What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-20 compared with 2024-02-22 · 83 added, 99 removed, 254 unchanged (42% of the section changed)

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In other regions (Latin America, portions of Europe and Asia Pacific, the Middle East and Africa), the Company relies on a network of third-party distributors, licensees and joint ventures.

At December 30, 2023, the Company oper ated 166 retail stores in the U.S., United Kingdom, and Canada an d 56 direct-to-consumer eCommerce sites.

Effective February 4, 2023, the Company completed the sale of the Keds ® business.

In the third quarter of fiscal 2023, the Company entered into a multi-year licensing agreement of the Hush Puppies ® brand in the United States and Canada.

In addition, the Company completed the sale of Hush Puppies ® trademarks, patents, copyrights, and domains in China, Hong Kong, and Macau.

At December 28, 2024, the Company oper ated 119 retail stores in the U.S., United Kingdom, and Italy an d 39 direct-to-consumer eCommerce sites.

Effective May 4, 2024, the Company entered into global multi-year licensing agreements of Merrell ® and Saucony ® kids footwear and Merrell ® apparel and accessories.

Effective January 10, 2024, the Company completed the sale of the Sperry ® business.

Effective January 1, 2024, the Company completed the sale of the Company’s equity interests in the Merrell ® and Saucony ® China joint venture entities.

Effective August 23, 2023, the Company completed the sale of the U.S.

Leathers business and effective December 28, 2023, the Company completed the sale of the Asia-based Leathers business.

See Note 20 to the Company's Consolidated Financial Statements for further discussion.

In the third quarter of fiscal 2023, the Company entered into a multi-year licensing agreement of the Hush Puppies ® brand in the United States and Canada.

In addition, the Company completed the sale of the Hush Puppies ® trademarks, patents, copyrights, and domains in China, Hong Kong, and Macau.

The Company continues to own the Hush Puppies ® brand throughout the rest of the world.

Effective February 4, 2023, the Company completed the sale of the Keds ® business.

The following discussion includes a comparison of the Company's results of operations and liquidity and capital resources for fiscal 2024 and 2023.

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Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended December 30, 2023, filed with the SEC on February 22, 2024.

Known Trends Impacting Our Business

Macroeconomic conditions and supply chain disruptions continue to adversely affect the Company’s business results.

During the third quarter of 2022, inventory transit times improved ahead of plan, resulting in challenges managing the timing of inventory flow, which caused the Company to have excess inventory.

Elevated inventory levels have resulted, and continue to result, in storage and processing capacity pressures at the Company’s U.S.

distribution centers.

The Company has incurred additional inventory carrying costs including costs for outside storage and other inventory related holding costs.

The Company decreased inventory purchases and increased promotional activity during the fourth quarter of 2022 and fiscal year 2023 to reduce excess inventory.

These actions caused inventories to decline in fiscal year 2023 by $371.6 million, compared to the fourth quarter of 2022.

As of the end of fiscal year 2023, the Company had $30.9 million of inventory in-transit, which represents a decrease in inventory of $115.9 million as compared to the end of the fourth quarter of 2022.

As inventory transit and product purchase timelines continue to move towards pre-pandemic levels, the Company expects that the flow of seasonal product and our inventory levels will normalize by the end of fiscal 2024.

Inflation and other macroeconomic pressures in the U.S.

and the global economy such as rising interest rates, energy prices and recession fears are creating a complex and challenging retail environment for the Company and its customers as consumers generally seek discounted merchandise and reduce discretionary spending, which in turn impacts wholesale customer orders.

Inflationary pressures are increasing logistics costs, including labor costs, raw materials costs and product input costs, which continue to adversely affect the Company’s results.

These increased costs, combined with higher promotional activity, contributed to gross margin contraction of 100 basis points for fiscal year 2023 compared to fiscal year 2022.

These impacts were partially offset by selective price increases taken in prior quarters by certain brands and products.

The Company expects to continue to evaluate future pricing of its products.

