WWW Q3 2026 earnings call transcript, November 12, 2026

A question and answer session will follow the formal presentation. If you'd like to ask a question, please press star and the number 1 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jared Filippone, Head of Investor Relations. You may now begin.

Good morning everyone and thanks for joining us on today's call. In the third quarter results exceeded our expectations. Revenue grew to approximately 8%, our strongest quarter of growth this year, led by Saucony and Merrill, which were up 20% and 7% respectively. This growth, coupled with the healthier, more profitable business we've built. delivered adjusted earnings per share of $0.79, which includes a $0.31 benefit from IEPA tariff for funds received in the quarter. Excluding this benefit, adjusted earnings per share increased more than 30% compared to the prior year. Year-to-date, consolidated revenue is up 7%. And excluding the benefit of the refunds, gross margin is flat year-over-year, despite a meaningful tariff headwind. Adjusted operating margin has expanded 140 basis points, and adjusted earnings per share are 27%. Better than last year. As a result of a strong performance of the business, the company is generating solid cash flow and now possesses a healthy balance sheet. Further advancing our ability to drive greater shareholder return. Looking ahead, although pressure persists for consumers and the macroeconomic environment remains dynamic, we believe our brands are well positioned, aligned with long-term consumer macro trends. And focused on product categories that leverage our performance and innovation capabilities as a company. A result of the intentional strategic decisions made over the last several years. And importantly, our brand building model has proven to be effective.

Delivering eight consecutive quarters of top-line growth. Bolstered by our stronger position, established strategies, and disciplined execution, coupled with the performance of the business year to date, and our expectations for the closing weeks. We're raising our outlook for the year, which Sharon will review in detail in a few minutes. Before providing some color on our brand's performance in the third quarter, I want to take a step back to speak to our brand strategies and outline our building blocks for growth. Merrill, Saucony, Sweaty Betty, and Wolverine. We expect Merrill, a leader in performance footwear for the trail with significant runway in the broader outdoor lifestyle category, to continue to grow in alignment with our shareholder value creation model over time. The brand remains focused on modernizing the outside with faster, lighter, more versatile product for hiking and trail running. It also plans to scale its lifestyle business by leveraging its iconic performance franchises and materializations for everyone. Every day where continuing to elevate design and developing lifestyle distribution, including tier zero through tier two specialty retail. Finally, we believe Merrill's key city strategy is critical to cultivating broader global brand awareness and relevance through impactful. Activation of the brands. It starts outside platform. Saucony expected to remain our fastest growing brand is positioned at the intersection of what continues to be two of the fastest growing categories in footwear performance and lifestyle.

Running. Both of which were up double digits in the third quarter. To grow performance, the brand continues to prioritize innovation in its endorphin collection and capturing the broader commercial opportunity with its core four product franchises, the ride. Hurricane and triumph. We believe the brand has an opportunity to take, share and run specialty and it's underpenetrated in sporting goods. To expand its lifestyle business, Saucony plans to continue to thoughtfully deploy its deep product archive. Collaboration and capsule strategies. It also intends to heighten attention on women with classic trend rights silhouettes. Similar to Merrill, the brand's proven key city strategy expected to continue to underpin its key growth initiative. Building awareness, strengthening affinity, and generating brand heat in the global marketplace. Sweaty Betty and Wolverine, we believe, will also contribute to our consolidated growth over time. As they execute their new strategies rooted... ...in our repeatable brand building model. Sweaty Betty continues to elevate the brand through bold, differentiated positioning and a more diversified product offering powered by key icons. The brand remains focused on strengthening its core UK... ...directing consumer business and expanding global distribution throughout Europe with specialty and sporting goods retailers and in Asia-Pacific by partnering with our network of highly capable distributors. At the same time, Wolverine is making progress in executing its...

...strategy to build on its leadership in the work boot category by elevating its position with performance innovation and scaling Western, focused on more premium products and distribution, along with more focused demand creation efforts. Now, beforehand, I'll call over to Taryn. I'd like to briefly review our... Brand's progress in the third quarter, beginning with Merrill. Merrill again delivered good revenue growth, up 7%, its ninth consecutive quarter of growth. Encouragingly, the brand's DTC trend improved relative to the first half of the year. Posting a mid-single-digit revenue increase versus the prior year. Brand Health also remained positive, with strong affinity and double-digit increases in consumer search interest globally, fueled in part by the brand's outside-in-the-city activations in New York, London. Taipei, Montreal, Sydney, Santiago, and Mexico City. Merrill strengthened its leadership in outdoor performance, taking significant share in the U.S. hiking category, which itself grew again in the quarter. The brand's key product icons, the Moab & Moab speed, fueled the gains, and delivered meaningful growth. In trail running, Merrill celebrated a significant achievement in August with Merrill athlete Frederick Trishon wearing the Agility Peak 6, winning one of the premier events of the year, the OCC race at UTMB in Chamonix. placing Merrill at the top of the podium on one of the sport's biggest global stages. Looking ahead to next year, Merrill anticipates releasing the Moab Speed 3 in the first quarter, the latest version of one of its biggest franchises, to build on its momentum in the late hiking.

