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Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-02-20 · 86 added, 123 removed, 214 unchanged (49% of the section changed)

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and delivering supply chain excellence.

The Company’s brands are marketed in approximately 170 countries and territories at December 28, 2024, including through owned operations in the U.S., Canada, the United Kingdom and certain countries in continental Europe and Asia Pacific.

The Company’s brands are marketed in approximately 170 countries and territories at January 3, 2026, including through owned operations in the U.S., Canada, the United Kingdom and certain countries in continental Europe and Asia Pacific.

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 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.

At January 3, 2026, the Company oper ated 128 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.

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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.

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 2025 and 2024.

A discussion of a comparison of the Company's results of operations and liquidity and capital resources for fiscal 2024 and 2023 has been omitted from this Form 10-K but may be found in Item 7.

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.

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 28, 2024, filed with the SEC on February 20, 2025.

2025 FINANCIAL OVERVIEW

• 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.

• Revenue was $1,874.3 million for 2025, representing a increase of 6.8% compared to the prior year of $1,755.0 million.

• Gross margin for 2025 was 47.3%, compared to 44.3% in 2024.

• The effective tax rate in 2025 was 16.9%, compared to 15.9% in 2024.

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

• Diluted earnings per share in 2025 was $1.14, compared to $0.55 in 2024.

• The Company declared cash dividends of $0.40 per share in 2025 and 2024.

• Cash flow provided by operating activities was $140.0 million in 2025 and $180.1 million in 2024.

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

• Compared to the prior year, inventory increased $26.4 million, or 10.7%.

RESULTS OF OPERATIONS

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Environmental and other related costs (income), net of recoveries 6.6 (10.3) 164.1 %

Operating profit (loss) 101.0 (68.2) 248.1 %

Operating profit 150.2 97.5 54.1 %

Interest expense, net

32.8 42.7 (23.2) %

Other expense (income), net (3.3) 2.5 (232.0) %

Earnings (loss) before income taxes 61.6 (134.2) 145.9 %

Income tax expense (benefit) 10.1 (95.0) 110.6 %

Net earnings (loss) 51.5 (39.2) 231.4 %

net earnings (loss) attributable to noncontrolling interests 3.6 0.4 800.0 %

Net earnings (loss) attributable to Wolverine World Wide, Inc.

Other income, net (4.1) (3.3) (24.2) %

Earnings before income taxes 121.5 58.1 109.1 %

Income tax expense 20.5 9.3 120.4 %

Net earnings 101.0 48.8 107.0 %

net earnings attributable to noncontrolling interests 5.2 3.6 44.4 %

Net earnings attributable to Wolverine World Wide, Inc.

$ 95.8 $ 45.2 111.9 %

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

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 ® .

Diluted earnings per share $ 1.14 $ 0.55 107.3 %

Revenue was $1,874.3 million for 2025, representing an increase of 6.8% compared to the prior year's revenue of $1,755.0 million.

The change in revenue reflected a $161.7 million, or 13.0%, increase from the Active Group, a $33.1 million, or 7.3%, decrease from the Work Group and a $9.3 million, or 17.4%, decrease from Other.

The Active Group's revenue increase was driven by an increase of $126.6 million from Saucony ® and $50.6 million from Merrell ® , partially offset by decreases of $9.4 million from Chaco ® and $6.1 million from Sweaty Betty ® .

The Work Group’s revenue decrease was driven primarily by a decrease of $17.4 million from Wolverine ® , $5.2 million from Cat ® , $4.3 million from HYTEST ® , $3.5 million from Harley-Davidson ® , and $2.7 million from Bates ® .

The decrease in Other revenue was primarily driven by decreases of $4.6 million from Sperry ® , $3.3 million from joint venture and royalty revenue recorded at the corporate level, and $0.9 million from Hush Puppies ® .

International revenue represented 52.2%, and 49.1% of total reported revenues in 2025 and 2024, respectively.

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For 2025, the Company’s gross margin was 47.3%, compared to 44.3% in 2024.

