Good morning! My name is Allison Malkin, and I'm a partner at ICR. It gives me great pleasure to introduce our next presentation, Wolverine Worldwide. Wolverine Worldwide's company has been on a mission to transform its business model, focusing on its powerful brands, improving its balance sheet and cash flow, and reducing costs. This morning, the company put out a press release, reiterating its guidance, and here to share more about the company's strategy and performance are President and CEO, Chris Hufnagel, and Executive Vice President and CFO, Mike Stornant. Chris?
Thanks, Allison. Thank you very much. Certainly, thanks for taking time for being with us today. We know you've got lots of options in your day, and we appreciate you hearing a little bit about the Wolverine Worldwide story. I'm Chris Hufnagel, President and CEO. Wolverine Worldwide is based just outside of Grand Rapids, Michigan. It's a 141-year-old company, and this is my 151st day as the company's CEO. I wanna talk a little bit about who we are and where we're going. I'm not gonna spend too much time talking about where we've been. If you're interested in that, we can have breakouts or contact Mike or myself, and we're happy to talk to you about the past.
I really wanna talk to you a little bit about the future and the vision, for Wolverine Worldwide. At the highest level, we're gonna become great global brand builders. Consumer-obsessed brand builders focused on building awesome products, telling amazing stories, and driving the business each and every day with powerful brands and powerful platforms. I wanna start, most importantly, with that portfolio of brands. We're very proud of the portfolio of brands that we have today, led by Merrell, the number one outdoor performance footwear brand in the world, established in 1983. A leader in its category. Saucony, a top 10 running brand, really known the world around for innovation for the elite runner. Sweaty Betty, a brand we acquired just a few years ago.
A premium women's athletic lifestyle business positioned in a great growing category with a fanatical consumer following. Wolverine brand, the number one work footwear brand in the U.S., established in 1883, the name on our ticker symbol. Additionally, we've got brands like Chaco. We hold a global license for Cat Footwear, along with Harley-Davidson, and we invented the Hush Puppies brand back in 1958. Let's talk about brands first, and start, most importantly, the thing that I care the most about: product. I'm most excited about the product pipeline that we have in store for 2024 and leading into 2025, starting with Merrell. The hike, the trail has changed dramatically over the past handful of years. It's getting lighter and faster, and Merrell is ready for that.
Big product introductions this year, for us, the hike, the Moab Speed 2, light and fast, won an ISPO Award for the best new trail runner, and five exciting collaborations around the Moab Speed this year. The trail is critically important, and the evolution of the trail is lighter and faster, led by trail run. Our best trail runner we've ever built, the Agility Peak 5, won the same award from ISPO the year prior. Elite max cushioning, which is right on trend. Really the best trail runner we've built, as a brand. And then, importantly, lifestyle. Merrell's ability to grow beyond the trail is gonna be critically important, especially for her and especially from the lifestyle category. This is a shoe that we built. It's called the Wrapt.
It's a barefoot platform, very versatile, a great shoe, performs awesome, and it's visually disruptive. Story about this shoe is we had a hard time selling this into wholesale. They didn't believe that we could sell this. We believe in this, put it at Merrell.com, and sold out in a handful of weeks. It shows our ability to use our direct-to-consumer platforms, build compelling products, build different products, test them in our own platforms, and then launch them to the world. We're excited about what this means as the evolution of Merrell beyond just the trail. Moving to Saucony, a brand that I love, over a hundred years old. One of the elite, great, running brands in the world today. Really led by elite run. This is the Endorphin Pro 4.
This is the year of the super shoe, and we feel fantastic about where Saucony is positioned. This shoe will drop in March of this year. On the far right, you see a fashion lifestyle, our Originals collection. We are proud to be the 2023 Collaboration of the Year, named by Footwear News, and our partnership with Jae Tips. Expanding this fashion lifestyle component is critically important for us. We've got drops coming this year. And then I think the, in the middle is probably the most important. Saucony's been great at both ends of the spectrum, elite run and niche sneakerheads.
There's a great business right in the middle, and we're super excited about the Hurricane 24, which will drop in July of this year, which is that performance run lifestyle shoe, which looks fantastic, is very versatile, and is very democratic. And then moving to Sweaty Betty, a brand that we acquired a couple of years ago. It's a premium women's athletic lifestyle brand. About a third of the business is in leggings. The Power, Power Pro legging is the number one franchise within that. Premium price products. Brand is based in London, with an important category, with a great consumer. Bras is a critically important business. And then a sleeper business for us is the outerwear business. Been a great growing business. Price points between $400 and $500. Each day over the holidays, we saw these in our top categories.
