Weyco Group Inc. reported sales of Bogs wholesale sales were down 21 percent in the first quarter, reflecting the continued softness in the outdoor and better footwear channels.
On a conference call with analysts, Thomas Florsheim, Jr., chairman and CEO, said Bogs was hurt by unseasonably warm weather and a lack of precipitation.
Across all the company’s footwear brands, he said the company was hurt by the challenging retail environment, particularly at its customers’ brick and mortar locations, where foot traffic has declined due to the growing popularity of online retailing. The shift has led to “numerous store closings.”
Another factor in retail’s overall challenges is a “market shift on what people are spending their money on,” particularly a shift in discretionary spending away from soft goods toward durable goods in the home and auto sectors as well as increased spending on experiential purchases such as travel and dining out.
While gains are being seen to e-commerce accounts, it’s not been enough to offset the declines at brick & mortar.
Specifically regarding Bogs, Florsheim noted that the brand is focused on diversifying its offerings to reduce its dependency in insulated footwear. While the brand “is making progress, growth is still tied to the fall and winter seasons.”
He said Bogs’ spring product “is selling” and “much cleaner” inventories versus prior-year levels should help Bog’s sales in the second half of 2017.
Companywide, Weyco’s sales were down 12.4 percent to $69.1 million.
Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $52.9 million, down 15.0 percent. Beside Bogs, net sales of the Nunn Bush, Stacy Adams and Florsheim brands were down 18 percent, 16 percent and 9 percent, respectively, for the quarter.
In its other segments, sales in North American retail, which include sales from the company’s Florsheim retail stores and its internet business in the U.S., were $4.9 million in the quarter, down from $5.1 million in the first quarter of 2016.
Other net sales, which include the wholesale and retail sales of Florsheim Australia and Florsheim Europe, were $11.3 million in the quarter as compared to $11.6 million in same period a year ago.
Net earnings slumped 18.5 percent to $2.2 million, or 21 cents a share. The decline came despite higher gross margins and a reduction in several categories of selling and administrative costs as a result of cost-containment efforts.
Florsheim said the beyond store closings, Weyco’s brick & mortar customers are remaining conservative on inventory purchases and investing in their own e-commerce operations. With retail in he the “early stages” of a significant transition, Weyco will continue to seek growth across all trade channels while working to reduce its overhead. Florsheim believes the company’s “operational excellence” and commitment to depth and at-once inventory will be beneficial in the long term. Said Florsheim, “We will be well positioned as the new landscape takes shape.”
Photo courtesy Bogs