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

The gross margin increase was primarily due to the benefit of product cost savings, a favorable mix shift toward more full-price sales, and the positive impact from recent price increases, partially offset by the impact of higher U.S.

OPERATING EXPENSES

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

Operating expenses increased $56.0 million in 2025, to $736.5 million.

The increase was primarily driven by higher advertising costs ($17.8 million), higher selling costs ($17.8 million), higher environmental and other related costs, net of recoveries ($16.9 million), higher incentive compensation costs ($13.5 million), 2024 gains on the sale of businesses, trademarks, and long-lived assets ($8.5 million), and higher general and administrative costs ($5.4 million), partially offset by lower reorganization costs ($17.0 million) and lower impairment of long-lived assets ($9.3 million).

Environmental and other related costs were $6.6 million and $15.6 million in 2025 and 2024, respectively.

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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.

Other income was $4.1 million in 2025 compared to $3.3 million in 2024.

The effective tax rate in 2025 was 16.9%, compared to 15.9% in 2024.

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

The increase in the effective tax rate between 2025 and 2024 was primarily related to income mix between jurisdictions with differing tax rates.

REPORTABLE SEGMENTS

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

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.

The Other category consists of Hush Puppies ® footwear, sourcing operations that include third-party commission revenues, multi-branded direct-to-consumer retail store, 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, IT costs, reorganization activities, impairment of long-lived assets and environmental and other related costs.

The reportable segment results for years 2025 and 2024 are as follows:

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Further information regarding the reportable segments can be found in Note 17 to the Company's Consolidated Financial Statements.

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

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 Active Group’s revenue increased $161.7 million, or 13.0%, in 2025 compared to 2024.

The revenue increase was driven by an increase of $126.6 million from Saucony ® and $50.6 million from Merrell ® , partially offset by a decrease of $9.4 million from Chaco ® and $6.1 million from Sweaty Betty ® .

The Saucony ® increase was driven primarily by strength in the US and EMEA wholesale channel and the Asia Pacific third-party distributor business.

The Merrell ® increase was primarily due to growth in the core Speed franchises and new product in the lifestyle category, particularly in the wholesale and international channels.

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 Sweaty Betty ® decrease was primarily due to a decline in the U.S., partially offset by growth within the EMEA market.

The Active Group’s operating profit increased $68.3 million, or 36.9%, in 2025 compared to 2024.

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 operating profit increase was due to revenue increases and a 300 basis point increase in gross margin, partially offset by a $47.8 million increase in selling, general and administrative costs.

The increase in gross margin in the current year period was primarily due to the benefit of product cost savings, a favorable mix shift toward more full-price sales, and the positive impact from recent price increases, partially offset by the impact of higher U.S.

The increase in selling, general and administrative expenses in the current year period was primarily due to higher advertising costs, selling costs and employee costs.

The Work Group’s revenue decreased $33.1 million, or 7.3%, in 2025 compared to 2024.

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.

The revenue decrease was primarily driven by a decrease of $17.4 million from Wolverine ® , $5.2 million from Cat ® , $4.3 million from HYTEST ® , $3.5 million from Harley-Davidson ® , and $2.7 million from Bates ® .

The Wolverine ® decrease was primarily due to lower closeout sales compared to the prior year, lower demand in independent channels, and lower direct to consumer traffic.

The Cat ® decrease was primarily due to softer consumer demand in the North American market.

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

The Harley-Davidson ® decrease was primarily due to softer consumer demand within the U.S.

wholesale channel.

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

The Work Group’s operating profit increased $3.5 million, or 5.1%, in 2025 compared to 2024.

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.

The operating profit increase was due to a 250 basis point increase in gross margin and a $4.7 million decrease in selling, general and administrative costs partially offset by revenue decreases.

The decrease in selling, general and administrative expenses in the current year period was primarily due to lower distribution costs and selling expenses.

Other revenue decreased $9.3 million, or 17.4%, in 2025 compared to 2024.

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 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.

The revenue decline was primarily driven by a decrease of $4.6 million from Sperry ® due to the divestiture of the business effective January 10, 2024, a $3.3 million decrease from joint venture and royalty revenue recorded at the corporate level, and a $0.9 million decrease from Hush Puppies ® .