So the ability of Sweaty Betty to grow beyond just a leggings business, head to toe, is critically important, and we're very excited about where Sweaty Betty is. I talked about powerful brands, and we talked about the three most important brands in our portfolio. At the same time, we have to have great platforms. We've reorganized the company over the past handful of months to really put the brands at the center of everything we do, allowing our brands to focus on building awesome products and telling amazing stories. Around that, we've got a set of platforms. International platform, which is our in-market experts, the commercial leads for the business.
We just created a new global licensing group, appointed a new leader, having all the licensing responsibilities of the entire organization reporting into this new global licensing lead, a business that we think that we can grow and certainly make more profitable. Supply chain. How do we have a reliable, durable, dependable supply chain? We have new leadership in place, and with a new Chief Supply Chain Officer, really focusing on helping us deliver great products each and every day. Corporate functions, legal, HR, allowing the brands to focus on the fun stuff, building great products, telling great stories.
And then the new The Collective, taking an idea that we piloted in Merrell three years ago, creating an in-house creative agency, an in-house photo studio, and importantly, doubling down on our investments in consumer insights and market intelligence to allow us to be a more externally focused organization moving forward. But this is the new global platform for Wolverine moving forward. As we think about where Wolverine has been, obviously, it was a very busy year in 2023. As we think about where we're going, I'm viewing our turnaround as a story, essentially in three critical chapters: a stabilization chapter, the transformation chapter, and then, and most importantly, the inflection to growth. We've made tremendous progress in stabilization in a few short months. We've refocused the business. The teams are leaning in each and every single day in a way that we haven't before.
We've worked hard to pay down our debt. Our debt's down 26% at the end of this year versus where it was last year, and we're working to get our inventories back in line. They're down 36%-38% today versus where they were just a year ago. Stabilization work has gone very quickly, very swiftly, and we're on much firmer footing as we enter 2024. Transformation is critically important. How do we redesign the organization to be consumer-obsessed global brand builders around the platform structure that I just presented to you? That work is largely done. We've went through a restructuring. We've take cost out of the organization in creating clear lines of responsibilities, knowing the talents and capabilities we need to have as an organization to win in the future.
Work to expand profitability, and then certainly strengthen those key capabilities to allow us to be great global brand builders. And importantly, the most important thing, in my opinion, is when and how we inflect to growth. Make sure that we're investing in global brand building, building awesome products, and certainly telling amazing brand and product storytelling. Transformation, two key components. First, redesign the organization, which I've talked to you about. A key component of that is creating The Collective. The Lab, which is to make sure that we are externally focused, staying very close to our consumers, very close to trend, very close to color. What's happening in categories? What's the competition doing? Where are we from a price standpoint? How does that help inform our brand teams to make better decisions?
The agency, the in-house creative agency, servicing all of our brands, allowing us to be nimble and fast, and then an in-house photo studio that allows us to be very quick to market, quick strike, and make sure we show up where and when our consumers want to engage with us. Then, certainly investing in brand building, and this is the new global brand building model for Wolverine Worldwide. I think great brands do three things extraordinarily well day in and day out. First and foremost, they build awesome products, trend-right, priced right, innovative, color right, placed right products that consumers crave and covet. Brands have to do more than just that today.
They have to tell amazing stories, differentiated stories that show up where consumers want to be met, whether it's shopping in the mall on the weekend, scrolling your Instagram page at night, or on our website during the day. How do we tell meaningful stories at each one of those consumer touch points? And then finally, everyone across the global organization, waking up each and every single day, driving the business to be better tomorrow than we were today, putting the company first, working to grow all of our brands in every corner of the world. With that, thanks for your time. Hand over to our Executive Vice President and Chief Financial Officer, Mike Stornant. Talk to you a little bit about the progress we've made, and then we'll have a couple of questions. Thank you.
Thank you, Chris. Thanks for joining us today and listening in a little bit on the Wolverine story. I'm just gonna cover some of the highlights for the preliminary results that we just published this morning in our release, and give you a little bit more of an update on the stabilization and transformation work that the company has executed on over the last year. Some highlights from this information here related to the results for the fourth quarter. In-line results on revenue and earnings, pleased to see that, and a few highlights that I think are important to focus on. I'll start with inventory. We ended the quarter, or expect to end the quarter, with our inventories down nearly 40% on a year-over-year basis.
$30 million better than we had expected or guided to, entering the quarter, and a couple of things are contributing to that. Really importantly, a lot of collaboration and focus and rigor in the business right now across the business functions. Chris talked about a new supply chain leadership team and a new set of tools and processes that we have in the business right now, that we've really refined and focused on over the last several months, and it's paying dividends and helping us drive our inventories down. So the quality of our inventory is improving.
