Wolverine Worldwide announced last week that Gene McCarthy, who has been president of the Merrell brand since August 2013, has left the company. His functions are being taken over by Jim Gabel, president of the company's Performance Group, which also includes Chaco and Saucony.
Gabel came to Wolverine about a year ago from Adidas Canada, bringing a strong background in product and marketing. As president of the Performance Group, he took the place of Jim Zwiers, who was placed in charge of Wolverine's International Group. McCarthy had come from Under Armour, where he was running the company's emerging footwear business, after filling important roles at Timberland, Reebok and Nike.
Don Grimes, senior vice president and chief financial officer of the group, told a group of analysts last week that Gabel had been working most of his time on Merrell, assessing the brand's team and future opportunities. He then proposed a change in direction for Merrell that was accepted by the top management. Grimes indicated that Gabel's assignment will be temporary, and that someone else from inside or outside the group will act as president of Merrell in the future.
Merrell stopped growing at a double-digit rate a few years ago, and as reported in the other article in this issue, its sales were flat in the first quarter of 2015, due in particular to softness in women's casual and lifestyle products. Wolverine's management said that it is recruiting new designers and accelerating the release of new products in this segment to try to reverse the trend.
After Wolverine acquired the Merrell brand in 1997, it pushed its international development, following a successful third-party model that it had already adopted for Hush Puppies. The brand is now licensed or distributed in about 135 countries around the world. It also developed Merrell in the casual arena through products such as the Jungle Moc and the Merrell Sprint.
The introduction of new performance-oriented lines such as Merrell Barefoot in 2011 and M-Connect in 2012 led the brand to lose ground in the lifestyle and casual sides of the business. The brand has been trying to find its way back in this area, but as Grimes put it last week, it has been “kind of in fits and starts.” The women's lifestyle segment performed relatively well in the fourth quarter of last year, but declined again in the following first quarter.
Performance outdoor now represents more than 60 percent of Merrell's total revenues of about $600 million, up from 45 percent 18 months ago. The management wanted Merrell to grow rapidly, reaching sales of $1 billion sooner or later, but its latest forecast for this year is for growth in the mid-single digits.