Declining sales and rising costs contributed to an 18.6% decline in third quarter earnings for Weyco Group Inc. The manufacturer of men's shoes said net income fell to $4.34 million, or 37 cents a share, from $5.33 million, or 45 cents, last year. Sales declined by 1.7% to $57.2 million from $58.2 million.
Sales in the wholesale division, which include wholesale sales and licensing revenues, were $50.3 million in the third quarter of 2008, compared with $51.3 million in 2007. Wholesale sales were $49.3 million in 2008, down from $50.5 million in 2007. Licensing revenues in 2008 were $991,000, compared with $807,000 in 2007.
Third quarter wholesale net sales of the company's Stacy Adams and Florsheim brands were down 18% and 6%, respectively, while Nunn Bush sales were up 16%. The decrease in Stacy Adams was due both to the timing of shipments between the second and third quarter and the continued decline in the business of independent shoe and clothing retailers. In the second quarter, Stacy Adams benefited from shipments of some new contemporary footwear programs. This pipeline fill resulted in a volume shift away from the third quarter with several key retailers. Florsheim is positioned at the higher end of the mid tier department store pricing matrix and as such has been more affected by the slower economic environment, resulting in lower sales. Nunn Bush sales increased across all distribution channels, reflecting the success of its new Dynamic Comfort line of slip resistant footwear, introduced in the second quarter of this year.
Retail sales for the third quarter were flat at $6.9 million in 2008 and 2007. Same store sales in 2008 were also flat compared with 2007.
Operating earnings for the third quarter of 2008 were $6.3 million, down from $7.9 million in 2007. This resulted from decreases in both the wholesale and retail divisions. In the wholesale division, the Company has been experiencing cost pressures from its foreign suppliers and increases in transportation costs, which has reduced gross margins. In the retail division, selling and administrative expenses have increased due to higher rent and occupancy costs at some locations.
“Our results this quarter reflect the difficult economic and retail environment, as well as the impact of cost pressures on both our wholesale and retail businesses,” stated Tom Florsheim, Jr., Chairman and Chief Executive Officer. “However, while we have experienced some swings in our individual brands, we believe our overall sales have held up well in this difficult time.”
