Weyco Group said sales of its Bogs outdoor brand were down 7 percent in North America, reflecting the continued impact of the mild 2015/16 winter season. The brand was down 23 percent in the year.

On a conference call with analysts, Thomas Florsheim Jr., the company’s chairman and CEO, said that while Bogs sales picked up with the cold and snow of December, the unseasonably dry and warm end to 2015 resulted in high inventory levels at retail being carried into 2016.

“The inventory levels at retail adversely impacted our wholesale shipments throughout the year,” said Florsheim. “The good news is that the winter weather that much of the country experienced this year end helped clear inventory and set the stage for growth in 2017.”

He added, “In general, Bogs performed well at retail and we received a very positive reaction to our fall 2017 line, including the first offering of our revamped occupational product. While retailers are currently much cleaner than last year at this time, our sense is that they will continue to take a conservative approach towards inventory levels given the inconsistency of the weather the past couple of winter seasons. We remain focused on diversifying our product mix with less reliance on heavy insulated boots and are confident in our long term formula for success with Bogs.”

Overall sales in the North American wholesale segment in the fourth quarter declined 8.7 percent to $61.6 million. Within the wholesale segment, net sales of the Stacy Adams, Nunn Bush and Florsheim brands were down 11 percent, 9 percent and 6 percent, respectively, for the quarter.

These sales declines were the result of a challenging retail environment, particularly at its customers’ brick-and-mortar locations, where foot traffic has declined due to the growing popularity of online retailing.

“In addition, overall footwear and apparel sales have been sluggish as consumer discretionary purchases have migrated away from soft goods and towards larger durable goods purchases, as well as towards expenditures on experiences such as vacations or dining out,” said Florsheim. “This shift has caused many key brick and mortar accounts to reassess their inventory levels and store counts.”

Florsheim said that while the performance of its brands at a consumer level remained strong relative to the non-athletic industry, wholesale shipments throughout the year faced headwinds based those challenges. He added, “Over the long term we believe the non-athletic footwear market will stabilize and return to growth as both e-commerce and brick and mortar retail evolve and find their appropriate levels. In the near term we are focused on navigating these changes in the retail environment and building our brands.”

Including retail and international sales, net revenues were down 6.1 percent to $82.1 million. Excluding non-recurring items, net earnings would have been down 9 percent in the quarter.

The latest quarter included a charge of $1.8 million to writedown its Umi kids footwear brand. The company said it decided Umi does not fit the long-term strategic objectives and it’s exploring strategic alternatives to divest the brand. That charge was offset by a $3.1 million adjustment to reverse a deferred tax liability on corporate-owned life insurance policies. The year-ago included a pre-tax $458,000 final payout as part of its 2011 acquisition of the Bogs/Rafters brands. As a result, net earnings were $8.6 million, or 78 cents a share, up from $7.1 million, or 65 cents, a year ago.

For 2016, net earnings were $17 million, or $1.56 a share, down from $18.2 million, or $1.68. Earnings adjusted to exclude non-recurring items were off 20 percent.

Sales for the year were down 7.4 percent to $296.9 million. In its North American wholesale segment, sales declined 23 percent for Bogs, 13 percent for Nunn Bush and 2 percent for Stacy Adams. Florsheim net sales were up 1 percent.

“It was a tough year for our North American wholesale business,” stated Florsheim. “Not only were Bogs sales down following last year’s mild winter, but our legacy brands also struggled, echoing the challenges our retail partners are facing, particularly at their brick and mortar locations. While we are disappointed in our results for the year, we are committed to addressing the challenges brought out by this rapidly changing marketplace. We believe we have the right products and long-term strategies in place that will position the company for sustained growth in the long-term.”

Photo courtesy Bogs