Wolverine World Wide Inc (WWW) 2011 Q4 法說會逐字稿

Good morning and welcome to Wolverine World Wide's fourth-quarter and full-year 2011 earnings conference call. All participants will be in a listen-only mode until the question-and-answer session of the conference call. This call is being recorded at the request of Wolverine World Wide. If anyone has any objections, you may disconnect at this time. I would now like to introduce Ms. Christi Cowdin, Director of Investor Relations and Communications for Wolverine World Wide. Ms. Cowdin, you may proceed.

Thank you, Rocco. Good morning, everyone and welcome to our fourth-quarter and full-year 2011 conference call. On the call today are Blake Krueger, our Chairman and CEO and Don Grimes, our Senior Vice President and CFO.

Earlier this morning, we announced our record financial results for the fourth quarter and full year 2011. If you did not yet receive a copy of the press release, please call Brad Van Houte at 616-233-0500 to have one sent to you. The release is also available on many news sites or it can be viewed from our corporate website at www.wolverineworldwide.com.

This morning's press release included non-GAAP disclosures and these disclosures were reconciled with attached tables within the body of the release. Today's comments during the earnings call will include some additional non-GAAP disclosures. There is a posting at our corporate website that will reconcile these non-GAAP disclosures to GAAP. To view the document, please go to our corporate website, www.wolverineworldwide.com and click on Investor Relations in the navigation bar, then click on Webcast at the top of the Investor Relations page and lastly, click on the link to the file called WWWQ4 Conference Call GAAP Versus non-GAAP Disclosures below the webcast link.

Before I turn the call over to Blake to comment on our results, I would like to remind you that the predictions and projections made in today's conference call regarding Wolverine World Wide and its operations may be considered forward-looking statements by securities laws and as a result, we must caution you that, as with any prediction or projection, there are a number of factors that could cause results to differ materially. These important risk factors are identified in the Company's SEC filings and in our press releases and with all of that being said, I would now like to turn the call over to Blake.

Thanks, Christi. Good morning to everyone and thanks for joining us today. Earlier this morning, we reported our financial results for the fourth quarter, which capped off a record year for the Company. Our significant brand-building and investments and focused growth initiatives in 2011 enabled us to excel in a somewhat softer retail landscape.

Our global business model, which is centered on marketing 12 brands in over 190 countries around the world, again produced strong growth in revenue and earnings and helped us mitigate risk as we are not dependent on any single country, region, consumer group, fashion trend or distribution channel. We are able to invest behind our brands and deliver great results in a variety of economic environments.

We approached 2012 with a confidence built on our record of performance, the global strength of our brands, the exciting growth opportunities we are driving and a seasoned management team that I believe is the best in the industry.

One of the key strengths of our Company is our international distributor and licensee business, which had an excellent year as our brands, marketing initiatives and product offerings resonated with the global consumer. Many of these distributors and licensees have been our partners for decades.

There are also a number of fashion and macro lifestyle trends that have and are working in our favor as the global economy has started to emerge from the recession. In addition to the general outdoor and health and wellness trends, the global consumer has shown an affinity and a willingness to pay a premium for vintage Americana styling and brands with an authentic heritage that have withstood the test of time -- the interest in unique performance product offering such as barefoot and minimalist footwear. All of these combined helped drive a very strong 2011 double-digit increase in our international distributor and licensee business, a corresponding one-year increase in pairs of close to 20%.

Before turning to our results, I would like to thank the team and mention some great recognition we recently received as a result of their efforts and momentum of our brands in the marketplace. The US retail community recently voted us as winners of several Footwear Plus magazine's excellence awards, including Company of the Year, Outdoor Footwear Brand of the Year for Merrell, Work Footwear Brand of the Year for Wolverine and Men's Street Footwear Brand of the Year for the Wolverine 1000 Mile Collection. This is the first time any company has won four of these awards in a single year. We are delighted to receive these awards obviously as they are a testament to our fanatical focus on product innovation and our teams' efforts to introduce compelling and category-leading product marketing concepts.

Now I will spend a few moments talking about the performance of our brands starting with the Outdoor Group. The Outdoor Group, which includes Merrell, Chaco and Patagonia Footwear, remained the Company's largest revenue and earnings contributor in Q4 and for the year. While the warmer weather and economic turmoil in Europe had some impact on the business, all three brands grew at a strong double-digit pace and achieved record results for the year.

Turning first to Merrell, the retail and consumer response to the initial Merrell Barefoot Collection was exceptional and helped make this collection the most successful new product introduction in the history of the Company -- over a million pairs sold in the first year. Significant marketing and sales investments were made in support of Merrell Barefoot, which helped the collection achieve shelf space in the athletic and running specialty retail channels, a market 10 times the size of the outdoor market.

While 2011 proved very successful for Merrell Barefoot, we are even more excited about the potential for 2012 and beyond. This year, we will leverage the strength of the Merrell brand and its leadership position in the barefoot category to expand our assortment with new cutting-edge product focused on sandals, casual footwear, water, road running and training.

Our gains in 2011 were mostly achieved in the US market, but the minimalist trend is just now beginning to gain traction in many international markets. In many of these markets, Merrell Barefoot is the first entrant. For the first year, the Merrell brand achieved strong double-digit growth in every region of the world as new performance, casual and loop product offerings continued to resonate with global consumers.

Turning to Chaco, our pure outdoor adventure brand, Chaco finished 2011 with strong double-digit revenue growth for the quarter and the year. The brand opened 50 new accounts in the US during Q4 and continues to achieve exceptional growth, partially due to the introduction of its closed toe footwear range. We now have Chaco in 25 countries around the world and this brand continues to be a key growth vehicle for the Company. The Outdoor Group had a tremendous 2011 and we are excited about the opportunities for growth already identified for the future.

Let's now turn to the Heritage Group, which includes the Company's oldest brand, Wolverine; our two largest licensed footwear businesses, Caterpillar and Harley-Davidson; as well as Bates and HyTest. Cat Footwear was the biggest contributor to the Heritage Group's growth as the brand posted very strong double-digit growth for both Q4 and the full year. The unique positioning of Cat Footwear is a trend-right lifestyle brand rooted in authentic work, continues to drive gains across all geographic regions.

In the US, new product introductions of innovative anti-fatigue product drove the business to record levels with SportScanInfo data indicating that the marketshare for Cat Footwear and workboots increased to over 400 basis points versus the prior year. On the international front, new product collections such as Code, targeted for a younger audience, fueled spectacular growth throughout the year.