The brand plans to launch a new ADAPT series with fresh innovation for both serious and casual trail runners. In Lifestyle, its focus on elevating the product line and testing new distribution is starting to gain traction. Merrill also expects to deepen its cultural relevance by extending its key city strategy. expanding its outside-in-the-city activations through partnerships with Live Nation and the Sundance Film Festival. As Merrill continues to build on its leadership performance footwear and realize progress in the broader outdoor lifestyle category, we see meaningful opportunity for continued global growth. Going to Saucony. Saucony grew 20%. It's six quarter of double-digit growth in the last seven quarters. Like Merrill, Saucony saw an acceleration in DTC in the third quarter, driving a mid-teens revenue increase versus the prior year. In addition, brand momentum continued with strong consumer search interest. around the world, particularly in markets benefiting from the brand's key city strategy execution in London, Paris, and Berlin. Saucony expanded its performance business in the quarter through continued innovation and its endorphin collection and by broadening its reach with its core four product franchise. The endorphin Azura remains on pace this year to be the biggest franchise launch in the brand's history and the endorphin Speed 6, introduced just a few weeks ago, has immediately become a top seller on Saucony.com and is selling through well at retail.

While we did see some additional promotional activity in the broader U.S. market in the category, Saucony actually saw declined promotions year-over-year overall. During the quarter, the brand again sponsored the London Tenke and Shortage Half Marathon. Two key events that are part of its effective key city strategy execution in London. Saucony's lifestyle business continued strong growth in the quarter as well, with continuous increases behind the ProGrid Omni 9 and positive momentum for styles like the Guide. 7 and Ride 1. Sell-through rates improved versus the prior year in the U.S. and were strong in Europe. Collaborations in energy capsules aimed at thoughtfully stretching and entrenching the brain with key consumer segments continue to be a key element of Saucony's stress. In the last several months, the brand fueled credibility in culture and fashion via partnerships with Westside Gunn and Stan Birch, as well as engaged women with the Ebelin World collaboration. The brand also introduced a host of compelling capsules, including its Space Cowboy. Daikayama, and Gloa Constrictor collections. Across the board, these drops drove impressions, demand, and most importantly, cultural relevance and brand heat. Looking ahead, Saucon anticipates launching an all-new endorphin super shoe in 2020. That will be one of its most innovative products to date, the Zenith, in addition to new models across its endorphin collection in Corfor.

In Lifestyle, the brand plans to continue to leverage its deep product archive and fuel brand heat with strategic collaborations. The Lifestyle team is doing a great job of bolstering the brand's offerings across not only streetwear and retrocheck, but also fashion and classic silhouettes, cultivating greater relevance with women as well as men. In 2027, Sockney expects to expand a new brand. It's key city strategy around the world, including into the US and Asia Pacific. We expect Sockney to deliver another record top and bottom line year in 2026, following a record year last year. While I'm pleased with how far the brand has come in a few short years. I'm even more excited about where we can go from here. In closing with Sweaty Betty and Wolverine. Just as we've done with Maryland Sauncony, we remain focused on returning to sustainable quality growth for both Sweaty Betty and Wolverine. While we believe our strategy. We're solid and our execution is improving. As we shared previously, our results continue to be choppy and we don't expect our performance to be perfectly consistent in the near term. In the third quarter, Sweaty Betty's revenue declined 7%, partially due to the reset of the U.S. market initiated last year. Including the U.S., the brand was down 3% as a tougher U.K. women's activewear market weighed in e-commerce while our stores fared better, posting low single-digit growth in the quarter. Importantly, Sweaty Betty continued to strengthen the brand with its consumers, driving double-digit income.

