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 condensed financial statements and related notes included elsewhere in this Quarterly Report.
BUSINESS OVERVIEW
The Company is a leading global footwear and apparel company driven by a vision to Make. Every Day. Better. The Company’s brands are sold in approximately 170 countries and territories at July 4, 2026, 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 July 4, 2026, the Company operated 123 retail stores in the U.S., United Kingdom, Ireland and Italy and 38 direct-to-consumer eCommerce sites.
Known Trends Impacting Our Business
On February 20, 2026, the U.S. Supreme Court ruled that U.S. tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) on goods imported into the U.S. were unauthorized. In March 2026, the U.S. Court of International Trade ordered U.S. Customs and Border Protection (“CBP”) to suspend collection of the invalidated tariffs and to establish a process to refund IEEPA tariffs previously collected. The total amount of IEEPA tariffs paid by the Company as of the date of the ruling was $35.9 million. The Company has submitted refund claims through the portal established by CBP for $34.0 million, excluding interest. Beginning on July 20, 2026, the Company has received cash of $6.9 million for a portion of the refund claims, with applicable interest.
The Company elected to apply the gain contingency model in accordance with ASC 450-30, Gain Contingency, to account for potential refunds. As of July 4, 2026, the Company has not recognized any tariff refunds as the amount and timing of any recoveries was uncertain. The Company will continue to monitor changes to the import and export policies of the U.S. and other countries that could impact its financial position, results of operations and cash flows.
The Company’s revenue from sales to customers in the Middle East represents approximately 1% of total revenue and is managed by third-party distributors. The Company is closely monitoring the ongoing conflict in the Middle East to determine the potential impacts on the Company’s business, which may include a reduction in distributor revenue and an increase in product input costs and transportation costs associated with elevated oil costs.
2026 FINANCIAL OVERVIEW
•Revenue was $506.4 million for the second quarter of 2026, representing an increase of 6.8% compared to the second quarter of 2025.
•Gross margin was 46.5% in the second quarter of 2026 compared to 47.2% in the second quarter of 2025.
•The effective tax rates in the second quarters of 2026 and 2025 were 19.5% and 13.7%, respectively.
•Diluted earnings per share for the second quarter of 2026 was $0.37 compared to $0.32 for the second quarter of 2025.
•The Company declared cash dividends of $0.10 per share in the second quarters of both 2026 and 2025.
•Cash flow provided by operating activities was $3.4 million for the first two quarters of 2026 compared to cash flow used in operating activities of $39.2 million for the first two quarters of 2025.
•Compared to the second quarter of 2025, inventory as of the end of the second quarter of 2026 decreased $55.2 million, or 17.0%.
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RESULTS OF OPERATIONS
Quarter Ended Year-To-Date Ended
(In millions, except per share data) July 4, 2026 June 28, 2025 Percent Change July 4, 2026 June 28, 2025 Percent Change
Revenue $ 506.4 $ 474.2 6.8 % $ 964.0 $ 886.5 8.7 %
Cost of goods sold 271.1 250.2 8.4 % 510.9 466.4 9.5 %
Gross profit 235.3 224.0 5.0 % 453.1 420.1 7.9 %
Selling, general and administrative expenses 187.4 182.4 2.7 % 370.1 354.4 4.4 %
Environmental and other related costs, net of recoveries 0.6 0.9 (33.3) % 1.8 4.0 (55.0) %
Operating profit 47.3 40.7 16.2 % 81.2 61.7 31.6 %
Interest expense, net 7.1 8.5 (16.5) % 13.6 16.5 (17.6) %
Other income, net (0.6) (1.4) 57.1 % (0.8) (2.9) 72.4 %
Earnings before income taxes 40.8 33.6 21.4 % 68.4 48.1 42.2 %
Income tax expense 7.9 4.6 71.7 % 13.1 5.9 122.0 %
Net earnings 32.9 29.0 13.4 % 55.3 42.2 31.0 %
Less: net earnings attributable to noncontrolling interests 1.7 2.2 (22.7) % 3.9 3.3 18.2 %
Net earnings attributable to Wolverine World Wide, Inc. $ 31.2 $ 26.8 16.4 % $ 51.4 $ 38.9 32.1 %
Diluted earnings per share $ 0.37 $ 0.32 15.6 % $ 0.61 $ 0.47 29.8 %
REVENUE
Revenue was $506.4 million for the second quarter of 2026, representing an increase of $32.2 million compared to the second quarter of 2025. The change in revenue reflected a $32.9 million, or 9.3%, increase from the Active Group, a $1.7 million, or 1.6%, decrease from the Work Group, and a $1.0 million, or 8.9%, increase from the Other category. The Active Group’s revenue increase was primarily driven by an increase of $17.6 million from Merrell® and $14.3 million from Saucony®. The Work Group’s revenue decrease was primarily driven by decreases of $2.3 million from Cat® and $1.9 million from Harley-Davidson®, partially offset by an increase of $2.5 million from Wolverine®. The increase in Other revenue was primarily driven by an increase in Hush Puppies® royalty revenue. Changes in foreign exchange rates increased revenue by $3.1 million during the second quarter of 2026. Direct-to-consumer revenue increased during the second quarter of 2026 by $0.1 million, or 0.1%, compared to the second quarter of 2025.