In addition, the strengthening of the U.S.

dollar relative to other major currencies negatively impacted the Company’s financial results in fiscal year 2023.

Please refer to Item 1A, “Risk Factors” for a more complete discussion of the risks the Company encounters in our business.

2024 FINANCIAL OVERVIEW

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• The effective tax rate in 2024 was 16.3%, compared to 70.7% in 2023.

• Diluted loss per share in 2023 was $0.51, compared to diluted loss per share of $2.37 in 2022.

• Diluted earnings per share in 2024 was $0.58, compared to diluted loss per share of $0.51 in 2023.

• The Company declared cash dividends of $0.40 per share in 2024 and 2023.

• Cash flow provided by operating activities was $121.8 million in 2023 and cash flow used in operating activities was $178.9 million in 2022.

• Cash flow provided by operating activities was $180.1 million in 2024 and $121.8 million in 2023.

• Compared to the prior year, inventory decreased $133.0 million, or 35.6%, as of year-end.

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Diluted earnings (loss) per share $ 0.58 $ (0.51) 213.7 %

Revenue was $2,242.9 million for 2023, representing a decline of 16.5% compared to the prior year's revenue of $2,684.8 million.

The change in revenue reflected a 8.3% decline from the Active Group, an 18.6% decline from the Work Group and a 38.3% decline from Other.

The Active Group's revenue decline was driven by a decrease of $88.4 million from Merrell ® , $25.3 million from Chaco ® , $9.6 million from Saucony ® and $7.8 million from Sweaty Betty ® .

The Work Group’s revenue decline was driven primarily by a decrease of $46.3 million from Wolverine ® , $40.2 million from Cat ® , $15.9 million from Harley-Davidson ® and $6.5 million from Bates ® .

The decline in Other revenue was primarily driven by a decrease of $87.0 million from Sperry ® , $84.7 million from Keds ® and $21.6 million from the performance leathers business.

Revenue was $1,755.0 million for 2024, representing a decrease of 21.8% compared to the prior year's revenue of $2,242.9 million.

The change in revenue reflected a $193.0 million, or 13.4%, decrease from the Active Group, a $25.3 million, or 5.3%, decrease from the Work Group and a $269.6 million, or 83.4%, decrease from Other.

The Active Group's revenue decrease was driven by a decrease of $89.3 million from Saucony ® , $77.4 million from Merrell ® , $21.4 million from Chaco ® , and $4.9 million from Sweaty Betty ® .

The Work Group’s revenue decrease was driven primarily by a decrease of $9.0 million from Cat ® , $8.1 million from Wolverine ® , $3.3 million from Bates ® , $2.6 million from Harley-Davidson ® and $2.3 million from HYTEST ® .

The decrease in Other revenue was primarily driven by a decrease in revenue from businesses that were sold in 2023 and 2024 and the licensing of the Hush Puppies ® business in 2023, which includes decreases of $191.9 million from Sperry ® , $37.0 million from the performance leathers business, $25.7 million from Hush Puppies ® and $6.5 million from Keds ® .

International revenue represented 49.1%, and 45.7% of total reported revenues in 2024 and 2023, respectively.

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For 2024, the Company’s gross margin was 44.5%, compared to 38.9% in 2023.

The gross margin decrease was primarily driven by unfavorable supply chain costs in the Company’s wholesale channel and unfavorable average selling price and product costs changes in the Company’s direct-to-consumer channel.

The gross margin increase was primarily driven by less end-of-life inventory sales, lower supply chain costs and lower product costs.

OPERATING EXPENSES

Operating expenses decreased $260.2 million in 2024, to $680.5 million.