increases in search interest and significant uplift in social sentiment in the U.K. Sweaty Betty remains focused on diversifying its business across several dimensions, including product categories, regions, and distribution channels. In the quarter, pants and shorts continue to grow, and while outerwear faced an unceasingly warm transition into fall, the Motion Jacket franchise grew materially, powered by the Born for the Storm campaign. The brand's priority for regional expansion, specifically Asia Pacific, more than quadrupled revenue in the quarter. albeit on a still small base, opening a new store in Shanghai with a couple more doors slated to open in China yet this year. The Wolverine brand, down 4% in the quarter, continues to work towards developing a cleaner, better segmented marketplace. and elevating the brand's positioning as a leader in work boots in the US to create a foundation for sustainable growth going forward. The brand has strengthened its product pipeline this year with new collections and better innovation to support this effort. This quarter, Wolverine launched The Reloader. expanding its loader collection and earlier this year introduced the Wheatland and Western, both at more premium price points. The brand gained meaningful market share in all price tiers above $100. Importantly, the brand has made considerable progress in cleaning up the marketplace, working through slower moving inventories and

increasing average selling prices, both improved by mid single digits year to date. Additionally, we've had significant reduction in planned promotional days in the marketplace for the first three quarters of the year. All of the above puts pressure on the short term results, but we believe our needed actions to run a better and more premium brand and return to consistent, sustainable growth. Looking ahead, Wolverine expects a stronger year of new product innovation in 2027, including the all new Raptor featuring tri grip technology in the first quarter and what we believe could be a game changing boot in the fourth quarter. The brand also plans to continue to improve its demand creation efforts, once again partnering with Paramount Plus' hit series Landman, sponsoring the Houston Rodeo, and amplifying its own project bootstrap platform by partnering with Meta's America Workforce Academy, a significant investment in training the skilled labor of tomorrow. With that, I'd like to hand the call over to Taryn to take you through our results for the quarter and our updated outlook for the year. Taryn?

At retail with DTC performance benefiting from continued momentum in the Moab 3. Saucony revenue increased 20% with double digit growth in both wholesale and DTC and across performance and lifestyle. In performance run, the U.S. and EMEA drove growth across channels aided by the continued success of the Endorphin Azura, which became a top three style of global DTC. Lifestyle growth was led by EMEA wholesale and DTC as Socrates' key city strategy continues to fuel brand heat and strong sail through. Sweaty Betty revenue declined. Seven percent with the ongoing U.S. reset accounting for roughly half the decline and a more promotional women's activewear market weighing on UK DTC performance. At the same. We continue to diversify the brand sources of growth with international wholesale revenue up double digits and further expansion beyond core leggings into a broader assortment. Workgroup revenue increased one percent. Largely driven by U.S. wholesale and was slightly ahead of our expectations. Performance across the portfolio was mixed with growth in several brands more than offsetting a decline at Wolverine. While we've made progress. Wolverine's performance has been inconsistent and we recognize more work is needed to drive sustained improvement. We remain focused on Wolverine's core work offering, demand creation, and marketplace management to position the brand for sustained growth.

Consolidated gross margin was 54.6%, up 710 basis points from the prior year, including an approximate 640 basis point benefit from IEPA tariff refunds. Excluding the refund benefit, gross margin was 48.2%, up 70 basis points from the prior year, and 80 basis points above our expectations. Pricing and other tariff mitigation actions, a higher mix to full price sales, and supply chain efficiencies more than offset an approximate 170 basis point unmitigated tariff headwind and modest pressure from elevated oil prices on freight costs. Adjusted operating margin. was 17.8%, up 870 basis points from the prior year, including an approximate 640 basis point benefit from IEPA tariff refunds. Excluding the refund benefit, adjusted operating margin was 11.4%. Up 230 basis points in the prior year, and 100 basis points above our expectations. Driven by a stronger gross margin and continued operating leverage from revenue growth. As a result, adjusted diluted earnings per share with $0.79, including an approximate $0.31 benefit from AEPA tariff refunds and related interest. Excluding the refund benefit, adjusted diluted earnings per share of $0.48 was up $0.30. 43% from last year and above our outlook of $0.42 to $0.45. Net debt was $399 million, down $143 million versus last year, bringing... our bank-defined leverage to 1.6 times. We ended the quarter with no borrowings outstanding on our revolver.

