Weyco Group, Inc. reported North American wholesale revenues at Bogs jumped 52 percent in the third quarter that ended September 30 as overall sales grew 57 percent.

Third Quarter 2022
Consolidated net sales were a third-quarter record of $97.0 million, up 57 percent compared to $61.8 million in the third quarter of 2021. Consolidated gross earnings increased to 40.6 percent of net sales compared to 40.0 percent of net sales in last year’s third quarter, due mainly to higher gross margins in our North American wholesale segment. Quarterly operating earnings were a record $14.2 million, more than double last year’s third-quarter operating earnings of $6.7 million. Quarterly net earnings were a record $10.8 million, or $1.12 per diluted share, up more than 100 percent from $5.1 million, or $0.52 per diluted share, last year.

North American Wholesale Segment
Quarterly net sales in our wholesale segment reached a record $81.6 million, up 63 percent compared to $50.2 million in the third quarter of 2021. While part of the increase was due to strong consumer demand and higher selling prices, last year’s third-quarter sales were abnormally low due to supply chain delays which caused some third-quarter orders to ship in the fourth quarter. Florsheim and Bogs posted the strongest results for the quarter, with gains of 82 percent and 52 percent, respectively, over last year, leading both brands to their third consecutive quarter of record sales. Stacy Adams and Nunn Bush also delivered sizeable increases of 68 percent and 50 percent, respectively, over last year.

This quarter our wholesale business experienced peak demand, and our inventory levels supported record shipments. Looking forward to the fourth quarter, we anticipate that our sales will fall short of 2021 due to last year’s shift in third-quarter sales to the fourth quarter, but overall, the second half of 2022 is expected to outpace the same period of 2021.

Wholesale gross earnings were 36.3 percent of net sales in the third quarter of 2022 compared to 34.6 percent of net sales last year. Gross margins improved as a result of higher selling prices and lower inbound freight costs, as freight rates on containers coming from China declined during the quarter.

Selling and administrative expenses were $16.7 million, or 21 percent of net sales, for the quarter, compared to $11.3 million, or 23 percent of net sales, last year. The increase was largely due to higher employee costs associated with our increased sales volumes. Additionally, last year’s third-quarter expenses were reduced by $1.9 million in government wage subsidies. Wholesale operating earnings rose to $12.9 million in the third quarter of 2022, up 114 percent from $6.0 million last year, due to higher sales and gross margins.

North American Retail Segment
Retail net sales were a third-quarter record of $7.1 million, up 13 percent compared to $6.3 million in the third quarter of 2021. The increase was primarily due to higher sales volumes across our major brands’ websites. Sales were also up for the quarter at our four domestic brick-and-mortar stores.

Retail gross earnings as a percent of net sales were 66.3 percent and 68.4 percent in the third quarters of 2022 and 2021, respectively. Selling and administrative expenses for the retail segment totaled $3.9 million for the quarter compared to $2.9 million last year. The increase was mainly due to higher e-commerce expenses, primarily outbound freight and advertising.

Retail operating earnings were $825,000 for the quarter versus $1.4 million last year. The decrease was primarily due to lower earnings from our e-commerce businesses, as higher sales were offset by higher selling and administrative expenses.

Other
The company’s other operations have historically included the wholesale and retail businesses of Florsheim Australia and Florsheim Europe. However, as previously disclosed, the company closed Florsheim Europe. As a result, the 2022 operating results of the “other” category reflect only that of Florsheim Australia.

Other net sales were $8.2 million, up 54 percent compared to $5.3 million in the third quarter of 2021, due to higher sales at Florsheim Australia. In local currency, Florsheim Australia’s net sales were up 71 percent for the quarter, due to higher sales in both its retail and wholesale businesses. Last year’s third quarter results were negatively impacted by COVID-19-related lockdowns which resulted in a large number of Florsheim Australia’s stores being closed for a majority of the quarter.

Other operating earnings recovered to $476,000 for the quarter from operating losses of $682,000 last year. The increase was due to the improved performance of our retail and online businesses in Australia.

“Continued demand for our footwear drove strong growth across our business lines, leading us to our fourth straight quarter of record sales,” stated Thomas W. Florsheim, Jr., Chairman and CEO. “The increased volume and improved gross margins also helped us achieve our highest-ever quarterly earnings. Florsheim Australia rebounded in the third quarter, contributing to our sales and earnings growth. We are proud of these achievements, particularly in this period of heightened macroeconomic uncertainty. As inflation continues and the pace of consumer spending changes, the near-term outlook for the overall retail environment remains unclear. We will remain focused on the things we can control, including investing in our business to ensure long-term sustainable and profitable growth.”

On November 1, 2022, the company’s Board of Directors declared a cash dividend of $0.24 per share to all shareholders of record on November 28, 2022, payable on January 3, 2023.

Photo courtesy Bogs