Wolverine Worldwide to Sell More of Its Leather Business, Announces New Operating Model in China for Merrell & Saucony
Wolverine Worldwide on Monday announced new deals meant to cut costs and continue the ongoing transformation of its business. Among these moves include a new licensing model for the company’s Merrell and Saucony brands in China as well as a deal to sell its Asia-based leathers business.
“We’ve taken fast, bold, and decisive actions to stabilize the company today, while working to transform Wolverine Worldwide for the future,” said Wolverine Worldwide CEO and president Chris Hufnagel. “Our actions over the past four months have served to simplify our business model, reduce our cost structure, and strengthen our balance sheet.”
Wolverine and brand manufacturer and distributer Xtep partnered for a joint venture in 2019 to launch Merrell and Saucony in China. Under this deal, Xstep had the option to buy a 40 percent minority stake from the intellectual property holder of Saucony in China, provided that the business hit certain goals. Wolverine’s strategic actions announced on Monday involve speeding up this option to sell the minority ownership interest and also selling Wolverine’s equity in the Merrell and Saucony joint venture to Xtep, both for a total of $61 million.
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The latter part of this deal will evolve the Merrell and Saucony business in China from a joint venture model to a license and distribution rights model exclusively run by Xtep.
According to Wolverine, this new model “underscores the growth prospects of these two brands in China, and is the result of the early success and maturity of the joint venture.”
The company also entered into a deal to sell its Asia-based Wolverine Leathers business to a current vendor, Interhides Public Company Limited, for about $9 million. Wolverine last year announced its intention to divest or license its Wolverine Leathers business as well as its Keds brand, which it sold to Designer Brands Inc. earlier this year. In September, Wolverine said it had completed the sale of its U.S. Wolverine Leathers business as well as the sale of the intellectual property of its Hush Puppies brand in China, Hong Kong and Macau.
In addition the above divestments, Wolverine is still in the process of exploring “strategic alternatives” for its struggling Sperry brand.
As part of a business transformation plan, Wolverine Worldwide in November revealed a new global workforce reduction and organizational redesign that was expected to deliver $215 million in annualized savings. Other costs reductions came in August, when Wolverine announced it would close its Boston headquarters by the end of the year. Wolverine’s Boston office housed the company’s Sperry, Saucony and Keds brands since it acquired them in 2012, as well as its Kids Group.
Hufnagel said in a statement that the latest announcements from Wolverine will position the company for a strong start to 2024.
“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,” he said.
