Weyco Group Inc. reported net sales for the first quarter ended March 31 were $69.1 million, down 12 percent as compared to first quarter 2016 net sales of $78.9 million. Earnings from operations were $3.5 million in the first quarter of 2017, a decrease of 18 percent as compared to $4.2 million in the first quarter of 2016. Net earnings attributable to the company were $2.2 million in the first quarter of 2017, down 17 percent as compared to $2.7 million in last year’s first quarter. Diluted earnings per share were 21 cents in the first quarter of 2017, as compared to 25 cents in the first quarter of 2016.
Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $52.9 million for the first quarter of 2017, down 15 percent as compared to $62.2 million in the first quarter of 2016. Within the wholesale segment, net sales of the Nunn Bush, Stacy Adams and Florsheim brands were down 18 percent, 16 percent and 9 percent, respectively, for the quarter. These sales declines were the result of a challenging retail environment, particularly at our customers’ brick and mortar locations, where foot traffic has declined due to the growing popularity of online retailing. Bogs first quarter net sales were down 21 percent, reflecting the continued softness in the outdoor and better footwear channels. Licensing revenues were $701,000 in the first quarter of 2017, up 15 percent as compared to $610,000 in last year’s first quarter. The increase in licensing revenues resulted mainly from a licensee transition that occurred in 2016. The new licensee was operational by the first quarter of 2017, resulting in increased revenues compared to the same period last year.
Gross earnings for the North American wholesale segment were 30.8 percent of net sales in the first quarter of 2017, as compared to 29.2 percent of net sales in last year’s first quarter. Earnings from operations for the wholesale segment were $3.2 million in the first quarter of 2017, down 15 percent as compared to $3.7 million in 2016, largely due to the decrease in wholesale sales.
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 $4.9 million in the first quarter of 2017, down 3 percent as compared to $5.1 million in the first quarter of 2016. Same stores sales (which include U.S. internet sales) were down 7 percent for the quarter due to decreased sales at brick and mortar stores and on the company websites. There were the same number of domestic retail stores operating during the first quarters of 2017 and 2016, as one store closed and one store opened over the past twelve months. Retail sales in 2017 were impacted by the later timing of the Easter holiday in 2017 as compared to 2016, which caused sales to shift into April this year. Earnings from operations for the retail segment were $43,000 in the first quarter of 2017, as compared to $246,000 in 2016. The decrease was mainly due to the decrease in retail sales.
Other net sales, which include the wholesale and retail sales of Florsheim Australia and Florsheim Europe, were $11.3 million in the first quarter of 2017, down 2 percent as compared to $11.6 million in the first quarter of 2016. The decrease was primarily due to lower net sales at Florsheim Australia. Florsheim Australia’s net sales were down 1 percent for the quarter. In local currency, Florsheim Australia’s net sales were down 6 percent for the quarter. Earnings from operations of Florsheim Australia and Florsheim Europe were $250,000 in the first quarter of 2017, and $236,000 in the first quarter of 2016.
“The retail environment continues to be challenging, as retailers address reduced foot traffic in their brick and mortar stores,” stated Thomas Florsheim, Jr., chairman and CEO. “We continue to seek growth across all trade channels and are working to reduce our costs. This quarter we saw higher gross margins and reductions in several categories of selling and administrative costs as a result of our efforts.”
On May 2, 2017, the company’s Board of Directors declared a cash dividend of $0.22 per share to all shareholders of record on May 26, 2017, payable June 30, 2017. This represents an increase of 5 percent above the previous quarterly dividend rate of 21 cents.