The decrease was driven by lower impairment of long-lived assets ($243.4 million), the gain on the sale of businesses, trademarks, and long-lived assets ($90.4 million), lower advertising costs ($51.4 million), lower environmental and other related costs, net of recoveries ($44.1 million), lower incentive compensation costs ($22.1 million), lower selling costs ($9.6 million), lower product development costs ($4.8 million), lower distribution costs ($4.7 million), and lower Sweaty Betty ® integration costs ($2.0 million), partially offest by the prior year gain recorded on the sale of the Champion trademarks for footwear in the United States and Canada ($90.0 million), higher reorganization costs ($36.8 million), higher divestiture costs ($5.1 million), and higher general and administrative costs ($2.1 million).

The decrease was primarily driven by lower impairment of long-lived assets ($176.3 million), lower general and administrative costs ($48.8 million), lower selling costs ($45.2 million), lower advertising costs ($28.9 million), lower distribution costs ($25.5 million), lower reorganization costs ($18.0 million), and lower product development costs ($7.8 million), partially offset by lower gains on the sale of businesses, trademarks, and long-lived assets ($81.8 million), higher incentive compensation costs ($12.9 million) and lower environmental and other related costs, net of recoveries ($0.1 million).

Environmental and other related costs were $15.6 million and $8.4 million in 2024 and 2023, respectively.

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Net interest expense was $42.7 million in 2024 compared to $63.5 million in 2023.

Interest expense increased in the current year due to higher average principal balances of variable rate debt and higher average interest rates on the Company’s variable rate debt.

Other expense was $2.5 million in 2023 compared to other income of $2.8 million in 2022.

Interest expense decreased in the current year due to lower average principal balances of variable rate debt and lower weighted average interest rates on variable rate debt.

Other income was $3.3 million in 2024 compared to other expense of $2.5 million in 2023.

The effective tax rate in 2024 was 16.3%, compared to 70.7% in 2023.

In 2023 the Company recognized more tax benefits compared to 2024 primarily related to the generation and utilization of a capital loss.

The tax benefits increased the tax benefit recognized from the pretax loss, resulting in a higher effective tax rate in 2023.

REPORTABLE SEGMENTS

The Company’s portfolio of brands are organized into the following reportable segments.

The Company’s portfolio of brands is organized into the following reportable segments.

• Active Group, consisting of Merrell ® footwear and apparel, Saucony ® footwear and apparel, Sweaty Betty ® activewear, and Chaco ® footwear;

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The Company also reports “Other” and “Corporate” categories.

The Other category consists of Sperry ® footwear, Keds ® footwear, Hush Puppies ® footwear and apparel, the Company’s leather marketing operations, sourcing operations that include third-party commission revenues, multi-branded direct-to-consumer retail stores and the Stride Rite ® licensed business.

Prior to the fourth quarter of 2023, Sperry ® , Keds ® , and Hush Puppies ® financial results were reported in the Lifestyle Group.

The Lifestyle Group is no longer a reportable segment based upon how the Chief Operating Decision Maker, the Company's Chief Executive Officer, allocates resources to and assesses performance of the Company's operating segments.

The Other category consists of Hush Puppies ® footwear, sourcing operations that include third-party commission revenues, multi-branded direct-to-consumer retail stores, the Stride Rite ® licensed business, Sperry ® footwear, Keds ® footwear, and apparel and the Company’s leather marketing operations,.

The Corporate category consists of gains on the sale of businesses and trademarks, unallocated corporate expenses, such as corporate employee costs, corporate facility costs, reorganization activities, impairment of long-lived assets and environmental and other related costs.

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The Active Group’s revenue decreased $193.0 million, or 13.4%, in 2024 compared to 2023.

The revenue decline was driven by a decrease of $88.4 million from Merrell ® , $25.3 million from Chaco ® , $9.6 million from Saucony ® and $7.8 million from Sweaty Betty ® .

The Merrell ® decrease was primarily due to softer consumer demand in wholesale and eCommerce channels.

The Chaco ® decrease was primarily the result of softer consumer demand and high inventory levels at retail customers.

The Saucony ® decrease was primarily due to high inventory levels at retail customers, which adversely impacted order patterns.