Turning to our outlook, building on our strong year-to-date performance, we are raising... ...our full-year 2026 outlook for revenue and profitability. We now expect revenue in the range of $2 to $2.01 billion, representing reported growth of approximately 7%. ...at the midpoint, compared to our prior outlook of $1.98 to $2 billion. Our updated outlook includes an estimated $15 million foreign currency benefit versus the prior year, compared to... ...$14 million dollar benefit in our prior outlook. On a constant currency basis and adjusted for the 53rd week in 2025, we now expect revenue growth of approximately 6.9% at the midpoint. The following segment in Brand Outlook is on a constant currency basis. We continue to expect active group revenue to grow high single digits and work group revenue to be approximately flat compared to 2025. At the brand level, we are maintaining our outlook for mid-teens growth at Saucony, mid-single-digit growth at Merrill, and a low single-digit decline at Sweaty Betty. We now expect Wolverine revenue to be... ...decline low single digits compared to our prior outlook of approximately flat, reflecting lower U.S. wholesale sell-in as the brand continues its marketplace reset. Turning to profitability. Our updated full-year outlook... reflects continued improvement in the business along with an approximate $35 million benefit from IEPA tariff refunds and related interest received to date. Our outlook does not assume any additional refunds.

Gross margin is now expected to be approximately 48.7% up 180 basis points from our prior outlook of approximately 46.9%. This includes an approximately 170 basis point benefit from IEPA tariff refunds. Adjusted operating margin is now expected to be approximately 11.8% up 190 basis points from our prior outlook of a approximately 9.9%. This includes an approximate 170 basis benefit from tariff refunds. Interest and other expenses projected to be approximately 23 million dollars unchanged. from our prior outlook. The effective tax rate is now projected to be approximately 19% compared to our prior outlook of approximately 18% largely due to the tax impact of the IEPA tariff refunds. As a result. Adjusted diluted earnings per share is now expected to be in the range of $1.95 to $1.99, including an approximate $0.32 benefit from tariff refunds and related interest compared to our prior outlook of $1.99. $1.55 to $1.65. Free cash flow is now expected to be in the range of $155 million to $170 million, up from our prior outlook of $115 million to $130 million. The increase reflects the tariff refunds and related interest received to date, as well as lower capital expenditures, now expected to be approximately $15 million compared to our prior outlook of $170 million. of approximately $20 million. Moving to our fourth quarter outlook, revenue is expected to be in the range of $531 million to $541 million, up approximately 3.5% at the midpoint on a reported basis.

compared to the prior year. On a constant currency basis, revenue is expected to increase 4% at the midpoint, with active group expected to increase mid-single digits, and work group expected to be approximately flat. Excluding the impact of the 53rd week. Last year, constant currency revenue growth is expected to be approximately 6.6% at the midpoint. Gross margin is expected to be approximately 46.3%, down 70 basis points compared to last year. Including an approximate 20 basis point benefit from IEPA tariff refunds. The year-over-year decline primarily reflects a difficult comparison to last year's fourth quarter, when tariff mitigation actions more than offset incremental tariff costs. We also expect modestly higher tariff and freight costs this year. Adjusted operating margin is expected to be approximately 11.6%, up 60 basis points compared to the year-over-year decline. To last year, as continued operating leverage and an approximate 20 basis point benefit from IEPA tariff refunds more than offset the gross margin headwinds. As a result, adjusted diluted earnings per share is expected. to be in the range of $0.52 to $0.56 compared to $0.45 last year and includes an approximate $0.01 benefit from tariff-free funds. To summarize, our third quarter results and raised outlook reflect the continued progress we're making in executing our strategy. We're growing revenue, expanding profitability, and strengthening our balance sheet,

providing greater flexibility to invest in our brand. and long-term growth opportunities while there's more work to do we're encouraged by the strength of our performance and remain focused on delivering sustained profitable growth and creating long-term value for our shareholders with that let me. I'll turn the call back to Chris before we open for questions.

Our team continues to execute with pace and distinction leading to another quarter of better than anticipated results and the confidence to once again raise our outlook for the year. We need to be encouraged by our transformation. Our brands are well positioned in the global marketplace and our strategies are focused with clear building blocks for future growth. Our business is growing, profitable, and generating cash. Our balance sheet is healthy. And our team is motivated, talented, and intently focused on building great products, telling amazing stories, and driving the business. All in the relentless pursuit to make every day better. As I said before, I believe the most important chapter is the next one. I'm looking forward to

We can't hear Dana. Next question is from the line of Ashley Owens with KeyBank Capital Markets. Your line is now open. Please go ahead.

is from the line of Dana Telsey with Telsey Group. Your line is now open. Please go ahead.

Open. Please go ahead.

It's from the line of Mauricio Serna with UBS. Your line is now open. Please go ahead.

with Williams Trading. Your line is now open. Please go ahead.

Anna and Draver with Piper Sandler. Your line is now open. Please go ahead.

line of Jonathan Komp with Baird. Your line is now open. Please go ahead.