Revenue was $964.0 million for the first two quarters of 2026, representing an increase of $77.5 million compared to the first two quarters of 2025. The change in revenue reflected a $77.8 million, or 11.4%, increase from the Active Group, a $0.7 million, or 0.4%, decrease from the Work Group, and a $0.4 million, or 1.8%, increase from Other. The Active Group’s revenue increase was primarily driven by an increase of $40.4 million from Saucony® and $36.7 million from Merrell®. The Work Group’s revenue decrease was primarily driven by a decrease of $1.9 million from Cat®, partially offset by an increase of $1.5 million from Wolverine®. The increase in Other revenue was primarily driven by an increase in Hush Puppies® royalty revenue. Changes in foreign exchange rates increased revenue by $18.5 million during the first two quarters of 2026. Direct-to-consumer revenue increased during the first two quarters of 2026 by $3.0 million, or 1.4%, compared to the first two quarters of 2025.
GROSS MARGIN
Gross margin was 46.5% in the second quarter of 2026 compared to 47.2% in the second quarter of 2025. Gross margin was 47.0% in the first two quarters of 2026 compared to 47.4% during the first two quarters of 2025. The decrease in gross margin was primarily related to higher tariff costs, partially offset by price increases other tariff mitigation initiatives.
OPERATING EXPENSES
Operating expenses increased $4.7 million, from $183.3 million in the second quarter of 2025 to $188.0 million in the second quarter of 2026. The increase was primarily driven by higher selling costs ($5.1 million), higher legal settlement costs ($2.5 million), higher distribution costs ($2.0 million), and higher incentive compensation costs ($1.8 million), partially offset by lower general and administrative costs ($3.9 million), 2025 reorganization costs that did not reoccur in 2026 ($1.9 million), and lower advertising costs ($1.2 million).
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Operating expenses increased $13.5 million, from $358.4 million in the first two quarters of 2025 to $371.9 million in the first two quarters of 2026. The increase was primarily driven by higher selling costs ($10.6 million), higher advertising costs ($6.7 million), higher distribution costs ($4.2 million), higher incentive compensation costs ($2.7 million), higher legal settlement costs ($2.5 million), and higher product development costs ($1.0 million), partially offset by lower general and administrative costs ($8.3 million), 2025 reorganization costs that did not reoccur in 2026 ($3.7 million), and lower environmental and other related costs, net of insurance recoveries ($2.2 million).
INTEREST, OTHER AND INCOME TAXES
Net interest expense was $7.1 million in the second quarter of 2026 compared to $8.5 million in the second quarter of 2025. Net interest expense was $13.6 million in the first two quarters of 2026 compared to $16.5 million in the first two quarters of 2025. The decrease in interest expense for both the quarter-to-date and year-to-date periods is primarily due to lower average principal balances of variable rate debt.
Other income was $0.6 million in the second quarter of 2026, compared to other income of $1.4 million in the second quarter of 2025. Other income was $0.8 million in the first two quarters of 2026, compared to other income of $2.9 million in the first two quarters of 2025.
The effective tax rates in the second quarter of 2026 and 2025 were 19.5% and 13.7%, respectively. The effective tax rates in the first two quarters of 2026 and 2025 were 19.2% and 12.3%, respectively. The increase in the effective tax rates between 2026 and 2025 was primarily related to changes in the income mix among jurisdictions with differing tax rates and the decreased impact of discrete benefits on the tax rate in the current year due to higher pretax income.