Turning to the Wolverine brand, the strength of the contour welt and new workboot offerings continue to drive strong performance in the US where SportScanInfo indicates that Wolverine holds the number one market position in work. Additionally, strong domestic and global interest from fashion retailers for the Wolverine 1000 Mile and 1883 Collections helped drive a near triple-digit Q4 revenue increase for these offerings.

The Heritage Group achieved double-digit growth during 2011 with new product introductions and business momentum underpinning our optimism for 2012.

Next, I'd like to discuss the Lifestyle Group, which includes Hush Puppies, Sebago, Soft Style and the most useful consumer brand in our portfolio, Cushe. All brands delivered double-digit revenue increases in the quarter. Hush Puppies, our classic American casual brand, turned in an exceptional quarter as new product initiatives led to growth in all geographic regions.

The iconic 1958 Collection generated significant growth for the year as strong sell-through in consumer interest led to increased penetration within existing markets, as well as expanded distribution to new retailers and geographies. We will continue to invest in global concepts, including the 1958 Collection, the Body Shoe and Laid-Back Luxe Collection as there is a strong consumer appetite for this authentic American brand, the world's first casual footwear brand.

The international licensee business had an outstanding year for Hush Puppies with a very strong double-digit increase in both revenues and pairs. Hush Puppies ended the year with about 625 global monobranded concept stores and over 2000 dedicated shop-in-shops.

Sebago, our premium New England heritage brand, achieved solid double-digit revenue growth for Q4 and the year with its strong Q4 performance being driven by the innovative Drysides collection. This is premium waterproof product. As well as a contemporary fashion boot program featuring product collaborations with Filson.

In November, we opened our first Sebago flagship store on Regent Street in London. This location has reinforced Sebago's positioning in the UK as a premium brand. And early results are exceeding expectations even in the challenging UK retail environment. We are excited to present a full offering of Sebago footwear, apparel and accessories under one roof and are evaluating plans to open up additional lifestyle stores in the future. Sebago finished the year with almost 50 standalone concept stores around the world.

Sebago has strong momentum going into 2012 and the success of major new initiatives like the Artisan and TriWater collections leads us to be very optimistic about the brand's global growth prospects. We have remained focused on Sebago as one of our higher growth brands.

Finally, Cushe, our action sports-inspired brand, continued to grow at a very high double-digit pace for Q4 and the year. Cushe has quickly built a reputation for delivering outstanding product innovation and for providing a source of freshness in the marketplace. We already have the Cushe brand in almost 100 countries around the world. While still very early in its lifecycle, Cushe continues to exceed expectations and is projected to be a major source of future growth for the Company.

In conclusion, I would like to congratulate the team for achieving yet another year of record revenue and earnings results. Our plan going into 2011 was the most aggressive in our history and the team flat out delivered. We remain well-positioned to inspire consumers and outperform in the future despite the economic and geopolitical challenges we expect to face in 2012.

The global economic recovery has been uneven and somewhat slower than hoped for, but our business model and our teams' rigorous execution against it helps us mitigate risk and at the same time deliver growth. We are just coming out of our key trade shows for fall 2012 and early product prototype meetings for spring '13 and I have never been more excited about the product innovation and compelling consumer stories that we will be bringing to global markets in the coming year. The strength of our product innovation pipeline reinforces our optimistic view of 2012 and beyond.

Strategically, we remain focused on expanding our already extensive global footprint through our new centralized international group, which will enable us to pursue new business models and global relationships; two, exceeding the expectations of our core consumers; three, maintaining a fanatical focus on innovation, especially product innovation; and four, consistently delivering excellent results for our shareholders.

I will now turn the call over to Don Grimes, our Senior Vice President and CFO, who will provide you with some additional information regarding our results and our preliminary 2012 guidance.

Thanks, Blake and good morning to everyone. Earlier this morning, we were very pleased to report our second consecutive year of record revenue and record earnings per share with double-digit growth in each. I am delighted to share the full-year and fourth-quarter results in more detail with you this morning, as well as provide our initial guidance for fiscal 2012.

Fiscal 2011 was an exceptional year on many fronts. Our global unit volume grew by more than 12% with over 52 million pairs of footwear or units of apparel sold around the world. Our brand portfolio continues to enjoy broad consumer appeal in each of our three wholesale operating groups and our consumer direct business achieved double-digit revenue growth. The outstanding full-year revenue growth was as equally balanced across our major geographies with all the Company's regions outside the United States delivering double-digit growth and the US up in the very high single digits.

Of particular note was a very strong double-digit increase in both unit volume and revenue and the important emerging markets of Latin America, greater China and India where our relatively new international group has accelerated our investment of time, attention and resources.

We've recently been fielding more questions about our performance by business model, so the subsidiary markets comprise of the US, Canada and most of Western Europe, including the United Kingdom, versus about 190 other countries that we service through distributor and licensee partners. These latter markets represent slightly more than half of our unit volume and are enormously profitable with an operating margin that is substantially higher than our very profitable subsidiary markets.

For the full fiscal year, revenue from these licensee and distributor markets grew at a very strong double-digit pace on an almost 20% increase in unit volume. Revenue growth from our more developed subsidiary markets was still strong, just shy of 10%.

Now I'll provide a little more color on both the quarter and the full fiscal year. Please note that any reference to full-year percentage growth rates reflect prior year's results adjusted for non-recurring restructuring charges. As a reminder, we completed our comprehensive restructuring initiative in Q2 of last year and incurred some non-recurring charges related to that in the first half of last year.

Our current year Q4 results compare apples-to-apples to reported numbers for the prior year's fourth quarter with no adjustments required. On top of the prior year's outstanding fourth-quarter revenue increase of 23.2%, revenue in this year's fourth quarter grew 5.6% to $406.5 million, our sixth consecutive quarter of record revenue. For the full year, reported revenue was $1.409 billion, another record for the Company and an increase of 12.9% on top of the prior year's 13.4% increase.

Foreign exchange had no significant impact on revenue growth in the fourth quarter and contributed $17.3 million to the full-year revenue, or 1.4% to the reported revenue growth. As we disclosed earlier this month, fourth-quarter revenue was impacted by several factors, including soft at-once orders, driven by both a relatively mild fall across most of the US and Europe and retailers focusing on keeping inventories lean. Additionally, the macroeconomic concerns in Europe, driven by all the things we read about on a daily basis, contributed to a softer retail environment, especially in the United Kingdom.

Our Outdoor Group, which consists of Merrell, Chaco and Patagonia Footwear, had an impressive year with full-year revenue of almost $552 million, growth of 18% over the prior year. Amazing first-year results from the Merrell Barefoot Collection, outstanding growth from Merrell apparel and growth in the upper teens from each of the Patagonia and Chaco brands combined to deliver record revenue for this group.