The level of inventory obviously is improving, and it's helping us to deliver on the gross margin improvements that we're starting to see in the business, both from a cost standpoint and also from the standpoint that we're dealing with less end-of-life inventory and less promotional inventory that we have to work through. So that was a good sign to see in the fourth quarter, and I think a signal of improvement that we expect to see as we enter into 2024 on both inventory and gross margin. The other highlight here is the net debt position. We executed some significant transactions in the fourth quarter, which we'll talk about in a minute, but really helped to deliver better-than-expected results from a leverage and net debt standpoint.
Stronger cash flow generation in the quarter, which is obviously important, and starting to see stabilization in this area and improvement in this area that we've been focused on for over a year. So very pleased to have delivered those results on a preliminary basis for the year, and obviously, we'll be providing more details and information on this in our February earnings call. Chris too touched on much of this at a high level, but I think it's important to revisit. Over the last year, really, when we were at ICR a year ago, we unveiled a lot of the work that we, you know, set out to do related to this phase of the turnaround of the company.
Stabilizing the business in many ways, and then kind of transitioning into the transformation phase for the business. So these are the highlights of that work. There's a lot, a lot of detail behind it, but fundamentally, I think it's important to revisit some of these key actions that were taken, decisions that have been made, and obviously, the great progress that the company's made in this area. We started, as I said, over a year ago, we established a profit improvement office and a tremendous focus in the organization to both simplify and improve the operational efficiency of the business, and we've seen some great progress and results as a result of that.
The focus on the business aspect of that stabilization has as much focused on the simplicity of the business and clarification and simplicity of the portfolio itself over the last year. So we've made some good progress in with respect to selling off some non-core assets during the year, and also, we sold our Keds brand early in 2023, and we continue to work on a process related to the Sperry brand, a strategic alternative assessment there that we expect will be concluded by the end of the first quarter.
But the progress we made in 2023 on the business simplification and focus generated $250 million of capital to help us pay down debt during the year, but more importantly, has helped us kind of refocus the business and make sure that we're investing behind both in terms of capital and human resources behind those business units and brands that can drive the most value for our shareholders.
On the debt side, seeing great progress here again, some of that benefiting from those asset sales, also some of that from the working capital improvements we're seeing in the business, but continuing to make this a focus for the business to continue to pay down debt, de-lever the company, but also to give the company as much capacity to invest and grow in the future and get behind those key initiatives that are driving that for our key brands. We talked about inventory and the actions that it kind of delivered those results.
I think it's important to call out here that the new systems, the new planning process that we have in place, the new team structure is really paying dividends, and we also recognize that while we made great progress in 2023 on the inventory improvement, we're not done. We have a lot of opportunities still in front of us to focus on SKU optimization, to focus on, in some of our business units, on some more efficient use of core inventory. We're operating in a more normalized supply chain environment today, which gives us also the benefit of being able to make decisions closer to the need. So we're continuing to see opportunities on the inventory side, despite the great progress of nearly 40% improvement in 2023.
Then the last area of focus, which actually was the first thing we talked about at ICR last year, which was this profit improvement office and the initiatives behind that. I would just say that since that time, we've overachieved our goals, but more importantly, it's become a more widespread and a more embedded part of our running the business today. With Chris's leadership over the last four months, we've expanded this work beyond just cost structure, and we've looked at areas of process improvement and also of resource allocation and prioritization. So I think in addition to the great cost improvements and profit results we expect to benefit from in 2024 from this work, we're also seeing a better and a more efficient run business to lean into in 2024 as well.
Having said that, we're still very, y ou know, the primary reason for that work was to really unlock capacity to invest in the business. The definition of that has evolved a little bit over the last four months. It started out as more demand creation, investment, and focuses in areas like that, which are still very important. But now we've also realized that we have to invest in the capabilities of our teams. We have to invest in the platforms and technology systems that we have in the business to operate in a more modern way.
So there are a variety of other areas in the business that we expect to be able to invest in because of the work that we've done over the last year to unlock these savings. So with that, I just want to thank everyone here on behalf of Chris and myself for attending and listening in. We'll hand this over to Allison now to wrap up the discussion. Thank you.
Start with a question for Chris: What are you most excited about? I mean, you've been in your role for almost six months now, and looking at your brands and the transformation, what do you see for the future?
Yeah, thanks for that. I'm excited as we enter the new year. I was named CEO on August 10th, and as you can imagine, between that point in time and the end of the year, we had a lot of work to go do to get our balance sheet back under control, attack inventories, restructure the business, and then currently build a new vision for the company and communicate that vision to the associates around the world. Stabilization phase has gone very well, and we're on much firmer footing today than we were a handful of months ago, and I think our results are testimony to that.