Sweaty Betty ® decrease was primarily due to softer consumer demand in direct-to-consumer sales channels across the U.K., Ireland, and U.S.

markets reflecting the challenging economic environment.

The Active Group’s operating profit decreased $58.1 million, or 29.3%, in 2023 compared to 2022.

The operating profit decrease was due to revenue decreases and a 200 basis point decrease in gross margin partially offset by a $26.9 million decrease in selling, general and administrative costs.

The decrease in gross margin in the current year period was primarily due to increased closeout sales and higher promotional activity in the Company’s wholesale and direct-to-consumer channels.

The decrease in selling, general and administrative expenses in 2023 is primarily due to lower advertising costs, selling expenses and employee costs.

The revenue decrease was driven by a decrease of $89.3 million from Saucony ® , $77.4 million from Merrell ® , $21.4 million from Chaco ® and $4.9 million from Sweaty Betty ® .

The Saucony ® decrease was primarily due to lower end of life inventory sales compared to the prior year, the divestiture of the Company's equity interest in the China joint venture entity, effective January 1, 2024, and lower Saucony ® kids revenue resulting from licensing the brand in the United States and Canada starting in the second quarter of 2024.

The Merrell ® decrease was primarily due to lower end of life inventory sales compared to the prior year, softer consumer demand in the U.S.

wholesale and International channels and lower Merrell ® kids revenue resulting from licensing the brand in the United States and Canada starting in the second quarter of 2024, partially offset by growth from new products, including Moab Speed and Speed Strike, and growth in core brand franchises, including Moab 3 and Jungle Moc.

The Chaco ® decrease was primarily due to lower closeout and end of life inventory sales compared to the prior year and softer consumer demand.

Betty ® decrease was primarily due to softer consumer demand in direct-to-consumer and wholesale sales channels across the U.S.

and China markets and lower end of life inventory sales compared to the prior year.

The Active Group’s operating profit increased $44.6 million, or 31.8%, in 2024 compared to 2023.

The operating profit increase was due to a 520 basis point increase in gross margin and a $58.9 million decrease in selling, general and administrative costs partially offset by revenue decreases.

The increase in gross margin in the current year period was primarily due to decreased closeout sales, lower product costs, and lower supply chain costs.

The decrease in selling, general and administrative expenses in 2024 is primarily due to lower advertising costs, selling expenses, distribution costs, and employee costs.

The Work Group’s revenue decreased $25.3 million, or 5.3%, in 2024 compared to 2023.

The revenue decline was primarily driven by a decrease of $46.3 million from Wolverine ® , $40.2 million from Cat ® , $15.9 million from Harley-Davidson ® and $6.5 million from Bates ® .

The Wolverine ® decrease was primarily due to softer consumer demand in U.S.

wholesale and high inventory levels at retail customers resulting in a continually heightened promotional environment.

The Cat ® decrease was primarily due to softer consumer demand across all regions.

The Harley-Davidson ® decrease was primarily due to lower at-once shipments and declines in top dealer accounts.

The Bates ® decrease was primarily due to softer consumer demand in U.S.

wholesale and direct-to-consumer channels.

The Work Group’s operating profit decreased $44.4 million, or 43.3%, in 2023 compared to 2022.

The operating profit decrease was due to revenue decreases and a 180 basis point decrease in gross margin, partially offset by a $2.6 million decrease in selling, general and administrative costs.

The decrease in gross margin in the current year was due to increased closeout sales, product mix and unfavorable average selling price and higher promotional activity in the Company’s direct-to-consumer channel.

The decrease in selling, general and administrative expenses in 2023 was primarily due to lower advertising costs and selling expenses.

The revenue decrease was primarily driven by a decrease of $9.0 million from Cat ® , $8.1 million from Wolverine ® , $3.3 million from Bates ® , $2.6 million from Harley-Davidson ® and $2.3 million from HYTEST ® .

The Cat ® decrease was primarily due to timing of shipments in the U.S.

and international channels, lower closeout sales versus the prior year and softer consumer demand in direct-to-consumer channels, partially offset by growth in the U.S.

wholesale channel.