While we don't regularly disclose specific results by individual brands, I think it is important to note that wholesale revenue for the Merrell brand surpassed the $0.5 billion milestone in fiscal 2011, quite an accomplishment for a brand that was doing $25 million of revenue when acquired by Wolverine. Lots of hard work, lots of jungle mocs and now lots of barefoot shoes between then and now, but more importantly a strong foundation for future growth.

The Outdoor Group remains the leading sales and profit contributor for the Company and we expect this leading performance to continue driven by cutting-edge product innovation and our compelling brand proposition that keeps attracting new consumers to these brands.

The Heritage Group is our second-largest operating group and consists of our Wolverine, Caterpillar Footwear, Bates, Harley-Davidson and HyTest businesses. The Heritage Group in total delivered full-year revenue of just over $0.5 billion, 10.1% growth versus the prior year. Solid growth in the Wolverine business bolstered by continued expansion of the more fashion-oriented 1000 Mile and 1883 Collections was supplemented by a phenomenal year for Cat Footwear, which delivered revenue growth in the mid-teens or higher in each of its major geographic regions.

The Lifestyle Group finished the year with reported revenue of just over $206 million, growth of 12.8%. Excellent growth from Hush Puppies, particularly in its licensee markets, a double-digit global increase for Sebago and an almost doubling of revenue from our fast-growing Cushe brand fueled the Lifestyle Group's momentum.

Wolverine Retail delivered excellent performance driven by comp store sales growth that was above the industry average and continued strong double-digit growth from our e-commerce business led by increases in traffic and conversion rates and the opening of 13 new consumer websites in 2011. We finished the year with 101 brick-and-mortar retail locations and 16 new store openings were partially offset by the closure of three existing locations.

Shifting back to the Company's full-year results, gross margin was equal to the prior year's reported gross margin of 39.5%. A positive mix shift across brands and channels and strategic selling price increases helped offset significant product cost increases and approximately $4 million of non-cash LIFO expense.

The Outdoor Group delivered about 60 basis points of gross margin expansion for the full year reflecting the benefit of the very successful higher-margin Barefoot Collection. The Lifestyle Group's and the Heritage Group's gross margin each benefited from outstanding growth in the higher-margin licensee and distributor business for both Hush Puppies and Cat Footwear.

Although our goal every year is to expand gross margin, we were very pleased that our strategy and the execution of that strategy allowed us to maintain our gross margin this past year in the still challenging supply chain environment. We believe that our results represent best-in-class performance across a broad range of footwear and apparel companies.

We delivered 40 basis points of full-year operating expense leverage in 2011 with SG&A as a percentage of sales dropping to 27.4% despite significant increases in marketing spend behind our brands. Operating expenses increased 11.2% for the full year and 6.8% for the quarter driven by incremental investments in support of our new international group and continued double-digit growth and important marketing initiatives designed to drive consumer awareness of our brands laying the foundation for record results in the years ahead.

The increase in full-year marketing spend was not pro rata across the brand portfolio. As an example, we increased the advertising behind the Merrell brand by over 25% in total and we increased Cushe's advertising by over 70%. We believe that our accelerated marketing investments are paying real dividends. While greater brand awareness is something that occurs over time, we have seen our incremental investments in outdoor, print, online and other direct-to-consumer efforts pay off through increased traffic and sales in our consumer direct business and a significant increase in the number of identified friends at almost all of our brands' Facebook pages.

Results like these demonstrate that our brand-building activities are driving greater brand awareness, a key component of our growth strategies today and moving forward.

In 2011, the Company repurchased approximately 1.8 million shares in the open market for $65.3 million at an average price of $35.49 per share. We have approximately $89 million remaining under our current share repurchase authorization. Also during the year, we used our cash flow to pay our $22.7 million of dividends to our shareholders.

Fully diluted earnings for the year were a record $2.48 per share, growth of 14.3% versus the prior year. Fourth-quarter earnings per share were $0.47, down $0.05 per share from the prior-year $0.52 per share. As expected and as previously disclosed, earnings growth in the quarter was impacted by $0.04 per share of incremental non-cash LIFO expense, $0.02 per share of incremental tax expense related to an unusually low prior-year tax rate, the absence this year of a prior-year $0.02 per share gain on the sale of a non-core business and $0.06 per share of incremental marketing, salesforce infrastructure and product development investments to drive future growth. Those items totaled $0.14 per share.

Our balance sheet remains extremely strong. Year-end inventory was up 12.5%, in line with previously committed communicated expectations with much of the increase in core carryover product. We finished the year with cash and cash equivalents of approximately $140 million and only $11 million drawn on our $150 million revolving credit facility. Our solid balance sheet and substantial liquidity gives us the ability to invest in our brands to drive organic growth, fund employee benefit plans, acquire new brands and share our cash flow with shareholders by paying dividends and making opportunistic share repurchases.

On the heels of our second consecutive year of record revenue and earnings, this morning, we issued our initial guidance for 2012. We are projecting reported revenue in the range of $1.485 billion to $1.525 billion, growth of 5.4% to 8.2% over 2011. Reflected in this revenue guidance is the assumption of a stronger US dollar versus our key foreign currencies throughout the course of the fiscal year, which is expected to negatively impact reported revenue by approximately $40 million. Therefore, on a constant currency basis, we expect revenue growth between 8.2% and 11.1%.

To further assist you with building your models, we expect Q1 revenue to be approximately flat with the prior year when revenue grew over 16% and Q2 revenue to show modest growth versus the prior year when revenue grew over 20% with much stronger growth on the second half of the year, particularly the fourth quarter.

While these year-over-year comparisons and a more cautious stance from our retail partners caused near-term sales growth to be muted, we remain confident in our ability to derive improved rates of sales growth as the year progresses. Confirming this view is that our inventory to sales ratios across a majority of our channels remain in good shape with our major brands gaining marketshare globally. We are projecting modest full-year gross margin expansion driven by continued favorable brand and channel mix shifts, strategic selling price increases, a more moderate product cost environment and lower full-year LIFO expense.

Turning to our outlook for operating expenses, we expect modest full-year SG&A deleverage in 2012 driven primarily by three things. First, as disclosed earlier in the month, low investment returns in 2011 and lower long-term corporate bond yields are driving a significant increase in non-cash pension expense. Based on the work from our actuaries, we are now estimating an $11 million or $0.15 per share increase in full-year pension expense, which will be recorded ported on a pro rata basis throughout the fiscal year. It is important to note that actual cash contributions to our pension plans will significantly decrease in 2012; thus helping drive an increase in full-year operating free cash flow.

