Wolverine Worldwide Inc., the US-based manufacturer of Merrell boots and Hush Puppy shoes , last week surprised the markets by announcing a 25% rise in first-quarter earnings. The company also took the opportunity to play down the effects of the recent hikes in the price of leather, stating that it did not expect this to significantly impact on sales.

CEO Timothy O'Donovan said he expected rising cowhide costs to increase shoe prices by $1 per pair and boot prices $2 per pair. However, he was also quick to point out that fluctuating cowhide prices have long been a feature of the footwear industry and that in any case, with its own pigskin tanneries, Wolverine could switch to pigskin or other materials for at least one-third of its production. In fact, he thought Wolverine could benefit from selling pigskin to other shoemakers such as New Balance Athletic Shoes. "When we see leather make a move of this magnitude we see people looking to use our performance suedes," he said.

In its statement for the three months ending March 24, the Illinois-based company recorded net income of $6 million on sales of $158.2 million. By comparison, during the same quarter in 2000, the company earned $4.8 million on sales of $147.4 million. The company’s executives attributed their success to strong demand for the company’s Merrell and Harley-Davidson brand boots, and continuing gains in efficiency that included the closure of five manufacturing plants during the quarter. The earnings announcement came as a particular surprise because of the current slowdown in US retail spending, prompting Wolverine shares last Monday (16..04.01) to climb by18.1 percent, closing at $15.70 per share.