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Non-Tech : Wolverine World Wide: Need some good shoes? -- Ignore unavailable to you. Want to Upgrade?

To: Chip Roos who wrote (58)	2/3/1998 3:17:00 PM
From: Ken Turetzky	Respond to of 178

More details from Alex Brown: BT Alex. Brown Incorporated DAILY RESEARCH HIGHLIGHTS--PART 4 Tuesday, February 3, 1998 WOLVERINE WORLD WIDE, INC. (WWW) (2/2/98, 27 5/8, STRONG BUY) Marcia Aaron (415) 477-4258 Joe Grillo (415) 477-4246 C. Scott Webster (415) 477-3246 * The footwear industry's most consistent Company. Wolverine World Wide should post its fifth year of 25+% operating income growth when it reports earnings on February 10th. * Wolverine World Wide is a leading designer, manufacturer and marketer of a broad line of quality comfortable casual shoes, rugged outdoor and work footwear and slippers and moccasins. The Company's products are designed to meet the needs of men, women and children. * Brands include Hush Puppies, Wolverine, Caterpillar, Harley Davidson, Merrell, Hy-Test, Bates and Coleman. The product offering is casual and the brands serve a variety of distribution channels from mass to department stores. * Hush Puppies revival in full swing. Fall 1997 sell through was robust and Fall 1998 product is being well received by major retailers. * Caterpillar Footwear represents a significant new growth vehicle. CAT Footwear is one of the hottest boot brands in Europe and that success is beginning to translate into US success. This will be the fastest growing brand for Wolverine. * Wolverine Worldwide is a global branded Company with more than half of all pairs sold outside the US. Pacific Rim exposure is limited with only 11% of pairs sold into this region, far less than many other marketers in the footwear industry. * Our 1997 EPS estimate is $0.95 versus $0.76 (+25%). Our 1998 EPS estimate is $1.18 (+24%) and our 1999 EPS estimate is $1.42 (+20%). We project earnings will compound at a 20-25% annual rate over the next 3-5 years. * Initiating coverage with a "strong buy" (1) investment rating. Our 12 month price target range is $36, which is, based on 25x our 1999 EPS estimate of $1.42. The stock has historically traded at an average P/E of 26 over the last year.

To: Chip Roos who wrote (58)	2/11/1998 11:55:00 AM
From: Ken Turetzky	Read Replies (1) \| Respond to of 178

Gerard Klauer Mattison report on WWW: Wolverine Wide Web/WWW BUY THOMAS A. FILANDRO (212) 885-4003 ___________________________________________________________________ Price 52-Week Earnings Per Share P/E Ratio 12-Month 02/10/98 Range 01/97 01/98E 01/99E 01/98E 01/99E Target 28.69 31.13-19.44 1.01 1.18 1.42 24.3x 20.2x 35 Prior: 0.99 ___________________________________________________________________ WWW*-- Strong FY97 Broad-Based Global Sales & Profits --BUY o 4Q97 EPS of $0.49 versus $0.38 were $0.02 ahead of our First Call-high estimate. Sales for the 13-week period ending January 3, 1998 rose 16% to $246 million, as all divisions registered solid results. Operating profits during the quarter jumped 27%, bolstered by better-than-expected gross margin trends, coupled with the broad-based sales strength. For the year EPS (excluding a non-recurring restructuring charge of ($0.05) per share) improved 33% to $1.01 versus $0.76. We maintain our view that WWW global brands possess true staying power and reiterate our BUY rating and our 12- month price objective of $35. o FY98 off to a strong start, as global footwear orders are trending well ahead of last year. WWW entered FY98 with strong indicated sales trends, as backlogs are up 20%, and footwear orders for the first four weeks of the new year are running 28% above the prior year. The backlog and order trends suggest that there is no slowdown in demand for the company's various brands. o We maintain our FY98 and FY99 EPS projections of $1.18 and $1.42, respectively. Despite above-plan fourth-quarter and FY97 results and our assumption of slightly higher sales and margins trends over the next two years, we are maintaining our current EPS estimates, reflecting an anticipated hike in the corporate tax-rate to 34% from 32%. o Higher IMU's bolster 4Q97 gross margins and afford further gains in FY98. 4Q97 reported gross margins rose 160 basis points to 31.3% and reflect management's efforts to restructure its manufacturing base to operate more efficiently, while driving product costs lower. The efficiencies in sourcing and manufacturing provide a springboard for improved gross margin trends over the next several years. o Hush Puppies (HP) positioned to post significant sales and profit improvements over the near and longer term. HP domestic wholesale business rose 15% in FY97 and, in our view, has just hit the tip of the iceberg of the potential market share gains over the next several years. Despite the strong FY97 sales and improved profitability, the HP business was under-served and has not reached its full sales potential. As a result, the division possess significant operating margin opportunity of nearly 400 basis points over the next several years. INVESTMENT CONCLUSION: We reiterate our BUY rating on WWW and maintain our 12- month price target of $35 as we believe the company's broad-based sales strength will continue. We also believe the recent acquisition of Merrell and the 5-year license agreement to manufacture Harley Davidson (HDI-$26 15/16) footwear affords WWW incremental sales and profit opportunities beyond our current forecast. WWW shares are currently trading at P/E multiples of 24.3 times and 20.2 times our FY98 and FY99 EPS estimates, respectively. Although the current P/E multiples appear high, we believe WWW brands and strategies suggest substantial growth potential which has not been fully appreciated by investors. As such, we continue to view WWW shares as attractive and believe the shares should continue to trade at a premium P/E multiple to the company's estimated secular growth rate of 20%, or 29 times our FY98 EPS forecast of $1.18.