Weyco Group Inc. reported net sales for the third quarter of 2021 rose 16.2 percent to $61.8 million compared to third quarter 2020 net sales of $53.2 million.

Operating earnings were $6.7 million for the quarter compared to operating losses of $3.8 million in last year’s third quarter. Net earnings rose to $5.1 million, or $0.52 per diluted share, from net losses of $5.9 million, or $0.60 per diluted share, in the third quarter of 2020.

Last year’s third-quarter operating results were significantly impacted by the pandemic and included non-recurring charges totaling $7.4 million. As such, comparisons of 2021 financial performance to 2020 may have limited utility. Therefore, selected comparisons to 2019 are included in this release as appropriate. Net sales for the third quarter of 2021 rose to approximately 75 percent of third-quarter 2019 sales levels. Consolidated operating earnings for the quarter recovered to 80 percent of 2019 levels.

North American Wholesale Segment
Net sales in the company’s North American wholesale segment were $50.2 million for the quarter compared to $44.0 million in the third quarter of 2020, with sales up across all of the company’s legacy brands (Florsheim, Stacy Adams and Nunn Bush). Last year’s third-quarter sales of the legacy brands were down significantly as a result of the pandemic. Sales of the Bogs outdoor brand fell 8 percent for the quarter mainly due to production and shipping delays from manufacturers in Asia.

Gross earnings for the North American wholesale segment were 34.6 percent of net sales in the third quarter of 2021 compared to 35.7 percent of net sales in last year’s third quarter. The decrease in gross margins was primarily due to higher inbound freight costs. Additionally, last year’s gross earnings included $500,000 in non-recurring charges. Selling and administrative expenses were $11.3 million for the quarter, compared to $13.0 million in last year’s third quarter, and $14.9 million in 2019. Third-quarter 2021 expenses were reduced by approximately $1.9 million of wage subsidies received from the U.S. and Canadian governments. Third-quarter 2020 expenses included $1.5 million in non-recurring charges. Wholesale operating earnings rose to $6.0 million in the third quarter of 2021, up from operating earnings of $2.8 million in last year’s third quarter, due mainly to higher sales and lower selling and administrative expenses.

At wholesale, there was a significant pickup in demand across all of the company’s brands during the quarter. However, bottlenecks in the supply chain caused delays in the delivery of merchandise from suppliers, which negatively impacted its third-quarter shipments. In October, it began to see improvement in the rate of deliveries from suppliers, which the company expects will continue through the fourth quarter, and which should help it to meet increased demand for product.

North American Retail Segment
Net sales in the company’s North American retail segment were $6.3 million in the third quarter of 2021, up from $4.4 million in the third quarter of 2020. Same-store sales rose 49 percent for the quarter, due to a 33 percent increase in e-commerce sales and higher brick and mortar sales. Last year’s brick and mortar same-store sales were down significantly as a result of the pandemic. The company closed three unprofitable retail stores in the third quarter of 2020 and currently has just four active U.S. brick-and-mortar locations.

The retail segment had operating earnings of $1.4 million for the quarter, compared to operating losses of $2.8 million in last year’s third quarter. Last year’s third-quarter losses included $2.6 million in non-recurring charges. The improvement in 2021 was due to the benefit of closing unprofitable stores, improved performance at active brick and mortar locations, and higher e-commerce earnings.

Retail net sales for the third quarter of 2021 exceeded third quarter 2019 levels by 22 percent. While most of this increase was driven by e-commerce growth, brick-and-mortar sales at the company’s four remaining locations also exceeded their 2019 levels. Third-quarter 2021 retail operating earnings significantly outpaced the third quarter of 2019, due primarily to growth in the company’s more profitable e-commerce businesses and the shedding of unprofitable stores last year.

Other
Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $5.3 million for the quarter, compared to $4.8 million in the third quarter of 2020 and $9.5 million in the 2019 period. The 2021 increase was at Florsheim Australia, with sales up in both its wholesale and retail businesses, partially offset by lower sales at Florsheim Europe, as the company is in the final stages of winding down this business. Last year’s third-quarter sales were down significantly as a result of pandemic-related retail shutdowns.

Collectively, Florsheim Australia and Florsheim Europe had operating losses of $682,000 for the quarter, compared to operating losses of $3.8 million in the third quarter of 2020, and operating losses of $1.4 million in the 2019 period. Last year’s third-quarter losses included $2.8 million in non-recurring charges. The improvement in 2021 compared to 2019 was largely due to improved performance at Florsheim Australia.

Business recovery in Australia has been hindered by a large number of Florsheim Australia’s retail stores being closed for a majority of the quarter due to lockdowns imposed in New South Wales and Victoria. Stores in New South Wales have begun to reopen in October, and we currently expect that all of its stores in Australia will be allowed to reopen during the fourth quarter unless there are adverse COVID-19 developments there.

Consolidated provision for income taxes totaled $1.9 million for the quarter compared to $2.1 million in the third quarter of 2020. Last year’s tax provision included $2.0 million of tax expense related to deferred tax assets of the company’s foreign subsidiaries.

“We are excited about the trajectory of our business, as we are seeing strong demand across all of our brands,” stated Thomas W. Florsheim, Jr., chairman and CEO. “Our wholesale business posted solid results for the third quarter despite being challenged by supply chain delays, and our retail segment achieved record sales and earnings, largely driven by e-commerce growth. So far in the fourth quarter, we’ve seen a vast improvement in the flow of our products into the U.S., which will enable us to fulfill much of the increased demand through the end of the year and into 2022.”

Photo courtesy Bogs