The Wolverine ® decrease was primarily due to lower closeout sales compared to the prior year.

The Bates ® decrease was primarily due to softer consumer demand in the U.S.

direct-to-consumer channels, high inventory levels at certain retail customers and lower closeout sales versus the prior year.

The Harley-Davidson ® decrease was primarily due to declines in top dealer accounts.

The HYTEST ® decrease was primarily due to lower closeout sales compared to the prior year, partially offset by growth in the U.S.

wholesale channel.

The Work Group’s operating profit increased $11.1 million, or 19.1%, in 2024 compared to 2023.

The operating profit increase was due to a 180 basis point increase in gross margin and an $11.1 million decrease in selling, general and administrative costs partially offset by revenue decreases.

The increase in gross margin in the current year was due to decreased closeout sales, lower product cost and favorable average selling price.

The decrease in selling, general and administrative expenses in 2024 was primarily due to lower advertising costs, selling expenses, and employee costs.

Other revenue decreased $269.6 million, or 83.4%, in 2024 compared to 2023.

The revenue decline was driven by a decrease of $87.0 million from Sperry ® , $84.7 million from Keds ® and $21.6 million from the performance leathers business.

The Sperry ® decrease was primarily driven by softer consumer demand in U.S.

wholesale and softer boot sales in the direct-to-consumer channels.

The Keds ® decrease is due to the divestiture of the business effective February 4, 2023.

The revenue decline was primarily driven by a decrease of $191.9 million from Sperry ® , $37.0 million from the performance leathers business, $25.7 million from Hush Puppies ® and $6.5 million from Keds ® .

The Sperry ® decrease is due to the divestiture of the business effective January 10, 2024.

The performance leathers business decrease is due to the divestiture of the U.S.

leathers business effective August 23, 2023.

leathers business, effective August 23, 2023 and the Asia-based leathers business, effective December 28, 2023.

The Hush Puppies ® decrease is due to the licensing of the brand in the United States and Canada starting in the third quarter of 2023.

The Keds ® decrease is due to the divestiture of the business, effective February 4, 2023.

Other operating profit decreased $1.5 million, or 4.6%, in 2024 compared to 2023.

The operating profit decrease was due to revenue decreases partially offset by a 30 basis point increase in gross margin and a $50.9 million decrease in selling, general and administrative costs.

The increase in gross margin in the current year period was primarily due to the divestiture of the lower margin Keds ® and performance leathers businesses.

The decrease in selling, general and administrative expenses in the current year period was primarily due to lower advertising costs, selling expenses and the divestiture of the Keds ® and performance leathers businesses.

Corporate expenses decreased $269.8 million in 2023 compared to 2022 primarily due to lower impairment of long-lived and intangible assets ($243.4 million), the gain on sale of businesses, trademarks, and long-lived assets ($90.4 million), lower environmental and other related costs ($44.1 million), lower incentive compensation costs ($14.5 million), and lower employee costs ($11.4 million), partially offset by the 2022 gain recorded on the sale of the Champion trademarks for footwear in the United States and Canada ($90.0 million), and higher reorganization activities ($36.8 million).

The operating profit decrease was due to revenue decreases partially offset by a $90.0 million decrease in selling, general and administrative costs.

The decrease in selling, general and administrative expenses in the current year period was primarily due to the divestiture of the Sperry ® business, performance leathers business, and Keds ® business, along with the licensing of the Hush Puppies ® business.

Corporate expenses decreased $115.0 million in 2024 compared to 2023 primarily due to lower impairment of long-lived and intangible assets ($176.3 million), lower reorganization activities ($18.0 million) and lower employee costs ($5.3 million), partially offset by lower gains on sale of businesses, trademarks, and long-lived assets ($81.5 million), higher incentive compensation costs ($11.6 million) and higher environmental and other related costs ($0.1 million).

