Footwear Insight

F or the first time, Caleres' Brand Portfolio business will exceed its Famous Footwear unit in annual operating earnings in FY23, according to senior company executives speaking at the annual ICR event in early January. Bolstered by its key footwear labels in Sam Edelman, Allen Edmonds, Naturalizer, and Vionic, the Brand Portfolio is forecast to post a 7 percent CAGR in sales as its annual operating margin improves to 14 percent from 11 percent in the prior year. And there is more growth to come for the seg- ment due to key category, channel, and geographic strategies that have been implemented by senior management. e outlook for Famous Footwear in FY23, meanwhile, calls for 2 percent CAGR sales growth and a flat operating margin of about 8 percent. Caleres has benefited from a "speed production" strategy that relies on de- livering products early, getting early feedback on it from consumers, and coming back to the market with key styles and SKUs. Within its Famous Footwear seg- ment, Caleres has plans in place to accelerate the introduction of a new retail format called Flair that "shows off brands and trends that matter," says CEO Jay Schmidt. e strategy will also focus on connecting the larger footprint banner to the retailer's website and marketing efforts. ere are plans to add 30 more Flair locations this year to bring the banner's total door count to slightly under 200. —Bob McGee U nder new CEO Chris Hufnagel, Saucony and Merrell parent Wolverine Worldwide is optimistic about its product pipeline for H2 into FY25 as it proceeds under a new corporate structure focused on international, licensing, global supply chain, corporate function, and the True Collective that will capture consumer and marketing insights. e company continues work on simplifying and improving the operating efficiency of its overall business. Key 2024 initiatives, following the divestiture of non-core assets last year, include a modernization of its various e-commerce platforms/planning systems and further SKU optimization. e company announced the divestiture of its Sperry business to Authentic Brands Group in early January. Following the sale of the Sperry brand to Authentic, Hufnagel stated, "In a very short time, we have meaningfully reshaped Wolverine Worldwide – simplifying the portfolio, reducing our debt, and redesigning the organization to drive improved performance and profitability. ese efforts have enhanced the company's capacity to invest in our brands and platforms, and I am excited about the next chapter in our turnaround – focused squarely on building consumer-obsessed global brands and delivering greater value for our shareholders." In the product area, Merrell, which is introducing the Moab Speed 2, Agility Peak 2 and Wrapt, will aim to grow its business beyond the trail further and particularly with female consumers. Saucony, meanwhile, will unleash the Endorphin Pro 4, the X Jae Tips and Hurricane 24 this spring and look to test new styles on its own platform before introducing them to consumers. As for its Sweaty Betty business, Hufnagel says it's critical for it to become a head-to-toe brand. Sweaty Betty currently generates about one-third of its sales from leggings. Wolverine Worldwide is projecting FY23 revenues to come in at $2.24 billion with the annual ad-justed gross margin at 36 percent, inventory at $460 million, and year-end debt of approximately $750 million against $1.02 billion at the end of FY22. —Bob McGee Caleres Leans into 'Speed Production' & Brand Portfolio Restructured Wolverine Eyes Further Enhancements STRATEGY BUSINESS THE FOOTWEAR EYE The company continues work on simplifying and improving the operating efficiency of its overall business. footwearinsight.com January/February 2024 ~ Footwear Insight • 7

• Cover