Wolverine Worldwide Inc. in Rockford, north of Grand Rapids, revealed the company’s plans to sell its Asian properties as part of its focus to transform itself into a consumer-growth company.
“We’ve taken fast, bold, and decisive actions to stabilize the company today, while working to transform Wolverine Worldwide for the future,” says Chris Hufnagel, president and CEO of Wolverine Worldwide. “Our actions over the past four months have served to simplify our business model, reduce our cost structure, and strengthen our balance sheet. While our work isn’t done, we enter the new year with a clear vision for the future, enhanced ability to invest in our brands and platforms, and ultimately, a better position to deliver stronger returns for our shareholders.”
Wolverine is selling its equity interest in the Merrell and Saucony joint venture entities to Xtep. It also is accelerating an existing option to sell a minority ownership interest in the entity that owns the Saucony intellectual property in China to Xtep, its joint venture partner, for $61 million.
Wolverine Worldwide formed a joint venture with Xtep in 2019 to launch the Merrell and Saucony brands in China. Xtep is a vertical company in the fast-growing sportswear market, with over 8,200 stores in Asia-Pacific, North America, and EMEA, and a strong network of distributors and shopping mall operators.
Under the joint venture agreement, Xtep held the option to purchase a 40 percent minority ownership interest in the entity that owns the Saucony intellectual property in China if the business met certain financial targets. Due to the early success and profitability of Saucony in China, Wolverine and Xtep have agreed to speed up exercising the purchase option.
These actions underscore the growth prospects of these two brands in China and is the result of the early success and maturity of the joint venture.
The new operating model is expected to further use Xtep’s expertise and significant resources in China, unleashing the brands’ full potential in this key market while allowing Wolverine Worldwide to focus on brand-building by developing new products across its global footprint.
Additionally, Wolverine Worldwide is selling its Asia-based Wolverine Leathers business to Interhides Public Co. Ltd., a current materials vendor of Wolverine, for approximately $9 million. This completes the company’s previously announced objective to sell its Wolverine Leathers business.
The actions announced today are in addition to the Wolverine’s previously announced transactions, including:
- Selling Keds in February for more than $90 million.
- Selling the Hush Puppies intellectual property in China, Hong Kong, and Macau in August for approximately $58.8 million.
- Selling the U.S. Wolverine Leathers business in August for approximately $6 million.
The previously announced alternatives process for the company’s Sperry brand is ongoing.
Wolverine will provide more details regarding these actions and other strategic initiatives at the annual ICR Conference in Florida on Jan. 8, 2024.
