Weyco Group Inc. reported net sales for the second quarter of 2017 were $57.5 million, up 1 percent as compared to second quarter 2016 net sales of $56.9 million.
Earnings from operations were $1.9 million in the second quarter of 2017, a decrease of 7 percent as compared to $2 million in the second quarter of 2016. Net earnings attributable to the company were $1.3 million in the second quarter of 2017, up 26 percent as compared to $1 million in last year’s second quarter. Diluted earnings per share were 12 cents in the second quarter of 2017 and 9 cents in the second quarter of 2016.
Net sales in the North American wholesale segment, which includes North American wholesale sales and licensing revenues, were $42.3 million for the second quarter of 2017, up 2 percent as compared to $41.5 million in the second quarter of 2016. Within the wholesale segment, net sales of the Stacy Adams and Florsheim brands were each up 10 percent for the quarter due to strong new product sales. These sales increases were partly offset by a 13 percent decline in net sales of the Nunn Bush brand. Nunn Bush was negatively impacted in the quarter by product transitions where some large older programs are being phased out and new programs will be shipped in the third and fourth quarters. Nunn Bush’s performance also continues to be affected by reduced sales in the department store trade channel. Mid-tier department stores are facing a challenging retail environment, particularly at brick and mortar locations, where foot traffic has declined due to the growing popularity of online retailing. Net sales of the Bogs brand were flat for the quarter. Licensing revenues were $591,000 in the second quarter of 2017 and $596,000 in last year’s second quarter. Earnings from operations for the wholesale segment were $1.3 million in the second quarter of 2017 and $1.5 million in last year’s second quarter. The decline in wholesale operating earnings was due to slightly lower wholesale gross margins this quarter.
Net sales in the North American retail segment, which include sales from the company’s Florsheim retail stores and its internet business in the United States, were $4.8 million in the second quarter of 2017, as compared to $4.7 million in the second quarter of 2016. Same-store sales (which include U.S. internet sales) were down 2 percent for the quarter due to decreased sales at both brick-and-mortar stores and on the company’s websites. Last year in September, the company opened an outlet store in the Sawgrass Mills Mall in Florida. While the company closed two stores during the second quarter of 2017, sales from the new outlet store more than offset sales volume losses from the closed stores, resulting in overall retail sales being up for the quarter. Earnings from operations for the retail segment were $184,000 in the second quarter of 2017 and $228,000 in last year’s second quarter. The decrease was mainly due to an increase in retail selling and administrative expenses.
Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $10.4 million in the second quarter of 2017, down 3 percent as compared to $10.7 million in 2016. The decrease was primarily due to lower net sales at Florsheim Australia. Florsheim Australia’s net sales were down 3 percent for the quarter, due to a 6 percent decline in sales of its wholesale businesses and a 1 percent decline in sales of its retail businesses. Collectively, earnings from operations of Florsheim Australia and Florsheim Europe were $408,000 in the second quarter of 2017, up 25 percent as compared to $325,000 in the same period last year. Despite the decrease in sales, other operating earnings were up due to higher gross margins at both Florsheim Australia and Florsheim Europe this quarter.
In the first quarter of 2017, the company retrospectively adopted a new accounting rule that required the company to reclassify the non-service cost components of pension expense from selling and administrative expenses to other expense, net, in the Consolidated Condensed Statements of Earnings and Comprehensive Income (Unaudited). The decrease in other expense, net, this quarter was primarily due to a $367,000 decrease in the non-service cost components of pension expense. Pension expense decreased in 2017 as a result of freezing all benefits under the pension plan, effective December 31, 2016.
“Despite the challenging retail environment, we saw an uptick in overall sales and net earnings for the quarter,” stated Thomas W. Florsheim, Jr., chairman and CEO. “Our sales increase can be attributed, in part, to successful new product launches for two of our major wholesale brands. We are also working to control our costs, which contributed to our bottom line earnings increase for the quarter. While the retail landscape remains uncertain, we look forward to building upon this momentum as we move into the back half of the year.”
On August 8, 2017, the company’s board of directors declared a cash dividend of 22 cents per share to all shareholders of record on August 30, 2017, payable September 29, 2017.
Photo courtesy Bogs