Second, our outstanding organic growth over the last few years, including the brand acquisitions we have made, has caused us to outgrow our existing distribution facilities. We are now evaluating a variety of options to expand both our US and European distribution infrastructure and expect to make meaningful progress in this analysis over the next couple of months. Related to this, we expect to incur approximately $2.5 million, or $0.03 per share, of startup expenses in the second half of the year, including lease expense during the startup phase and other non-recurring transition costs.

Our strong balance sheet and cash flow enables us to pursue this important distribution expansion and we expect the project's internal rate of return to be quite high. We will share more detail on the status of this project over the coming months.

Third, we will continue our strategy of growing our own brick-and-mortar retail fleet. We have consistently said that our medium-term goal was to grow our consumer direct business to 15% of consolidated revenue and new store openings obviously are an important part of that strategy. We finished 2011 with 101 locations and we expect to open approximately 12 to 15 new locations in 2012 and incur the associated occupancy costs such as rent, labor and utilities.

Foreign exchange translation is expected to reduce full-year earnings per share by $0.07 per share, but we expect to realize a $0.05 per share year-over-year benefit from FX-forward contracts that will bring the net FX impact for the full year to a negative $0.02 per share. We expect a $0.07 per share negative FX translation impact to occur pretty much pro rata throughout the fiscal year with an FX contract gain expected in each of the first three quarters and an FX contract loss in Q4.

Related to FX and its impact on our financial results, some recent analyst notes on Wolverine have projected a more significant FX impact in 2012 than I just mentioned. I would like to remind everyone that, as a Company, we are most exposed to the British pound, the Canadian dollar and the euro in that order. Based on our current mix of business, a good rule of thumb is that a full-year 10% swing in FX rates for those three currencies versus the US dollar, good or bad, results in a translation impact of about $0.06 per share.

We are assuming a full-year effective tax rate of approximately 28% and fully diluted weighted average shares outstanding of approximate 49 million. Also, please remember that we have to adjust reported net income by an amount to arrive at income available to common shareholders in order to calculate fully diluted earnings per share. Per the accounting rules, this adjustment is driven by the existence of restricted shares that have non-forfeitable rights to dividends. That adjustment was $2.3 million in 2011 and we are projecting the adjustment to be approximately $2.4 million in 2012.

Because of the unusual seasonality of our expected revenue growth in fiscal 2012, we currently project our full-year SG&A deleverage to be heavily weighted towards the first half of the year, particularly Q1 where we project about 400 basis points of deleverage. To be clear, flat revenue and SG&A deleverage means that we expect Q1 diluted earnings per share to be lower than last year's record with current expectations in the range of $0.50 to $0.56 per share. For the full year, we are projecting reported fully diluted earnings per share in the range of $2.60 to $2.70, representing growth of approximately 4.8% to 8.9% versus prior-year diluted earnings per share.

The full-year earnings growth is expected to occur in the back half of year, particularly the fourth quarter. Adjusted for the $11 million of incremental non-cash pension expense, the $2.5 million of expenses related to our distribution expansion project and the FX impact, full-year earnings per share are expected to grow in the range of 12.9% to 16.9%.

Finally, capital expenditures in fiscal 2012, including those related to kicking off the distribution expansion initiative, will be in the range of $25 million to $30 million and depreciation and amortization will be approximately $20 million. Thanks for your time and attention this morning. I now turn the call back over to Blake for some final comments.

Thanks, Don. We are excited to have delivered another record year for our shareholders and look forward to continued growth in 2012. Thanks for your time this morning. We will now turn the call back to the operator so we can take your questions. Operator.

(Operator Instructions). Edward Yruma, Keybanc.

Thanks so much for taking my question. I know that 2011 marked the beginning of some of these widespread price increases that you have taken at retail. And I know you mentioned that it is part of your sales assumption for '12. How much of your sales growth will come from pricing this year?

Well, first of all, this is Blake. We started taking -- we got ahead of the game. So if you go back 18 months to 24 months, we saw what was happening in the sourcing and the input cost environment and we got out in front of it and started taking select price increases in certain products and categories starting 24 months ago. So we continued that in 2010. We continued some of that in 2011.

But I will tell you right now that, at least at this moment, 2012 looks like a much more stable sourcing and product cost environment. The waters are much calmer this year than they were the last two or three years. So it is hard to sit here today and give you any kind of exact information on a year-over-year increase.

Ed, it's Don. I will say that, along with what Blake said, we expect the product costs to be, depending on the brand, up in the mid to mid-high single digits in the first half of the year and lower than that in the second half of the year. And our 2012 gross margin analysis shows that our selling price increases will about offset the product cost increases. So a less aggressive contribution to revenue in 2012 from selling price increases than we experienced in 2011.

Got you. And one follow-up if I may. I just want a little bit more color on why you are confident that your sales trends should improve in the back half of the year. Is there new product introduction, is it some early order activity that you have seen from your retailers? I am just trying to understand what gives you confidence that you will see that acceleration in the back half. Thanks.

Frankly, from our standpoint, we have attended all of our fall 2012 tradeshows at this point. We have talked to all of our key retailers. We have even involved some of them in our earlier prototypes for spring 2013 product. So we know their inventories are pretty healthy right now, that they are not especially bloated, with maybe the exception of a little cold weather product and we know they are looking for product innovation for the fall. So we have had pretty good feedback. We are starting to get in some early orders and we feel very good about the fall and our product innovation and our offerings.

In addition to the positive feedback from our sales meetings for fall '12, just mathematically, we have much easier comps in the second half of the year over the first half of the year. We are going against plus 16% and plus 20%. So the way the math works, they are easier comps, but I think it's driven more by the expectation that our fall product is going to be very well-received.

Great, thank you very much.

Christian Buss, Credit Suisse.

Yes, I was wondering if you could provide some color on the acquisition environment and how you're thinking about that as we look forward into 2012.

Yes, I mean our position on that frankly hasn't changed. As you know, we have had a number of initiatives, eight or nine or so over the last 12 or 15 years, virtually all of them successful. We are pretty disciplined. We have a disciplined approach, a whitespace approach for our Company. We are very good at taking brands and keeping them very distinct and plugging and playing them through our international network. So Don and I spend quite a bit of time in this area. We have in the past. We are going to continue to spend quite a bit of time in the future and there are some opportunities out there and we are looking at them.