Other operating profit decreased $2.7 million, or 8.6%, in 2025 compared to 2024.

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).

The operating profit decrease was due primarily to revenue decreases.

Corporate expenses increased $16.4 million in 2025 compared to 2024 primarily due to higher environmental and other related costs ($16.9 million), higher incentive compensation costs ($12.5 million), gains on the sale of businesses, trademarks, and intangible assets in the prior year that did not reoccur ($8.5 million), business model change gain recorded in the prior year that did not reoccur ($6.5 million), partially offset by lower reorganization activities ($17.0 million) and lower impairment of long-lived and intangible assets ($9.3 million).

LIQUIDITY AND CAPITAL RESOURCES

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Cash and cash equivalents $ 206.3 $ 152.1

$ 152.1 $ 184.6

Debt 621.7 648.0

Available Revolving Facility (1)

(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.

(1) 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 $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.

Cash and cash equivalents located in foreign jurisdictions totaled $134.1 million as of December 28, 2024.

Cash and cash equivalents of $206.3 million as of January 3, 2026 were $54.2 million higher compared to December 28, 2024.

The increase is due primarily to cash provided by operating activities of $140.0 million, proceeds from the exercise of stock options of $12.2 million, favorable foreign exchange impacts of $5.8 million and net revolver borrowings of $5.0 million, partially offset by cash dividends paid of $33.3 million, long-term debt payments of $32.5 million, additions to property, plant, and equipment of $14.5 million, purchases of common stock of $14.5 million, shares acquired related to employee stock plans of $10.7 million and payment of debt issuance costs of $3.9 million.

The Company had $510.5 million of borrowing capacity available under the Revolving Facility as of January 3, 2026.

Cash and cash equivalents located in foreign jurisdictions totaled $181.3 million as of January 3, 2026.

Cash flow from operating activities is expected to be sufficient to meet the Company’s working capital needs for the foreseeable future.

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 of its common stock during 2024 and 2023.

A detailed discussion of environmental remediation costs is found in Note 16 to the Company's Consolidated Financial Statements.

The Company has established a reserve for estimated environmental remediation costs based upon an evaluation of currently available facts with respect to each individual affected site.

As of December 28, 2024, the Company has a reserve of $39.7 million, of which $19.4 million is expected to be paid in the next 12 months and is recorded as a current obligation in other accrued liabilities, with the remaining $20.3 million recorded in other liabilities and expected to be paid over the course of up to 25 years.

As of January 3, 2026, the Company has a reserve of $26.5 million, of which $12.0 million is expected to be paid in the next 12 months and is recorded as a current obligation in other accrued liabilities, with the remaining $14.5 million recorded in other liabilities and expected to be paid over the course of up to 25 years.

The Company's remediation activity at its former Tannery site and sites where the Company disposed of Tannery byproducts is ongoing.

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Note 16 to the Company's Consolidated Financial Statements also includes a detailed discussion of environmental litigation matters.

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.

As of January 3, 2026, the Company had recorded liabilities of $8.5 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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The Company expects to meet its contractual obligations through its customary sources of liquidity in the normal course of business, such as cash from operating activities, and believes it has the financial resources to satisfy these contractual obligations.

The Company had the following contractual obligations due by period at December 28, 2024:

The Company had the following contractual obligations due by period at January 3, 2026:

(In millions) Total Less than

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8.2 8.2 — — —

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

$ 1,245.6 $ 461.6 $ 107.2 $ 613.4 $ 63.4

(1) Includes principal and interest payments on the Company’s long-term debt.

Estimated future interest payments on outstanding debt obligations are based on interest rates as of December 28, 2024.

Estimated future interest payments on outstanding debt obligations are based on interest rates as of January 3, 2026.

Actual cash outflows may differ significantly due to changes in underlying interest rates.