LIQUIDITY AND CAPITAL RESOURCES

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Available Revolving Facility (2)

(1) Cash and cash equivalents at the end of the year in the Consolidated Statements of Cash Flows includes $5.6 million and $4.0 million of cash and cash equivalents that are classified as held for sale as of December 30, 2023 and December 31, 2022, respectively, that are not included in cash and cash equivalents in the Consolidated Balance Sheets.

(1) Cash and cash equivalents at the end of the year in the Consolidated Statements of Cash Flows includes $5.6 million of cash and cash equivalents that are classified as held for sale as of December 30, 2023 that are not included in cash and cash equivalents in the Consolidated Balance Sheets.

(2) Amounts are net of both borrowings, if any, and outstanding standby letters of credit issued in accordance with the terms of the Revolving Facility.

Cash and cash equivalents of $184.6 million as of December 30, 2023 were $49.1 million higher compared to December 31, 2022.

The increase is due primarily to proceeds from the sale of businesses, trademarks, long-lived assets and other assets of $188.9 million, cash provided by operating activities of $121.8 million and contributions from noncontrolling interests of $31.2 million, partially offset by net revolver payments of $120.0 million, long-term debt payments of $118.3 million, cash dividends paid of $32.6 million, additions to property, plant, and equipment of $14.6 million and shares acquired related to employee stock plans of $5.8 million.

Cash and cash equivalents of $152.1 million as of December 28, 2024 were $32.5 million lower compared to December 30, 2023.

The decrease is due primarily to net revolver payments of $235.0 million, long-term debt payments of $39.2 million, cash dividends paid of $32.5 million, additions to property, plant, and equipment of $20.2 million and shares acquired related to employee stock plans of $2.6 million, partially offset by cash provided by operating activities of $180.1 million, proceeds from the sale of businesses, trademarks, long-lived assets and other assets of $102.4 million, proceeds from company-owned life insurance policy liquidations of $7.9 million and proceeds from company-owned life insurance policies of $7.0 million.

The Company had $724.0 million of borrowing capacity available under the Revolving Facility as of December 28, 2024.

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Any excess cash flow from operating activities is expected to be used to fund organic growth initiatives, reduce debt, pay dividends and for general corporate purposes.

The Company did not repurchase shares during 2023 and repurchased $81.3 million of shares in 2022.

The common stock repurchase program expired in September 2023.

The Company did not repurchase shares of its common stock during 2024 and 2023.

A detailed discussion of environmental remediation costs is found in Note 17 to the Company's Consolidated Financial Statements.

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Note 17 to the Company's Consolidated Financial Statements also includes a detailed discussion of environmental litigation matters.

As of December 30, 2023, the Company had recorded liabilities of $2.7 million for certain of these environmental litigation matters which are recorded as other accrued liabilities in the consolidated condensed balance sheets.

As of December 28, 2024, the Company had recorded liabilities of $10.1 million for certain of these environmental litigation matters which are recorded as other accrued liabilities in the consolidated balance sheets.

Developments may occur that could materially change the Company’s current cost estimates.

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13.4 5.2 8.2 — —

TCJA transition obligation

21.0 9.3 11.7 — —

Tax Cuts and Jobs Act transition obligation 11.7 11.7 — — —

$ 1,339.9 $ 489.3 $ 138.1 $ 634.5 $ 78.0

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The credit agreement provides for a debt capacity of up to an aggregate debt amount (including outstanding term loan principal and revolver commitment amounts in addition to permitted incremental debt) not to exceed $2.0 billion unless certain specified conditions set forth in the Credit Agreement are met.

The Revolving Facility allows the Company to borrow up to an aggregate amount of $1.0 billion.

The Revolving Facility allows the Company to borrow up to an aggregate amount of $800.0 million.

The Company’s $550.0 million 4.0% senior notes issued on August 26, 2021 are due on August 15, 2029.

