WWW
#Yes, I mean, I will say that we don't comment on our order book anymore, as you know, for a variety of good reasons.
It's still early to comment on 2016.
We'll have plenty of details regarding our operating plan for 2016 when we report our Q4 results.
I would say right now, though, that some of the overall trends we're seeing, attitude by retailers, primarily here in the US, we're seeing that also reflected into 2016.
They are just playing it pretty conservative at the right time.
Maybe we'll get some weather.
Maybe a couple of other things will break for their business another way, but right now, they're taking a pretty conservative approach on any number of levels.
Yes, <UNK>, frankly it's a little hard at this time since we're just getting into the holiday, just approaching the holiday selling season.
I would say all of the factors you listed at the present time we believe are going to continue with respect to our domestic business.
Our international business, which is about half of our pairs, we are also anticipating that the dollar is going to remain very strong.
So in response, our brands are working on their product engines to bring in product, a lot of product to price points that have been vacated for our international partners.
So we all read about the geopolitical risks and challenges that are going on every day around the world.
We really don't see any calming impact having there.
We think it's going to be more of status quo.
We do think, though, at least domestically, retailers are buying closer to need and they are going to be reliant on brands that they trust and companies that can afford to be there with product when they need it.
And really, I'm not trying to dodge your question.
I'll have a lot more insight when we get into December, but that's kind of the status at the present time.
Sure.
Hi, <UNK>.
I'll answer it first and then I'm sure <UNK> will want to offer some of his thoughts, but this is not a new tactic for us as a Company.
It was a pretty dramatic strengthening of the dollar that, as we entered into 2015 and probably had a bigger impact on our business this year than it would in a typical year.
But the approach that we took is very consistent and I don't think it's one that we regret at all.
Our brands obviously continue to evaluate what the impact really is out there.
Is it the fact that we raised prices.
Is it other consumer sentiment issues in those markets that are having a bigger impact on some of the demand issues.
And we obviously believe not only that we did the right thing, we have other competitors that didn't follow suit and are experiencing the same challenges in the market that we are, so the good news is that we got there early.
We've been able to price that in.
We'll be able to anniversary that into next year, so the opportunity to bring in products at those different price points to sort of complement the assortment is something I think is an advantage for us because we acted really from a pricing standpoint.
We are taking a long-term view that the dollar is going to remain strong for a while and so there's really not an option for us to pull back on pricing at this point.
That's not something we want to do, but we're going to be very clear about every style and every opportunity, every brand in each market.
Every one is different and we'll be reevaluating that based on the benefit of a full season's worth of sell-through and everything else with our own foreign businesses and our partners as well.
And so the model going forward here is to stay the course, but also to look for other opportunities to enhance margin as we go into 2016.
I would say, <UNK>, as well, the sourcing environment that we're seeing right now is probably the best I've seen in the last five years, so certainly labor and overhead continues to go up when it comes to product cost, but leather is down significantly from last year.
Lower commodity prices are also contributing to lower quotes from our factories, so this will be the first year in many years where on carryover product we're probably going to see a pricing decrease.
Yes, I'd think ---+ just to take a step back from Merrell.
Obviously the continued focus on product creation and innovation, not just in the performance category but especially adding some talent on the lifestyle side.
For our international businesses in particular, backfilling with good product, maybe good product internationally that is now priced like better product.
And then again to refocus on athletic casuals and ath leisure.
So there's a number of levers the team is pulling on the product creation side.
We do intend to invest behind the brand platform, but a revised more athletic Company-like, go-to-market strategy for key offerings in the Merrell line.
It can be an expanded Moab collection with one key strategic retail partner.
I'm talking domestically now.
It can be an expanded Capra program for another key strategic.
It can be an expanded all-out program for another one and then some more moderately priced search and enjoy product for another key retailer.
That's going to be a change for the brand and one that <UNK> gave and the team are implementing this year.
In my view, still a big opportunity for Merrell.
A lot of people don't know about Merrell.
We think everybody does because it has such a dominant position in the outdoor category, but a lot of people don't know about Merrell, and yet the brand is ---+ consistently sits there with the number two intent to repurchase of all brands in this market.
So there's a lot of different levers to pull.
A lot of them are on the product side and some new introductions and we're going to invest behind.
Yes, I haven't had a recent update but we think certainly Keds is coming out with a new brand platform and campaign.
The Keds brand is ---+ frankly, can't believe I'm saying this, but it's bigger than Taylor Swift, and she's about as big as you can get, but we're going to put more emphasis on the Keds brand this year.
But we will still ---+ it appears right now we will still have Taylor Swift on the Keds team into 2016.
Thank you, <UNK>.
Did we lose you, <UNK>.
No, not really.
Not this year.
Sometimes that happens in the fourth quarter, but we had some easier comps based on some adjustments that were made last year's fourth quarter, some allowance and promotional stuff that we had to deal with related to some of our brands getting out of some distribution that we were not happy with, and so we took some of that pain in the fourth quarter last year which kind of increased our markdown exposure and some of those things we're not going to anniversary.
That's part of it.
And we talked about that last quarter, but really it's the price increases and it's the better quality of our business.
We talked about the cleanliness, I guess, or the high quality of our inventory, but it's really been true all year long.
We're selling less closeouts.
Our first quality sales are better.
We've spent the last year really focused on cleaning up and focusing the inventory and it's had a real positive impact on gross margin.