REPORTABLE SEGMENTS
The Company’s portfolio of brands is organized into the following reportable segments.
•Active Group, consisting of Merrell® footwear and apparel, Saucony® footwear and apparel, Sweaty Betty® activewear, and Chaco® footwear; and
•Work Group, consisting of Wolverine® footwear and apparel, Cat® footwear, Bates® uniform footwear, Harley-Davidson® footwear and HYTEST® safety footwear.
The Company also reports “Other” and “Corporate” categories. The Other category consists of Hush Puppies® footwear and apparel, sourcing operations that include third-party commission revenues, multi-branded direct-to-consumer retail store and the Stride Rite® licensed business. The Corporate category consists of unallocated corporate expenses, such as corporate employee costs, corporate facility costs, IT costs, reorganization activities, and environmental and other related costs.
The reportable segment results are as follows:
Quarter Ended Year-To-Date Ended
(In millions) July 4, 2026 June 28, 2025 Change Percent Change July 4, 2026 June 28, 2025 Change Percent Change
REVENUE
Active Group $ 388.4 $ 355.5 $ 32.9 9.3 % $ 760.0 $ 682.2 $ 77.8 11.4 %
Work Group 105.8 107.5 (1.7) (1.6) % 181.6 182.3 (0.7) (0.4) %
Other 12.2 11.2 1.0 8.9 % 22.4 22.0 0.4 1.8 %
Total $ 506.4 $ 474.2 $ 32.2 6.8 % $ 964.0 $ 886.5 $ 77.5 8.7 %
OPERATING PROFIT (LOSS)
Active Group $ 71.2 $ 64.7 $ 6.5 10.0 % $ 137.6 $ 122.8 $ 14.8 12.1 %
Work Group 16.7 20.3 (3.6) (17.7) % 23.3 27.4 (4.1) (15.0) %
Other 8.5 8.1 0.4 4.9 % 15.5 15.6 (0.1) (0.6) %
Corporate (49.1) (52.4) 3.3 6.3 % (95.2) (104.1) 8.9 8.5 %
Total $ 47.3 $ 40.7 $ 6.6 16.2 % $ 81.2 $ 61.7 $ 19.5 31.6 %
Further information regarding the reportable segments can be found in Note 16 to the consolidated condensed financial statements.
Active Group
The Active Group’s revenue increased $32.9 million, or 9.3%, in the second quarter of 2026 compared to the second quarter of 2025. The revenue increase was primarily driven by increases of $17.6 million from Merrell® and $14.3 million from Saucony®.
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The Active Group’s revenue increased $77.8 million, or 11.4%, in the first two quarters of 2026 compared to the first two quarters of 2025. The revenue increase was primarily driven by increases of $40.4 million from Saucony® and $36.7 million from Merrell®. The Saucony® increase was primarily driven by strength in the EMEA wholesale channel. The Merrell® increase was primarily driven by strong demand across its core Moab and Moab Speed franchises, complemented by the launch of Agility Peak 6.
The Active Group’s operating profit increased $6.5 million, or 10.0%, in the second quarter of 2026 compared to the second quarter of 2025. The operating profit increase was due to revenue increases, partially offset by a 190 basis point decrease in gross margin and a $2.3 million increase in selling, general and administrative expenses. The Active Group’s operating profit increased $14.8 million, or 12.1%, in the first two quarters of 2026 compared to the first two quarters of 2025. The operating profit increase was due to revenue increases, partially offset by a 130 basis point decrease in gross margin and a $13.2 million increase in selling, general and administrative expenses. The decrease in gross margin in the current year period was primarily due to increased U.S. tariff costs and unfavorable product and customer mix, partially offset by price increases and improved full price mix. The increase in selling, general and administrative expenses in the current year periods was primarily due to higher advertising and selling costs, partially offset by lower general and administrative costs.
Work Group
The Work Group’s revenue decreased $1.7 million, or 1.6%, in the second quarter of 2026 compared to the second quarter of 2025. The Work Group’s revenue decrease was primarily driven by $2.3 million from Cat® and $1.9 million from Harley-Davidson®, partially offset by an increase of $2.5 million from Wolverine®. The Work Group’s revenue decreased $0.7 million, or 0.4%, during the first two quarters of 2026 compared to the first two quarters of 2025. The revenue decrease was primarily driven by a decrease of $1.9 million from Cat®, partially offset by an increase of $1.5 million from Wolverine®. The Cat® decrease was primarily due to decreases in consumer demand in both North America and international markets. The Harley-Davidson® decrease was primarily due to decreased consumer demand in the U.S. wholesale channels. The Wolverine® increase was primarily due to increased consumer demand in Wolverine Workwear and higher average sale prices in Wolverine footwear.