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2024 December 30,

Net cash provided by (used in) operating activities 121.8 (178.9)

Net cash provided by operating activities 180.1 121.8

Net cash provided by investing activities 86.8 171.6

Net cash provided by (used in) financing activities (246.3) 107.1

Net cash used by financing activities (299.2) (246.3)

Additions to property, plant and equipment (20.2) (14.6)

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Cash from operations during 2024 was higher compared to 2023, due primarily to a decrease in net working capital representing a source of cash of $82.6 million.

Working capital balances were favorably impacted by a decrease in inventories of $286.5 million and a decrease in accounts receivable of $2.8 million, partially offset by an increase in other operating assets of $16.8 million, a decrease in accounts payable of $65.6 million and a decrease in other operating liabilities of $36.6 million.

Operating cash flows included non-cash add back for the impairment of long-lived assets of $185.3 million, depreciation and amortization expense adjustment of $35.1 million, stock-based compensation expense adjustment of $15.2 million, deferred income tax adjustment of $95.8 million, gain on sale of business, trademarks and long-lived assets of $90.4 million, environmental and other related costs, net of cash payments and recoveries received cash outflow of $55.1 million, and pension expense adjustment of $0.7 million.

Working capital balances were favorably impacted by a decrease in inventories of $127.1 million and a decrease in accounts receivable of $16.7 million, partially offset by a decrease in other operating liabilities of $47.9 million, an increase in other operating assets of $5.6 million, a decrease in income taxes payable of $4.3 million, and a decrease in accounts payable of $3.4 million.

Operating cash flows included non-cash add back for depreciation and amortization expense adjustment of $26.2 million, deferred income tax adjustment of $21.4 million, stock-based compensation expense adjustment of $19.1 million, environmental and other related costs, net of cash payments and recoveries received cash outflow of $13.3 million, the impairment of long-lived assets of $9.3 million, gain on sale of business, trademarks and long-lived assets of $8.5 million, and pension expense adjustment of $0.2 million.

Investing Activities

The Company made capital expenditures of $14.6 million and $36.5 million in years 2023 and 2022, respectively, for building improvements, eCommerce site enhancements, new retail stores, distribution operations improvements and information system enhancements.

The current year activity includes proceeds from the sale of businesses and trademarks of $188.9 million.

The Company made capital expenditures of $20.2 million and $14.6 million in years 2024 and 2023, respectively, for building improvements, eCommerce site enhancements, new retail stores, distribution operations improvements and information system

enhancements.

The current year activity includes proceeds from the sale of businesses and trademarks of $102.4 million and company-owned life insurance policy liquidations of $7.9 million.

Financing Activities

The current year debt activity includes net payments under the Revolving Facility of $120.0 million and payments on long-term debt of $118.3 million.

The current year debt activity includes net payments under the Revolving Facility of $235.0 million, payments on long-term debt of $39.2 million and proceeds from company-owned life insurance policies of $7.0 million.

The Company paid $2.6 million and $5.8 million in 2024 and 2023, respectively, in connection with shares or units withheld to pay employee taxes related to awards under stock incentive plans.

The Company received $31.2 million and $7.0 million from noncontrolling interests in 2023 and 2022, respectively.

The Company received $31.2 million from noncontrolling interests in 2023.

The Company declared cash dividends of $0.40 per share in each of 2024 and 2023 .

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Control of the Company's goods and services, and associated revenue, are transferred to customers at a point in time.

The Company’s contract revenue consist of wholesale revenue and direct-to-consumer revenue.

Wholesale revenue is recognized for products sourced by the Company when control transfers to the customer generally occurring upon the purchase, shipment or delivery of branded products to the customer.

The Company’s contract revenue consists of wholesale revenue and direct-to-consumer revenue.

Wholesale revenue is recognized for products sourced by the Company when control transfers to the customer generally occurring upon the shipment or delivery of branded products to the customer.

Direct-to-consumer includes eCommerce revenue that is recognized for products sourced by the Company when control transfers to the customer once the related goods have been shipped and retail store revenue recognized at time of sale.