We talked about the price increases for Sperry as well as for our international markets and that's helped us to really combat or mitigate the currency costs.
And we've had some other things go in our favor, including the beginnings of some of the product cost benefits that <UNK> alluded to that will be more meaningful next year but still had a small benefit in the third quarter.
From the unit standpoint, it's about 10%.
Pretty much, yes.
We don't have a licensed business for Sperry.
I'd say over the last three years, the Sperry international, 2013 was kind of a get-started year for many of our brands, Boston-based brands, Keds, Saucony and Sperry.
And we've had real growth in 2014 and real growth in 2015 that's accelerating, but the Sperry international businesses has increased at over a 20% clip over that period of time, as has Saucony.
And frankly, the Keds international business is even higher than that, so we always knew it was going to take a little time, but once we get some traction, it continues to grow.
Yes, we expect all three of those brands to continue at that rate.
I mean, I would say Sperry doesn't have as large as international business as the Hush Puppies or Merrell or even Saucony, but we expect it to certainly continue at that rate into the future.
Very early on the growth curve there.
Thanks, <UNK>.
I'm sorry.
Give me the last part, <UNK>.
I missed that.
I can give you that.
So on Q4 on a net basis, it's about $8 million this year versus about $15 million, almost $16 million last year, I guess.
So $8 million improvement.
No, that's combined.
So the interest expense is $11 million versus $14 million last year.
The other items are about $4 million benefit versus about a $1 million expense last year.
We don't generally give that out in the call, <UNK>, so ---+ and I don't have it by segment right here in front of me anyway.
But we typically don't share that.
I think the Q is just about to go out, but we'll consider that in the future for sure.
No, not at all, <UNK>.
These are just what I talked about before including the improving prices are really tied to leather, commodities, and how all of that impacts the sourcing sheet by pair.
None of what I talked to earlier really goes to any kind of despecing the shoes or taking any actions in that regard.
And, frankly, that's not something we would do as a Company.
All of our bigger brands certainly have a better ---+ a good, better, best brand offering, but we don't anticipate any significant changes there whatsoever.
Most of the growth for next year we anticipate from taking more shelf space at exiting distribution.
So we do not right now anticipate any ---+ for example, any significant family channel increase over what we had in 2015, <UNK>.
As an example for Merrell, <UNK>, all of the partnership alliances that Merrell has right now are all with premium retailers pretty much.
So the growth and the new go-to-market strategy is really to play up the premium product as much as possible, and gain share in that same distribution with the same retailers, not just the channel.
Yes, I absolutely agree with you, <UNK>.
I mean the macro environment impacts everybody.
We all know it begins with product, product, product.
We know that in our industry, there's quite a bit of need as well as want.
And if you're out there with great product, you've got a chance to win in any environment.
And when you look at Merrell and Sperry, for Sperry it's fundamentally how fast can they move beyond boat.
They're going to remain dominant in the boat shoe category, an extremely important category here domestically, and in some international markets.
But obviously, a total acceptance by the Sperry consumer in retailers to move beyond boat for Sperry and they're focused on that.
And on Merrell, it's really a fundamental question of regaining some traction in the lifestyle area for the brand.
And again, the product creation and innovation team there is busy on that.
The new team is probably going to need a little more time to get where we want it to be, but that's the fundamental issue.
The macro environment is going to test some smaller brands and smaller businesses.
We've been through this before.
We've seen this movie and it's going to be a bit of a challenging environment for some good, but maybe smaller brands and smaller businesses.
Thanks, <UNK>.
Yes, are you talking about our Boston-based brands.
Yes.
I think we've got new agreements or re-upped agreements for over 100 countries today for those brands.
Since the beginning of 2013, we've added well over 400 points of dedicated distribution for those brands.
Saucony, Kids and Sperry are all growing at over a 20% rate each year, and that includes the start year which is really 2013, so we continue to see strong double-digit growth there.
Those brands are still all underpenetrated internally when you compare them to, for instance, a Caterpillar, or Merrell or Hush Puppies.
So, again, still early there.
We still continue to make progress.
Yes, I would say that's a good question.
I would say that, as you know, we have a very disciplined approach when it comes to acquisitions.
We have a bit of an unusual macroeconomic environment in front of us right now.
We're focusing a lot of our time, energy in growing what we have and in getting more earnings out of our current portfolio.
That being said, if the right strategic opportunity came around, the right dovetail fit, we are certainly in a financial position now to act on it.
It could be a Lifestyle or Performance brand, we normally like brands with some authenticity in heritage.
It could have some Lifestyle potential beyond footwear.
Certainly geographic expansion opportunities are always high on our criteria list.
So, you know, as I've said before, some of the best acquisitions we've done are ---+ over the years are the ones we've had the discipline not to do and we're pretty ---+ we have a pretty disciplined approach and a pretty successful track record over the last 20 years.
Yes, I mean, it's hard for me to parcel it out, whether it's leather or other commodity pricings, but, you know, we could anticipate overall ---+ this is for carry-over product kind of as an example, but we could see overall price ---+ decreases in the 1% or 2% range here over 2016.
When you're sourcing 100 million pairs a year, like we are, that is not insignificant.
And it's something, frankly, we haven't seen in a long time.
On behalf of Wolverine World Wide, I would like to thank you for joining us today.
As a reminder, our conference call replay is available on our website at wolverineworldwide.com.
The replay will be available until November 20, 2015.
Thank you and good day.