The Work Group’s operating profit decreased $3.6 million, or 17.7%, in the second quarter of 2026 compared to the second quarter of 2025. The operating profit decrease was due to a 200 basis point decrease in gross margin and a $0.7 million increase in selling, general and administrative expenses. The decrease in gross margin in the current year period was primarily due to higher U.S. tariffs and unfavorable product mix, partially offset by price increases. The increase in selling, general and administrative expenses in the current year periods was primarily due to higher general and administrative costs.
The Work Group’s operating profit decreased $4.1 million, or 15.0%, in the first two quarters of 2026 compared to the first two quarters of 2025. The operating profit decrease was due to a 50 basis point decrease in gross margin and a $2.9 million increase in selling, general and administrative expenses. The decrease in gross margin in the current year period was primarily due to higher U.S. tariffs, partially offset by favorable channel mix, less promotional activity and price increases. The increase in selling, general and administrative expenses in the current year periods was primarily due to higher advertising and selling costs.
Other
The Other category’s revenue increased $1.0 million, or 8.9%, in the second quarter of 2026 compared to the second quarter of 2025. The Other category’s revenue increased $0.4 million, or 1.8%, in the first two quarters of 2026 compared to the first two quarters of 2025. The revenue increase was primarily driven by an increase in Hush Puppies® royalty revenue.
Other operating profit increased $0.4 million, or 4.9%, in the second quarter of 2026 compared to the second quarter of 2025. The operating profit increased in the second quarter of 2026 primarily due to higher Hush Puppies® royalty income. Other operating profit decreased $0.1 million, or 0.6%, in the first two quarters of 2026 compared to the first two quarters of 2025.
Corporate
Corporate expenses decreased $3.3 million in the second quarter of 2026 compared to the second quarter of 2025, primarily due to tariff mitigating benefits from sourcing partners recognized in 2026 ($3.4 million), lower reorganization activities ($1.9 million), lower corporate software licensing costs ($1.9 million), and lower inventory reserves recorded at the corporate level ($1.1 million), partially offset by higher legal settlement costs ($2.5 million) and higher incentive compensation costs ($1.9 million).
Corporate expenses decreased $8.9 million in the first two quarters of 2026 compared to the first two quarters of 2025, primarily due to tariff mitigating benefits from sourcing partners recognized in 2026 ($4.3 million), lower reorganization activities ($3.7 million), lower corporate software licensing costs ($3.5 million), lower inventory reserves recorded at the
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corporate level ($2.4 million), and lower environmental and other related costs ($2.2 million), partially offset by higher incentive compensation costs ($2.7 million), higher legal settlement costs ($2.5 million), and higher corporate general and administrative costs ($1.8 million).
LIQUIDITY AND CAPITAL RESOURCES
(In millions) July 4, 2026 January 3, 2026 June 28, 2025
Cash and cash equivalents $ 158.5 $ 206.3 $ 141.0
Debt 601.1 621.7 708.5
Unborrowed revolving credit facility (1) 522.8 510.5 653.3
(1)Amounts are net of both borrowings, if any, and outstanding standby letters of credit in accordance with the terms of the revolving credit facility.
Liquidity
Cash and cash equivalents of $158.5 million as of July 4, 2026 were $17.5 million higher compared to June 28, 2025. The increase is due primarily to cash provided by operating activities of $182.6 million, proceeds from the exercise of stock options of $11.9 million, and proceeds from company-owned life insurance policy liquidations of $2.2 million, partially offset by net repayments of debt of $108.5 million, cash dividends paid of $33.6 million, purchases of common stock of $14.5 million, employee taxes paid under stock-based compensation of $10.7 million, additions to property, plant and equipment of $7.6 million, and payments of debt issuance costs of $3.9 million. The Company had $522.8 million of unborrowed capacity under the Revolving Facility as of July 4, 2026. Cash and cash equivalents located in foreign jurisdictions totaled $129.6 million as of July 4, 2026.