I will say, Christian, that the environment is, compared to 24 months ago, is pretty robust. There are a number of opportunities that are out there, some of which we are interested in, some which we are not. But we've consistently said over the last three years since we did Chaco and Cushe in January of '09 that we were very interested in adding brands to the portfolio and leveraging our infrastructure. But one thing we can assure you and shareholders that we will be very disciplined in our approach, make sure that any brand we add to the portfolio fits in with our strategy and has extendibility globally.

That's helpful. Thank you very much and best of luck.

Eric Alexander, Stifel Nicolaus.

Good morning, everyone. This is Eric in for Jim Duffy. Thanks for taking my questions. I do appreciate it. On the inventory, if you could provide some color on the unit increase versus input costs, that would be helpful just exiting 4Q '11.

Yes, on a dollar basis, our inventory was up 12.5% and much of the increase is in core carryover product. Obviously higher factory FOBs in 2011 versus 2010 contributed a meaningful part of that dollar increase. It differs, of course, by brand, but across the entire portfolio, unit volume was up in the low to mid-single digits, with the balance of the increase really driven by either higher product costs or mix where you have more of your higher dollar items in inventory.

Okay, that's helpful, thank you. And then a follow-up in terms of the acquisition. In an acquisition scenario, if you could provide some parameters on the debt levels you guys would be comfortable going up to in terms of nominal debt and then a targeted leverage ratio that would also be helpful for us.

Yes, I mean we consider a range of opportunities. We have very strong ample liquidity in terms of what is available currently based on our revolver. At the end of the Q4, we had $11 million drawn on a $150 million revolver, but we have borrowing capacity that goes beyond that.

In terms of what's the max leverage ratio we would go to, I guess it really depends on the opportunity. We are not looking to become a highly leveraged company, but we also recognize that, on a trailing 12-month basis, our EBITDA was $185 million. So bankers are frequently in my office talking about ways that they can help us out. So in terms of a max leverage ratio, I really have nothing to offer to you. But suffice it to say that we have said repeatedly that we would like our next acquisition to be a little larger than either Chaco or Cushe were and so there is a sweet spot that we are targeting and there are a number of opportunities that may fit that.

Okay, thank you. And then last one is just on a modeling question. I just want to make sure I'm good on share repurchasing. You guys -- you noted that you had $89 million remaining. We were coming out of fourth quarter '11 with 48 million diluted shares and you guys are looking for 49 million for next year. If you could just help me out with kind of the cadence for that, that would be -- I think that would get us where we need to go.

In terms of the cadence in terms of quarter-by-quarter?

Maybe not quarter-by-quarter, but just kind of how we should think about that progressing. Is it just an even growth over the balance of the year to get from that 48 million to the 49 million?

The difference between 48.2 million and 49 million I don't deem material. The assumption of 49 million makes a certain assumption regarding share purchases in 2012, which will be plus or minus whatever the assumption is. So if I were building your model, I would probably just do a regular uptick between Q4 2011 and the 49 million.

Okay, great. And then I want to make sure I'm clear on the FX. You guys are assuming incremental US dollar strength versus the basket of currencies compared to current spot rates, is that right? You guys aren't taking just current spot rates right now.

That is correct. We are modeling as a strengthening dollar.

All right, very much. Best of luck.

Oliver Chen, Citigroup.

Hi, guys. Thanks for your time. I am speaking on behalf of Kate McShane. We were just curious a little bit about how you are thinking on '12 in relation to the underlying European market and the strength or caution on the consumer in the various markets.

And then secondly regarding the Barefoot product, could you elaborate on what is happening with your increase in points of distribution for '12 and your relationship with Vibram? Thank you.

Sure. Let me talk about Europe briefly to begin with. Yes, we expect Europe to be more volatile and choppy this year. As you know, there are one or two countries that are already officially in a recession again and probably a couple of more that are going to follow as soon as their official fourth-quarter GDP results are announced. We are seeing some softness, especially in the UK market and maybe a little less so in southern Europe and then greater strength in northern Europe. Obviously, it is a pretty volatile situation over there given their macro economic and political considerations and the climate there. So we see Europe as having a bit more of a challenging year for us. And to put it in perspective, about 20% of our pairs is in greater Europe and then maybe half or slightly half of those in the UK market.

And then I think you had a question regarding Barefoot. Obviously, a spectacular start for us. We do see it beginning to take hold in markets outside the United States, although this is frankly the home for Barefoot. Merrell is going to be the first brand out there offering Barefoot selections across a number of product categories -- water, sandals, training, road running, trail running. So we are going to be out there with more SKUs, some more doors in the US.

2011 was a nice add-on for distribution channels for Merrell in the Barefoot Collection being able to penetrate and get a real foothold in the running, specialty and athletic shops. So it is very, very early in its lifecycle yet internationally. And that is obviously, given our international footprint in 190 countries, very good for us.

Thank you. Can you refresh us on the nature of your relationship with Vibram? And then finally, regarding supply chain and cost of goods sold, the one component we were also curious about is labor. What is your kind of view on that and was there -- were you taking strategic actions in light of kind of labor issues? Thank you.

Yes, we have a very strong relationship with Vibram. We are Vibram's -- overall, our Company is their number one customer in the world by I think a substantial factor. So we have got a very strong relationship with them overall and especially in the barefoot minimalist area and continue to work very closely with them.

With regard to the sourcing environment, obviously we have been working on new countries, reengineered product, new factories to take some of the risk out of the cost increases that we have seen over the last couple of years. We have changed our product mix a little bit and as noted earlier, we have taken some selective wholesale price increases.

So that being said, as an example, the United States still has about 80% to 87% of all footwear sold in this market in terms of pairs comes from China. And that percentage hasn't fluctuated over the last several years despite everyone's efforts to diversify their sourcing base. So we see gradually continuing higher prices in China tied to labor costs. We also see the Chinese currency continuing to gradually strengthen over time. All this will continue to put some pressure on product costs, but I will have to tell you that 2012 is almost feeling like a breather for us in the sourcing environment and the product cost arena. The factories have been very cooperative in trying to maintain prices despite their higher labor costs. So this is one area where I certainly feel better than I have the last couple of years.

Thank you. That sounds very encouraging.

(Operator Instructions). Mitch Kummetz, Robert Baird.

Thanks. I have got a few questions. Let me start, Don, on your 2012 sales guidance. You talked about flattish in the first quarter, a modest increase in the second quarter. So what does that imply for the back half and the fourth quarter? I haven't done the math yet.

It implies obviously much stronger growth. Given the guidance that we gave of $1.485 billion to $1.525 billion, it would be in the double-digit range in terms of revenue growth in the back half of the year.