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(3) Under the terms of a Consent Decree resolving certain civil and regulatory actions, the Company is obligated to contribute towards the costs of extending municipal water lines, developing a replacement wellfield and making certain improvements to Plainfield Township’s existing water treatment plant, all subject to an aggregate cap of $69.5 million.

During 2024 and 2023, the Company made payments of $12.2 million and $6.4 million towards the total cap, respectively.

uncertainty of the timing and amounts related to the Company's other environmental remediation costs, they have been excluded from this table.

The Company has made payments of $61.3 million towards the total cap.

Due to the uncertainty of the timing and amounts related to the Company's other environmental remediation costs, they have been excluded from this table.

See Note 16 to the Company's Consolidated Financial Statements for additional information.

(4) The total amount of unrecognized tax benefits on the consolidated balance sheet at December 28, 2024 is $1.6 million.

(4) The total amount of unrecognized tax benefits on the consolidated balance sheet at January 3, 2026 was $1.4 million.

At this time, the Company is unable to make a reasonably reliable estimate of the timing of payments in individual years beyond 12 months due to uncertainties in the timing of tax audit outcomes.

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Financing Arrangements

The Company’s credit agreement provides for a term loan A facility (the “Term Facility”) and for a revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Senior Credit Facilities”).

The maturity date of the loans under the Senior Credit Facilities is October 21, 2026.

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.

On September 24 2025, the Company entered into a 2025 Replacement Facility Amendment and Reaffirmation Agreement (the “Credit Agreement”) to replace the existing revolving credit facility and term loan A facility.

The Company’s Credit Agreement provides for a revolving credit facility (the “Revolving Facility”).

The maturity date of the loans under the Revolving Facility is September 24, 2030.

The Credit Agreement provides for a debt capacity of up to an aggregate debt amount (including existing revolver commitment amounts in addition to permitted incremental debt) not to exceed $850.0 million.

The Revolving Facility allows the Company to borrow up to an aggregate amount of $600.0 million.

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The senior notes are guaranteed by substantially all of the Company’s domestic subsidiaries.

As of December 28, 2024, the Company was in compliance with all covenants and performance ratios under the Credit Agreement.

The Company’s debt at December 28, 2024 totaled $648.0 million, compared to $920.8 million at December 30, 2023.

As of January 3, 2026, the Company was in compliance with all covenants and performance ratios under the Credit Agreement and senior notes.

The Company’s debt at January 3, 2026 totaled $621.7 million, compared to $648.0 million at December 28, 2024.

The Company expects to use the current borrowings to fund organic growth initiatives, pay dividends and for general corporate purposes.

The decreased debt position is due to lower borrowings under the Revolving Facility resulting from operating cash inflows and proceeds from divestitures.

The decreased debt position is due to repayment of the term facility resulting from operating cash inflows, partially offset by capital expenditures, cash dividends, and purchase of common stock.

The following table summarizes cash flow activities:

Fiscal Year Ended

(In millions) December 28,

(In millions) January 3,

2026 December 28,

Net cash provided by operating activities 140.0 180.1

Net cash provided by investing activities 86.8 171.6

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

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

Depreciation and amortization 26.2 35.1

Net cash provided by (used in) investing activities (13.9) 86.8

Net cash used in financing activities (77.7) (299.2)

Operating Activities

The principal source of the Company’s operating cash flow is net earnings, including cash receipts from the sale of the Company’s products, net of costs of goods sold.

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 $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.

Cash from operations during 2025 included a decrease in net working capital representing a source of cash of $8.8 million.

Working capital balances were favorably impacted by a decrease in accounts receivable of $54.2 million and an increase in other operating liabilities of $23.3 million, partially offset by an increase in inventories of $20.9 million, an increase in other operating assets of $17.8 million, and a decrease in accounts payable of $30.0 million.

Operating cash flows included a non-cash add back for depreciation and amortization expense adjustment of $25.9 million, a deferred income tax adjustment of $8.0 million, a stock-based compensation expense adjustment of $24.4 million, a cash outflow of $14.5 million for environmental and other related costs, net of cash payments, a pension expense adjustment of $1.0 million, and $12.6 million of other operating cash outflows.