Cash flow from operating activities is expected to be sufficient to meet the Company’s working capital needs for the foreseeable future. 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 of its common stock during the first two quarters of both 2026 and 2025.
A detailed discussion of environmental remediation costs is found in Note 15 to the consolidated condensed 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. As of July 4, 2026, the Company had a reserve of $23.3 million, of which $9.5 million is expected to be paid in the next 12 months and is recorded as a current obligation in other accrued liabilities and the remaining $13.8 million is recorded in other liabilities and is expected to be paid over the course of up to 25 years. The Company's remediation activity at its former Tannery site and sites where the Company disposed of Tannery byproducts is ongoing. It is difficult to estimate the cost of environmental compliance and remediation given the uncertainties regarding the interpretation and enforcement of applicable environmental laws and regulations, the extent of environmental contamination and the existence of alternative cleanup methods.
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.
Financing Arrangements
On September 24, 2025, the Company entered into a 2025 Replacement Facility Amendment and Reaffirmation Agreement (the “Credit Agreement”) to replace the previous revolving credit facility and term loan A facility. The Credit Agreement provides for a revolving credit facility (the “Revolving Facility”). The maturity date of the loans under the Revolving Facility is September 24, 2030. The Credit Agreement provides for a debt capacity of up to an aggregate debt amount (including existing revolver commitment amounts in addition to permitted incremental debt) not to exceed $850.0 million. The Revolving Facility allows the Company to borrow up to an aggregate amount of $600.0 million.
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.
As of July 4, 2026, the Company was in compliance with all covenants and performance ratios under the credit agreement.
The Company’s debt at July 4, 2026 totaled $601.1 million compared to $621.7 million at January 3, 2026. The Company expects to use the current borrowings to fund organic growth initiatives and for general corporate purposes. Lower debt is primarily due to repayment of borrowings under the Revolving Facility.
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Cash Flows
The following table summarizes cash flow activities:
Year-To-Date Ended
(In millions) July 4, 2026 June 28, 2025
Net cash provided by (used in) operating activities $ 3.4 $ (39.2)
Net cash used in investing activities (4.6) (11.9)
Net cash provided by (used in) financing activities (46.3) 35.3
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.
For the first two quarters of 2026, an increase in net working capital represented a use of cash of $66.1 million. Working capital balances were unfavorably impacted by an increase in accounts receivable of $57.2 million, a decrease in other operating liabilities of $31.5 million, partially offset by an increase in accounts payable of $14.4 million, a decrease in other operating assets of $4.3 million, and a decrease in inventories of $3.9 million. Operating cash flows included adjustments for stock-based compensation expense of $12.4 million, depreciation and amortization expense adjustment of $10.5 million, other operating activities of $5.0 million, environmental and other related costs, net of cash payments and recoveries received, cash outflow of $4.0 million, and deferred income taxes of $0.3 million.
Investing Activities
The Company made capital expenditures of $4.1 million and $11.0 million in the first two quarters of 2026 and 2025, respectively, for corporate headquarters building improvements, eCommerce site and information system enhancements, and for company owned stores.
Financing Activities
The current year debt activity includes net repayments under the Revolving Facility of $21.0 million. The Company paid $5.0 million in principal payments associated with its long-term debt during the first two quarters of 2025. The Company paid $8.5 million and $8.5 million during the first two quarters of 2026 and 2025, respectively, in connection with shares or units withheld to pay employee taxes related to awards under stock incentive plans. The Company received cash proceeds from the exercise of stock options of $0.2 million and $0.5 million during the first two quarters of 2026 and 2025. The Company did not repurchase its shares in the first two quarters of 2026 or 2025.
The Company declared cash dividends of $0.20 per share during the first two quarters of 2026 and 2025. Dividends paid in the first two quarters of 2026 and 2025 totaled $17.0 million and $16.7 million, respectively. A quarterly dividend of $0.10 per share was declared on August 3, 2026 to stockholders of record on October 1, 2026.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of the Company’s consolidated condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP"), requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates these estimates. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Historically, actual results have not been materially different from the Company’s estimates. However, actual results may differ materially from these estimates under different assumptions or conditions.
The Company has identified the critical accounting policies used in determining estimates and assumptions in the amounts reported. For information regarding our critical accounting policies refer to Part II, Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2025 Form 10-K. Management believes there have been no material changes in those critical accounting policies.
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