Okay. And is that largely a function of the easy reorder comparison or are you guys already seeing something on the pre-book side that gives you that confidence?

We have little insight to the back half, relatively little, I would think, compared to the first half in terms of the backlog of the order book right now. As we mentioned in response to Ed's question right off the gate, it is based on, A, easier comps that both the plus 16% and plus 20% in the first half of this year, difficult comp for this year's Q1 and Q2 compared to easier comps in the back half of the year, but also the reorder environment is just tough this year because of a bit of pipeline fill on the cold-weather product that Blake mentioned. And also it is based in large part -- our view on the back half of the year is based on our very well-grounded optimism regarding the product offering in the back half of the year.

Okay. And then Outdoor in Q4 was up roughly 5%. Did you say -- I know Merrell is -- you said Merrell is over $500 million of wholesale. So it's obviously the biggest, most largest piece of that business. Was Merrell up double digits in the fourth quarter? I thought I had heard you say that before, but somehow that doesn't reconcile with the mid-single digit increase.

No, if I said it before, I made a mistake, but I don't recall saying that.

Okay, so Merrell was not up double digits in Q4. And then, Blake, I think you had said that you sold over a million pairs of Barefoot in 2011. I mean does that put you at around sort of a $50 million business there for 2011? And then kind of how do you see that playing out in 2012?

Well, Mitch, you have got to remember, although it was really the first year for Barefoot, a good portion of those pairs are sold internationally. So we would only report the royalty income stream on those pairs. So it is not as simple a calculation of taking a million pairs and multiplying it times a deemed wholesale price. So our actually reported sales would have been less than $50 million, I don't have the exact number, but that is tied to a number of those -- a portion of those shoes were sold internationally on a royalty basis.

And do you have some estimate for what you expect the pairage increase to be in Barefoot in 2012? It sounded like you were pretty optimistic about how that business sets up.

Yes, right now, I would say substantial.

With the new products and the way the backlog looks for Barefoot, we expect meaningful growth from Barefoot. It's important in 2011, as we remind everyone every quarter, even without the incremental contribution from Barefoot, the Outdoor Group still had very substantial growth in each quarter of 2011. So I want to refresh everyone's memory to that.

Okay. I have one last question. On your gross margin outlook, Don, it sounds like cost increases net of price increases is pretty neutral to gross margin in 2012. You are looking for a modest increase. Can you give us some sense as to what that -- is it all about mix in 2012 in terms of the gross margin pickup or is there something else there?

It is mix and it is lower LIFO expense.

Okay, all right.

With mix being a bigger contributor than lower LIFO.

Okay, great. Thanks a lot. Good luck.

Sam Poser, Sterne Agee.

Good morning. Thanks for taking my question. I have a couple questions. The commentary -- are you seeing any difference on a year-over-year basis given the weather and everything else of the order flow -- of the hard purchase orders or are the retailers just waiting longer this year to start writing than they did last year?

Yes, as I have said earlier, including within the last month, I believe, Sam, you are seeing factory leadtimes come down substantially. So that is leading retailers to hold back a bit on placing their orders. And also throughout 2011, which, as you know, was a pretty good year for footwear and an especially good year for our brand, I would say the mood of retailers was more cautious than the actual consumer. So the actual consumer was coming into the stores and spending, especially if there was some freshness and some new product innovation and the retailers mood was just a little more cautious, especially as 2011 progressed.

So a number of those factors are contributing to a bit more of a cautious outlook by retailers. I am saying that, of course, in the context of the USA and Western Europe. The other 190 countries we operated around the world were seeing continued robust demand.

Thank you. And then within the guidance, can you give us some idea -- like are you expecting the Outdoor Group to grow every quarter or is this -- with these big comparisons and the launch of Barefoot last year, is this a situation where we are likely to see both, I would guess, Heritage and Outdoor Group to be down in the first half of the year while the Lifestyle business would probably be up just because the comparisons aren't quite as great and they have the faster-growing pieces?

Yes, we really aren't going to get into quarterly guidance by operating group, Sam, as I am sure you can appreciate. We were uncharacteristically specific on the first half of the year this year to help people out building the models given the unexpected or unusual seasonality of our revenue growth. But going down to the operating group or brand level is probably not, Sam, is not in anyone's best interest. There are so many moving pieces, as you know.

But, Sam, you are right. Obviously, we filled kind of the pipeline in the first half of last year with Merrell Barefoot, but on the other hand continuing demand remains very strong.

Okay. And then, lastly, I think it was to Mitch's question, was Merrell up in Q4? Because you said it was sort of -- I just want to get a clarification there because you were getting big growth on the other. I mean -- because you certainly saw some deceleration in the fourth quarter.

Yes, Merrell was up in Q4.

Thank you. Good luck.

Taposh Bari, Jefferies & Co.

Thanks. Hey, guys. I wanted to ask you a question about retail. So it looks like 15 new stores in 2012. I guess, first of all, it looks like you opened nine new stores in the fourth quarter of this past year, which seems like a pretty big number versus where you have been tracking in the past. So is that kind of the cadence that we should expect into next year? And then on that point, are you expecting any continued store closures next year or is 15 kind of a good net number to consider as well?

Yes, obviously, I wouldn't take nine stores in Q4 and project that forward. That was -- as you know, store openings are tied to availability and getting the right location and sometimes they cluster in a quarter and sometimes they are a little more evenly spread out throughout the year. Given the fact that we directly operate 101 retail stores today, you can expect some closings every year. So we will always be looking at our portfolio of stores and closing and transferring out of those stores that don't make any economic sense.

I will say though, one of the reasons we called out retail SG&A as one of the items driving the expected deleverage in 2012 is because of that heavy Q4 store openings that we had in fiscal 2011. Those stores being open only a hand -- I will say approximately two months versus 12 months in 2012, plus the new stores we are going to open in 2012 is really why that was material enough for it to be a call item on that.

Okay. And of those 15 stores, can you just give us some context around brand? I am assuming they are mostly Merrell and geographic placement?

Yes, right now, I think they would be focused on the USA primarily. We are looking at some opportunities in the UK where the Merrell brand is very strong and where especially the Sebago brand is very strong. We have opened up a couple of concept stores for Sebago lifestyle stores in the UK. They are exceeding our expectations and we are taking -- as challenging as the UK is at the moment, we are taking a hard look at more stores for Sebago in the UK and some other parts of Europe where it is really a premium brand.

But the new stores would be weighted more towards Merrell to your point.

Okay. A quick question for you, Don, just housekeeping on the FX hedging gains that offset the currency-related weakness. Is that a gross margin line item or does that appear in other income?