Investing Activities

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.

The Company made capital expenditures of $14.5 million and $20.2 million in years 2025 and 2024, respectively, for building improvements, eCommerce site enhancements, new retail stores, distribution operations improvements and information system enhancements.

The current year activity also includes proceeds from company-owned life insurance policy liquidations of $2.2 million and $1.6 million of other investing cash outflows.

Financing Activities

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 current year debt activity includes net borrowings under the Revolving Facility of $5.0 million, payments on long-term debt of $32.5 million, and payment of debt issuance costs of $3.9 million.

The Company paid $10.7 million and $2.6 million in 2025 and 2024, 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 from noncontrolling interests in 2023.

The company paid $14.5 million for purchases of its own common stock and had proceeds of $12.2 million from the exercise of stock options.

The Company declared cash dividends of $0.40 per share in each of 2025 and 2024 .

Dividends paid totaled $32.5 million and $32.6 million for 2024 and 2023 , respectively.

Dividends paid totaled $33.3 million and $32.5 million for 2025 and 2024 , respe ctively.

A quarterly dividend of $0.10 per share was declared on February 11, 2026 to shareholders of record on April 1, 2026.

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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.

Revenue recognized during the year ended January 3, 2026 related to the Company’s contract liabilities was nominal.

The Company values its inventory at the lower of cost or net realizable value.

Cost is determined by the last-in, first out ("LIFO") method for certain domestic finished product inventories.

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 U.S.

retail store business inventory.

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 domestic finished product inventories.

The Company changed its method of accounting for certain domestic inventory valued using the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) i nventory valuation method, refer to " Change in Accounting Principle ", within Note 1, for additional information regarding this change.

The average cost of inventory is used for finished product inventories of the Company’s retail store business inventory.

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

The Company reduces the carrying value of its inventories to the lower of cost or net realizable value for excess or obsolete inventories based upon assumptions about future demand and market conditions.

If the Company were to determine that the estimated realizable value of its inventory is less than the carrying value of such inventory, the Company would provide a reserve for such difference as a charge to cost of sales.

If the Company were to determine that the estimated realizable value of its inventory is less than the carrying value of such inventory, the Company would provide a

reserve for such difference as a charge to cost of sales.

If actual market conditions are different from those projected, adjustments to those inventory reserves may be required.

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If the Company determines that adjustments to the inventory quantities are appropriate, an adjustment to the Company’s cost of goods sold and inventory is recorded in the period in which such determination was made.

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting, which requires that once control is obtained, the consolidated financial statements reflect the operations of an acquired business starting from the acquisition date.

All assets acquired and liabilities assumed are recorded at fair value as of the acquisition date.

The Company allocates the purchase price of an acquired business to the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed, with any excess purchase price recorded as goodwill.

Contingent consideration, if any, is included in the purchase price and is recognized at its fair value on the acquisition date.

During the measurement period, which is up to one year from the acquisition date, adjustments to the assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill.

The determination of fair values of identifiable assets and liabilities requires estimates and the use of valuation techniques and requires management to make judgments that may involve the use of significant estimates.

For intangible assets acquired in a business combination, the Company typically uses the income method.

Significant estimates used in valuing certain intangible assets include, but are not limited to, the amount and timing of future cash flows, growth rates and discount rates, among other items.

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 Intangible Assets

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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.

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.

The Company did not recognize any impairment charges for goodwill and indefinite-lived intangible assets during 2025 and 2024 and did not recognize any impairment charges for goodwill during 2023.

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.

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.

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

Environmental

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The bonds selected are listed as high grade by at least two recognized ratings agency and are non-callable, currently purchasable and non-prepayable.

The calculated discount rate was 5.75% at December 28, 2024, compared to 5.30% at December 30, 2023.

The calculated discount rate was 5.72% at January 3, 2026, compared to 5.75% at December 28, 2024.

Pension expense is also impacted by the expected long-term rate of return on plan assets, which the Company has determined to be 7.60% and 6.96% for fiscal 2025 and 2024, respectively.

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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.

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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