I'm most excited now because I'm a brand and consumer product and marketing person, and we can take a lot of the energy that we pushed on stabilization to really inflecting our brands to growth. I'm working with the product teams, working with the marketing teams, going out, talking to customers about the business, and really spending time there, because that's gonna be what's most important to this turnaround story. I think there are three critical chapters to the turnaround: the stabilization phase, the transformation phase, and the inflection phase. And everyone and myself, most importantly, are focused on that inflection to growth as we think about how we get our brands back in the marketplace, winning, making smart investments, and getting our brands back to where they deserve to be.
And Mike, how about for you, in terms of what you're most excited about for the future of Wolverine?
That's very similar. I the energy to focus on the opportunities ahead of us. The stabilization phase isn't completely done yet, as Chris said, but I feel like we're in late innings of that work, and obviously the progress that we shared today signals that. But it's really the opportunity as we spend, you know, every week together as a leadership team, being able to focus on the opportunities that we have, some of the green shoots we're seeing within our brands, and also, you know, working with Chris on how do we prioritize those things and make sure that we optimize those opportunities. So it's really very simple, but it's visibility of some of those opportunities, and then being able to just spend time and resources behind them.
Okay, great. I know we've been operating in a tough consumer environment. Chris, if you could share with us your thoughts on the consumer. What are they seeing and buying in terms of key trends, and how the company is focused on capitalizing on that activity?
Yeah. I think, you know, where the consumer is, certainly in the U.S., is well-documented, and I think we're seeing those trends play out. Our business is a little bit different. You know, as you think about the Wolverine portfolio, we play in the outdoor footwear category, we play in performance run, we play in work. So we're seeing different things across those segments. At the same time, in any environment, there are always winners. And I think the winners today are the brands that are bringing new, innovative products and telling emotional stories. And that's where we have to get better and where we have to invest. And that's why I'm encouraged about the product pipeline we have for our key brands in the back half of this year.
Then, how do we go to work to activate that? I spent a lot of my time in the first six months on the road, traveling, visiting key U.S. wholesale customers, talking to them about their business, talking about our business, how we can expand that relationship, how we can be better partners. Same time, I spent time traveling around the world to visit our partners there, about the same thing, about how we grow our global business together. So, I think certainly 2024 is poised to be an interesting year. I think we're hearing lots of commentary about what the expectations are. I think we've done a great job controlling what we can control to put the company on firmer footing. At the same time, now we have to pivot and make sure that we can ensure our brands inflect to growth, and that's what everyone's focused on today.
All right, great. And then, as we come back here in 2025, to the ICR conference, can you just share your thoughts on what you would wanna have achieved or what you wanna.
Yeah.
T alk to us then in January 2025?
Yeah. I think certainly for us, you know, our goal is to state expectations and meet expectations and do that again. A year from now, we will have been through this year. The stabilization work, hopefully will be largely complete behind us. We will have transformed the organization, and I'll be able to talk to you about where our brands have inflected to growth, where we've chosen to invest, what the returns have been from those, and then a bigger picture of what I think the future of the company can be. We have a tremendous portfolio of brands, we've got very strong global platforms, and we have a really great team, aligned today, focused on turning around the organization and then ultimately getting back to Wolverine Worldwide to where we all know that it can be.
Okay. And then one last one for Mike. In terms of, y ou talked about investments and how investments were being fueled for brand marketing, but also for technology and some other areas. Anything that you'd wanna share with the audience, in terms of what, what you're investing in, in other areas besides marketing?
Sure, yeah. We talked a little bit about this in recent earnings calls, but you know, obviously, we have to modernize our eCommerce platform, and we also have to develop a new and better, maybe more modern skill set in certain areas of the business. So it's certainly investing behind marketing initiatives, but also the capabilities that come with that. Some of the changes that Chris talked about with The Collective and The Lab and things, those are areas where we can do more research, do more testing, and make sure that those investments are gonna pay off before we overcommit.
But I think we have a more rigorous and a better process in place today than we've ever had, to look at those opportunities in a way that will give us the best payback. Then the last area that we're also focused on, and it's not new, but it's gonna be something that we continue to invest behind, is our planning systems, just to make our business more predictable and our ability to deliver on those things that Chris talked about also more credible and predictable in the future. So whether that's on the operations side or on the financial planning side, we're making investments there to improve our systems and our approach to running the business.
All right, great. So the company will have two breakout sessions, one directly after this at 11:00 A.M. in Palazzo B, and then the second one at 3:00 P.M. in Palazzo C. So I wanna thank you both for participating, and we'll make time for the next presentation.
Awesome. Thank you for your time.
Thank you. Thank you, Allison.