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These estimates take into consideration a range of possible outcomes, which are probability-weighted in accordance with the expected value method for relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns.

Overall, these reserves reflect the Company’s best estimates of the amount of consideration to

which it is entitled based on the terms of the respective underlying contracts.

Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts.

Revenue recognized during the year ended December 28, 2024 related to the Company’s contract liabilities was nominal.

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Cost is determined using the first-in, first-out (“FIFO”) method for all raw materials, work-in-process and finished product inventories in foreign countries and certain domestic finished product inventories.

The average cost of inventory is used for finished product inventories of the Company’s direct-to-consumer business and Sweaty Betty ® inventory.

The average cost of inventory is used for finished product inventories of the Company’s U.S.

retail store business inventory.

The Company has applied these inventory cost valuation methods consistently from year to year.

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If the actual results differ from the estimates and judgments used, the amounts recorded in the Consolidated Financial Statements may be exposed to potential impairment of the intangible assets and goodwill as discussed in the "Goodwill and Indefinite-Lived Intangibles" section below.

Goodwill and Indefinite-Lived Intangibles

Goodwill and Indefinite-Lived Intangible Assets

Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are subject to impairment tests at least annually.

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The Company performs its annual testing for goodwill and indefinite-lived intangible asset impairment at the beginning of the fourth quarter of the fiscal year for all reporting units.

In the fourth quarter of 2022, after completion of the annual impairment testing, the Company recorded a $48.4 million impairment charge for Sweaty Betty ® goodwill.

The Company did not recognize any impairment charges for goodwill during 2024 and 2023.

In the fourth quarter of 2022, after completion of the annual impairment testing, the Company recorded

a $48.4 million impairment charge for Sweaty Betty ® goodwill.

The Company did not recognize any impairment charges for indefinite-lived intangible assets during 2024.

In the third quarter of 2023, after completion of impairment testing, the Company recorded a $38.3 million impairment charge for the Sperry ® trade name.

In the fourth quarter of 2022, the Company recognized impairment charges of $191.0 million for the Sperry ® trade name and $189.3 million for the Sweaty Betty ® trade name.

No impairment charges were recognized for the Company's intangible assets during 2021.

Refer to Note 4, “Goodwill and Other Intangibles” for additional discussion of the Sweaty Betty ® goodwill impairment and the Sweaty Betty ® and Sperry ® trade name impairments.

Refer to Note 4, “Goodwill and Other Intangible Assets” for additional discussion of the Sweaty Betty ® goodwill impairment and the Sweaty Betty ® and Sperry ® trade name impairments.

Environmental

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Income tax audits associated with the allocation of this income and other complex issues may require an extended period of time to resolve and may result in income tax adjustments if changes to the income allocation are required between jurisdictions with different income tax rates.

The Company evaluates the probability a tax position will be effectively sustained and the appropriateness of the amount recognized for uncertain tax positions based on

factors including changes in facts or circumstances, changes in tax law, settled audit issues and new audit activity.

The Company evaluates the probability a tax position will be effectively sustained and the appropriateness of the amount recognized for uncertain tax positions based on factors including changes in facts or circumstances, changes in tax law, settled audit issues and new audit activity.

Changes in the Company’s assessment may result in the recognition of a tax benefit or an additional charge to the tax provision in the period our assessment changes.

The carrying value of the Company’s deferred tax assets assumes that the Company will be able to generate sufficient taxable income in future years to utilize these deferred tax assets.

If these assumptions change, the Company may be required to record valuation allowances against its gross deferred tax assets in future years, which would cause the Company to record additional income tax expense in its consolidated statements of operations.

If these assumptions change, the

Company may be required to record valuation allowances against its gross deferred tax assets in future years, which would cause the Company to record additional income tax expense in its consolidated statements of operations.

Management evaluates the potential that the Company will be able to realize its gross deferred tax assets and assesses the need for valuation allowances on a quarterly basis.

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis