Weyco Group reported net sales for the second quarter of 2018 were $60.9 million, up 6 precent compared to second quarter 2017 net sales of $57.5 million.
Earnings from operations were $1.9 million in both the second quarters of 2018 and 2017. Net earnings attributable to the company rose 29 precent to $1.6 million in the second quarter of 2018 from $1.3 million in last year’s second quarter. Net earnings were positively impacted by the lower U.S. federal tax rate of 21 precent effective January 1, 2018, compared to 35 precent in 2017, which resulted from the passing of the Tax Cuts and Jobs Act. Diluted earnings per share were $0.15 per share in the second quarter of 2018 and $0.12 per share in the second quarter of 2017.
Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $45.6 million for the second quarter of 2018, up 8 precent compared to $42.3 million in the second quarter of 2017. Within the wholesale segment, net sales of the Florsheim brand were up 30 precent for the quarter, driven by strong new product sales in the national shoe chain and department store trade channels. Net sales of the Nunn Bush and Bogs brands were up 4 precent and 6 precent, respectively, for the quarter.
Bogs’ gain represents a bounce-back. Sales were down 2 percent in in the first quarter. Bogs sales declined 9 percent in 2017, due mostly to lower sales to outdoor retailers. In 2016, Bogs’ revenues dropped 23 percent, mainly due to the continued impact of the mild 2015/2016 winter season, as retailers carried over Bogs inventory into the 2016/2017 winter season.
Stacy Adams sales were down 2 precent for the quarter. Licensing revenues were $72,000 in the second quarter of 2018 and $591,000 in last year’s second quarter.
Gross earnings for the North American wholesale segment were 33.3 precent of net sales in the second quarter of 2018 compared to 31.3 precent of net sales in last year’s second quarter. Earnings from operations for the wholesale segment rose 35 precent to $1.7 million in the second quarter of 2018 from $1.3 million in last year’s second quarter, mainly due to higher sales and gross margins.
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 $4.6 million in the second quarter of 2018, down 3 precent compared to $4.8 million in the second quarter of 2017. Same-store sales (which include U.S. internet sales) were up 2 precent for the quarter due to increased sales on the company’s websites. Retail earnings from operations increased to $222,000 this quarter from $184,000 in last year’s second quarter, mainly due to the benefit of closing unprofitable stores since last year.
Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $10.6 million in the second quarter of 2018, up 2 precent compared to $10.4 million in the second quarter of 2017. This increase was due to higher net sales at Florsheim Europe. Florsheim Australia’s net sales were down 2 precent for the quarter with lower sales in both its retail and wholesale businesses. Collectively, Florsheim Australia and Florsheim Europe had operating losses of $23,000 in the second quarter of 2018 compared to operating earnings of $407,000 in the second quarter of 2017. The decline between years was mainly due to lower operating earnings in Florsheim Australia’s wholesale and retail businesses.
“Our growth for the quarter came from our North American wholesale segment led by our Florsheim brand,” stated Thomas W. Florsheim, Jr., the company’s Chairman and CEO. “At the same time, our overseas businesses were challenged by the tepid retail environment in their markets. Overall, we had a solid quarter, but we continue to work on the soft spots in our business and are excited to build upon our positive momentum in the second half of the year.”
On July 31, 2018, the minority interest shareholder of Florsheim Australia provided notice that it will tender its shares, representing 45 precent equity in Florsheim Australia, to the company in accordance with the Shareholders Agreement dated January 23, 2009. Accordingly, the company will purchase the minority interest of Florsheim Australia for $3.8 million on August 30, 2018.
On August 7, 2018, the company’s Board of Directors declared a cash dividend of $0.23 per share to all shareholders of record on August 29, 2018, payable September 28, 2018.
