to have an impact on the Company’s business results.
Added
See Note 20 to the Company's Consolidated Financial Statements for further discussion. The following discussion includes a comparison of the Company's results of operations and liquidity and capital resources for fiscal 2023 and 2022.
Removed
During fiscal 2021 and the first half of fiscal 2022, disruption in the global supply chain due to vessel shortages, labor and container shortages, and U.S. port congestion resulted in transportation delays that interrupted the flow of the Company’s inventory and delayed shipments to wholesale partners.
Added
The Company has incurred additional inventory carrying costs including costs for outside storage and other inventory related holding costs. The Company decreased inventory purchases and increased promotional activity during the fourth quarter of 2022 and fiscal year 2023 to reduce excess inventory.
Removed
As of December 31, 2022, the Company had $146.8 million of inventory in-transit, which includes both inventory in-transit to the Company's distribution centers and inventory not yet able to be processed due to processing capacity pressures at the Company’s distribution centers.
Added
These actions caused inventories to decline in fiscal year 2023 by $371.6 million, compared to the fourth quarter of 2022. As of the end of fiscal year 2023, the Company had $30.9 million of inventory in-transit, which represents a decrease in inventory of $115.9 million as compared to the end of the fourth quarter of 2022.
Removed
As a result, the Company’s inventory levels as of December 31, 2022 were elevated compared to the prior fiscal year. The inventory in-transit balance has declined from a balance of $280.9 million at October 1, 2022.
Added
As inventory transit and product purchase timelines continue to move towards pre-pandemic levels, the Company expects that the flow of seasonal product and our inventory levels will normalize by the end of fiscal 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+1 added−0 removed11 unchanged
Biggest changeAt January 1, 2022, a stronger U.S. dollar compared to foreign currencies decreased the value of these investments in net assets by $20.0 million from their value at January 2, 2021. 35 Interest Rate Risk The Company is exposed to interest rate changes primarily as a result of interest expense on the Incremental Term Loan borrowings and any borrowings under the Revolving Facility.
Biggest changeInterest Rate Risk The Company is exposed to interest rate changes primarily as a result of interest expense on the Incremental Term Loan borrowings and any borrowings under the Revolving Facility.
Any associated foreign currency gains or losses on the settlement of local currency amounts are reflected within the Company's consolidated statement of operations and comprehensive income. Assets and liabilities outside the U.S. are primarily located in the United Kingdom, Canada and the Netherlands.
Any associated foreign currency gains or losses on the settlement of local currency amounts are reflected within the Company's consolidated statement of operations and comprehensive income. 35 Assets and liabilities outside the U.S. are primarily located in the United Kingdom, Canada and the Netherlands.
Based on the level of variable-rate debt outstanding as of that date, a 100 basis point increase in the weighted-average interest rate would have increased the Company’s annual pre-tax interest expense by approximately $4.4 million. The Company does not enter into contracts for speculative or trading purposes, nor is it a party to any leveraged derivative instruments. 36
Based on the level of variable-rate debt outstanding as of that date, a 100 basis point increase in the weighted-average interest rate would have increased the Company’s annual pre-tax interest expense by approximately $3.0 million. The Company does not enter into contracts for speculative or trading purposes, nor is it a party to any leveraged derivative instruments. 36
At December 31, 2022 and January 1, 2022, the Company had outstanding forward currency exchange contracts to purchase primarily U.S. dollars in the amounts of $334.2 million and $296.7 million, respectively, with maturities ranging up to 524 and 538 days, respectively. The Company also has sourcing locations in Asia, where financial statements reflect the U.S. dollar as the functional currency.
At December 30, 2023 and December 31, 2022, the Company had outstanding forward currency exchange contracts to purchase primarily U.S. dollars in the amounts of $269.0 million and $334.2 million, respectively, with maturities ranging up to 531 and 524 days, respectively. The Company also has sourcing locations in Asia, where financial statements reflect the U.S. dollar as the functional currency.
The Company’s total variable-rate debt was $615.0 million at December 31, 2022 and the Company held a forward-dated interest rate swap agreement, denominated in U.S. dollars that will effectively convert $176.2 million of this amount to fixed-rate debt. The interest rate swap derivative instrument is held and used by the Company as a tool for managing interest rate risk.
The Company’s total variable-rate debt was $376.7 million at December 30, 2023 and the Company held a forward-dated interest rate swap agreement, denominated in U.S. dollars that will effectively convert $75.3 million of this amount to fixed-rate debt. The interest rate swap derivative instrument is held and used by the Company as a tool for managing interest rate risk.
The fair value of the interest rate swap was determined to be a net asset of $6.1 million as of December 31, 2022. As of December 31, 2022, the weighted-average interest rate on the Company’s variable-rate debt, net of the impact of the interest rate swap, was 4.86%.
The fair value of the interest rate swap was determined to be a net asset of $1.8 million as of December 30, 2023. As of December 30, 2023, the weighted-average interest rate on the Company’s variable-rate debt, net of the impact of the interest rate swap, was 6.18%.
The Company’s investments in foreign subsidiaries with a functional currency other than the U.S. dollar are generally considered long-term. At December 31, 2022, a stronger U.S. dollar compared to certain foreign currencies decreased the value of these investments in net assets by $76.3 million from their value at January 1, 2022.
The Company’s investments in foreign subsidiaries with a functional currency other than the U.S. dollar are generally considered long-term. At December 30, 2023, a weaker U.S. dollar compared to certain foreign currencies increased the value of these investments in net assets by $16.8 million from their value at December 31, 2022.
Added
At December 31, 2022, a stronger U.S. dollar compared to foreign currencies decreased the value of these investments in net assets by $76.3 million from their value at January 1, 2022.

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