It is gross margin.

Okay. And then just a quick follow-up on just M&A. I think last we heard you guys were in the market for maybe one to two brands. Is that still kind of the way you're thinking about your criteria? And also can you just give a sense of any kind of size? I think you had mentioned greater than Cushe or Chaco, but are you thinking like $200 million, $300 million? Can you just give us some more context around the relative size of those potential acquisitions?

Yes, we really don't have a set plan, never have, on how many new brands to add in a particular timeframe, a particular year. We are -- as we have also said though, we would be willing to consider some small, medium and larger acquisitions. We have got the wherewithal to do it. We have the management team to do it. We have the systems to do it. We have the international spread of our brands and relationships to do it. So we would not be adverse to small, medium or larger for us acquisitions.

On the other hand, you also have to remember in our industry you are only a collection away from a $100 million business. So Cushe, as an example, was a very small brand when we acquired it, but spectacular creative talent and product and that business is going to continue to grow. But we are not averse to looking at some businesses with some more mass.

Okay, that is all I have. Thank you. Good luck.

Chris Svezia, Susquehanna Financial Group.

Good morning, everyone. So a quick question for you, Don. When I think about the earnings, you gave us some color for Q1 and the level of deleverage on SG&A. I'm just curious, as you go into Q2, is there any reason, if you get some modest revenue growth, that the deleverage wouldn't be in and around that same level of impact? Just kind of curious about some color around that if you could.

No, it won't be. We don't expect the deleverage to be that significant in Q2.

So you can possibly grow earnings in Q2?

Again, we offered nice pretty specific guidance on Q1, so I don't want to presume that I'm going to get into providing quarterly EPS guidance for each quarter of the year. I think I will let our comments stand and try to be as helpful as possible for people just given the unusual nature of how revenue and earnings are going to flow in 2012. While there is still a lot of the story to be told on Q1, there is even more of the story to be told yet on Q2 in terms of how the orders flow.

Okay. And then when you guys think about, from a geographic perspective, when you think about Europe, the subsidiary business, for 2012, I mean that is still a growth driver for you when you think about overall revenue. I'm sure the licensing and distributor that is probably one of the biggest standouts and then US wholesale is a pretty still solid growth driver for you as well. Just any color in and around those segments would be helpful.

Yes, when we step back and try and predict what the world is going to do next year, I would say that Europe and the United States have been a little slower than the rest of the world coming out of the recession and parts of Europe may be going back into a shallower recession as we speak. So we expect to grow in Europe. We have plans to grow in the United States and probably our growth certainly in pairs around the world in those 190 countries is going to be even greater.

Okay. And then, last, just on the distribution side, I guess maybe talk about what you guys are doing versus getting a new facility. Just maybe a little color about what you guys are doing and what is the timing on that. It seems like coming out of Q2 into Q3, maybe share a little more color.

Yes, we have outgrown our Michigan-based distribution facility, so we have evaluated a number of alternatives. I won't bore you with the details of which, but we expect to make very significant progress in finalizing what we're going to do over the next couple of months. We have a third-party resource helping us kind of navigate our way through this. It is something we have to do because we have outgrown -- as we've generated organic growth both from our existing brands, as well as adding brands to the portfolio, something that we have to do.

But the interesting thing is we think we can actually reduce our overall freight costs and reduce leadtimes to customers from some of the things we are thinking about doing in terms of geographic location and where we actually expand our distribution capability. So it is not just an investment to preserve the gross profit that you would otherwise get through our Michigan facilities; I think we can actually improve the profitability of our business and become a more valued supplier to our customers. And so the net present value -- the preliminary net present value is astronomical and the internal rate of return on what we are talking about is quite high.

To your point, it is a kind of back-half investment initiative. The $2.5 million that I referred to would be primarily a Q3 and Q4 event. The CapEx related to the project is included in the guidance that I gave you for 2012. So there would be an additional amount in 2013. We would be looking at whatever we do to go operational mid-2013.

Okay. And last one, if I can just squeak one in here, when you guys, coming out of OR and some of the tradeshows you have been at, in the conversations you have with some of your retail partners about looking at inventory and open to buy for fall '12, just given what has kind of unfolded here for 2011, I mean is the conversation more about shrinking the pie overall and the commitment initial to inventory and chasing and putting more pressure on you guys to hold the inventory for at-once? What is the conversation like? It seems like the pie is shrinking a little bit more, you've got to fight a little bit harder for marketshare. Any color about that would be helpful.

Yes, I think retailers again got increasingly cautious since 2011 went on for a variety of reasons. Their inventories overall in my estimate are in pretty good shape. They may have a little bit too much cold-weather product here, a little too much cold-weather product there, but their inventories are in pretty good shape. But that being said, there has been a long-term trend for the retailers to try and push back as much risk, marketplace risk on the brand owners as possible. So it puts a premium on having a great supply chain and being able to fill in quickly and deliver product quickly.

Okay. Best of luck to you guys. Thank you.

Diana Katz, Lazard Capital.

Hi, thank you for taking my questions and really great color and disclosures today. Thank you. Don, I was wondering if you could help me with the SG&A expense associated with opening these new stores. What is the typical cost per store inclusive of rent and overhead and what was your store comp in the quarter and where do you expect it for the year? And then can you also talk about your four-wall contribution from your chain?

Yes, that's a lot of questions. They are all about retail though and you're welcome on the additional disclosures. So I hope you guys found that helpful and I can't guarantee they will be that specific every quarter, but this quarter, it was. But of our total SG&A next year, about $6 million of the increase is related to new store openings, either stores that opened in the latter part of 2011 that will be open for a full year in 2012 or stores that will open in 2012 for a partial year. So that is a pretty significant driver. If you look at our SG&A of $385 million in 2011, that is a pretty significant portion of any kind of percentage increase you may have in 2012. So I will leave that at that.

Our four-wall contribution margin is high single digits. It is improving. It is nowhere near what we or our retail group want it to be. So we have shown a steady improvement in four-wall contribution margin. More importantly, or as importantly, our productivity in terms of sales per square foot was up 11% in the quarter. That is a very key metric that we watch and we are showing nice improvement on that and the other question was --?

Well, if you looked at Q4 comps, it is hard to get any real apples-to-apples measurements except here in the United States where we can compare ourselves against the FDRA survey, which is about 30,000 shoe doors across the United States and our comps in Q4 were about 30% higher than the comps of the FDRA survey.

Okay. Thank you. Is there any way to quantify what percentage of your year is pre-booked and then what percentage you see more as your at-once business?

Well, it's difficult. Historically speaking, it was about 50/50 if you look back over a 5 or 7, 10-year period for our Company. Certainly a different game we play in than the athletic brands, the athletic footwear companies. But we have had some big swings over the last three years starting with the recession, some big swings to at-once -- on the at-once side, some big swings back to the future order side. So it has probably been as volatile as it has ever been over the last three years. But overall 50/50 would have been our historical norm, but that could fluctuate 5 percentage points either way in a given year.

Obviously, as you know, Diana, Q1 and Q3 are kind of heavier future quarters where we would have more of that quarter's revenue on the books going into the quarter. And Q2 in Q4 would be heavier reorder quarters, so therefore less on the books going into the quarter. But if you asked me, as we enter a fiscal year, what percent of that year's expected revenues are on the books, it is below 50% given how the business plays out over quarters.

Okay. And I know this question has been asked in different ways, but just in terms of your acquisitions, are there any restrictions from your revolver in terms of the size of an acquisition that you could make? And then would you look to grow your retail chains through an acquisition of stores or are you more looking at wholesale brands?

We have a number of restrictions on our revolver regarding how much we can borrow, but revolvers can be refinanced, I guess, is the easy answer to your question. So I mean if we do a small to medium-size acquisition, we can easily fit it under our revolver using a capacity on the revolver plus our existing cash. We finished the fiscal year with $140 million of cash on the balance sheet. If we did something that was kind of medium to medium large, then we would probably be looking at raising money anyway, so in which case we probably would replace the revolver with something else. I'm sorry, the last question was --? I'm sorry, the last question?

Would you look to grow your retail chains through an acquisition of store chains or looking more at wholesale brands?

I think we would have -- we would be open to potentially a retail acquisition, but we would be more focused on acquiring brands.

Okay. And then my final question was just on Cat Footwear. Your market increased over 4 bps this year. Can you comment on where you are taking share from?

Well, we think -- we know we are not taking share from Wolverine brand, which is the number one in USA Work, so we presume we are taking share from just about everybody else. Cat had a spectacular year here in the USA and frankly around the world. A lot of the same boot silhouettes that are more workboot-focused here in the US are fashion styles around the world.

Okay.

I don't know where Cat Footwear stands right now in terms of its rank in USA Work, which that category, by the way, had a very good year for us and for the industry, but it is clearly in the top five and maybe above that.

Thank you very much.

Reed Anderson, Northland.

Good morning. Thanks for taking my question. Just a couple follow-ups. First off, getting back to the Barefoot line, I am just curious, the growth you are anticipating for '12, will that, by and large, be within a lot of that core athletic and specialty distribution channel or do expect you are going to broaden the distribution a little bit?

We think we have plenty of room to grow in our existing customer doors, whether it is the outdoor specialty channel starting with REI and going down to the wonderful mom and pops that exist within every market or really to expand in the athletic and running specialty shops where our distribution is frankly pretty new.

So we may -- there is always a few great doors to add, but we -- as you know, Merrell, especially in the United States, has a pretty wonderful base of retail exposure right now and we are looking to take more shelf space in that space.

That's great. And then you had also made -- I think Don had made a reference to marketing spend in the prepared remarks. I am just curious, is that going to also continue in '12 where you'll see kind of -- I don't want to call it disproportionate, but a continued ramped up ad spend related to brands like Merrell and so forth to keep pushing out and maintain that momentum?

At this point, we have no intention to take our foot off the gas pedal.

And lastly -- (multiple speakers). I'm sorry, go ahead.

I was going to say -- but one thing that we are -- we do look at quite closely is how we prioritize spend across our brand portfolio. When you have 12 brands -- as I mentioned in my prepared remarks, not every brand grew at the same rate with Merrell up 25% in terms of marketing spend and Cushe up over 70%. So we do strategically allocate resources as we think most appropriate and we also are looking to drive efficiencies elsewhere in the organization to reallocate those dollars towards marketing and advertising and product development investments. So we continually look to get to drive efficiencies in kind of backroom operations and elsewhere in order to fund that.

That's great. And then one last one, I think you had said that you are targeting your direct-to-consumer piece to be roughly 15% at some point. I mean where did you exit '11? Where are you currently relative to that sort of target?

We are in the 7% to 7.5% range, so we have a ways to go.

That's fantastic. Great. Thank you very much. Best of luck.

Scott Krasik, BB&T Capital Markets.

Hi, guys. Thanks for fitting me in. Blake, can you tell me -- aside from Barefoot, the other big sort of trend that has helped your business has been this vintage American classic sort of styles in your boot and whatnot category. Where do you stand in terms of the lifecycle of that, do you think?

It still seems to be very strong to me and it is not just based here in the United States, but it is especially true around the world. We have -- even in global markets, we have even seen a strong desire for made in America and as you know, we have one footwear factory left here in America and most of it -- our industry has been -- the making part of it has been transferred overseas over the last 20 years, and it ties into the post-recession consumer's focus on real brands and quality and brands that have been around for some decades, brands that stand for something. But it is a strong trend continuing here in the United States.

I think the Wolverine 1000 Mile boot is one example. It has been the best-selling boot in Orvis now for well over a year, as an example and continues to be -- that collection continues to just outperform in that particular venue and very strong demand overseas as well. So I don't personally haven't witnessed any letup in the boot trend. I haven't seen any slowdown in the trend towards Heritage brands, the consumer coming out of this recession, a strong preference for Heritage brands or Americana styling. They all still seem very strong.

That's helpful. And then, Don -- thanks, Blake -- Don, on the flattish Q1 revenue guidance, just balancing your comments about inventory, it is pretty clean at retail. Has anything changed in terms of your cadence of pre-book versus at-once in Q1 shifting to Q2 or what are the factors?

In terms of the ratio of future orders to at-once orders, no, there hasn't been a significant change. The at-once order environment throughout Q4 and even into the first part of Q1 has been a little softer than normal. There is a bit of that pipeline fill with the cold-weather product that has affected a lot of footwear and apparel companies, but in terms of any massive mix shift, no.

Okay. So any other exogenous factors impacting the flattish Q1 revenue guidance?

No, other than what I said, no.

Okay. All right, thanks, guys.

At this time, we have no further questions. I would now like to turn the call over to Ms. Christi Cowdin. Ms. Cowdin, you may proceed.

Thank you. On behalf of Wolverine World Wide, I would like to thank everyone for joining us today and as a reminder, our conference call replay is available on our website at www.wolverineworldwide.com and that replay will be available through April 17, 2012. Thank you, everyone and have a good day.