Weyco Group Inc. reported sales of Bogs grew 5 percent on a wholesale basis in the fourth quarter but were slightly down for the year.

Fourth Quarter 2020
Net sales for Weyco Group overall were $62.0 million compared to the fourth quarter 2019 net sales of $86.9 million. Earnings from operations totaled $7.9 million compared to $11.5 million in the fourth quarter of 2019. Net earnings totaled $5.1 million compared to $8.8 million in last year’s fourth quarter. Diluted earnings per share were $0.52 per share versus $0.90 per share in the fourth quarter of 2019.

Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $46.2 million compared to $68.8 million in the fourth quarter of 2019. Earnings from operations for the wholesale segment were $5.6 million compared to $10.9 million in last year’s fourth quarter. Sales volumes were down across our three men’s legacy brands (Florsheim, Nunn Bush, Stacy Adams) due to the slow retail environment resulting from the ongoing pandemic, but our Bogs outdoor brand increased 5 percent for the quarter, as consumers continue to spend more time outdoors. Our cost-cutting measures, mainly in employee and advertising costs, helped us to generate solid earnings in the fourth quarter despite the reduction in sales.

Net sales in the North American retail segment, which include sales from the company’s e-commerce businesses and brick & mortar stores in the United States, were $8.7 million compared to $9.1 million in last year’s fourth quarter. Retail earnings from operations totaled $2.7 million for the quarter, up from $1.5 million last year. Retail sales decreased due to the closing of three unprofitable stores in the third quarter of 2020, as well as reduced foot traffic in our existing stores, as compared to last year, resulting from the pandemic. This decrease was offset by a 15 percent increase in e-commerce sales, due to consumers turning to online shopping in the COVID-19 environment. Retail operating earnings increased due to the benefit of closing unprofitable stores and higher operating earnings from our websites.

Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $7.1 million compared to $9.0 million in the fourth quarter of 2019, and also decreased as a result of the pandemic. Collectively, Florsheim Australia and Florsheim Europe had a combined loss from operations totaling $393,000 compared to a loss from operations of $854,000 in last year’s fourth quarter.

Full Year 2020
Overall net sales for 2020 were $195.4 million compared to $304.0 million in 2019.

Loss from operations totaled $7.6 million in 2020 compared to earnings from operations of $27.0 million in 2019. Adjusted earnings from operations were $4.3 million in 2020.

Net loss totaled $8.5 million, or $(0.87) per diluted share, in 2020 compared to net earnings of $20.9 million, or $2.10 per diluted share, in 2019. Adjusted net earnings were $3.2 million, or $0.32 per diluted share, in 2020.

Amounts referred to as “adjusted” are Non-GAAP and exclude certain items that were recognized by the company primarily in the second and third quarters of 2020. These items are described more fully under “Non-GAAP Adjustments” below and “Reconciliations of Non-GAAP Financial Measures” accompanying this release.

Full Year 2020 Segment Results

North American Wholesale Segment
Net sales were $152.2 million in 2020 compared to $242.1 million in 2019. Net sales of the Stacy Adams, Florsheim, and Nunn Bush brands were down significantly as compared to last year due to the effects of the pandemic. Bogs net sales were down slightly for the year, though business improved as the year went on as consumers spent more time outside. Licensing revenues were $1.2 million in 2020 and $3.0 million in 2019, down in line with reductions in licensees’ sales of branded products. Gross earnings as a percent of net sales were 35.5 percent in 2020 versus 36.6 percent in 2019. The decrease in gross margins was largely due to additional costs related to the tariff on certain footwear imported from China, and higher overseas freight costs. Earnings from operations were $975,000 in 2020 compared to $27.8 million in 2019. Adjusted earnings from operations were $5.8 million in 2020.

North American Retail Segment
Net sales were $21.5 million in 2020 and $25.2 million in 2019. The decrease was due to fewer stores in 2020 as a result of the closure of unprofitable stores, and a significant decline in brick & mortar same-store sales due to the pandemic. This decrease was partially offset by a 9 percent increase in e-commerce sales, due to consumers turning to online shopping in the COVID-19 environment. Loss from operations totaled $1.1 million in 2020 compared to earnings from operations of $2.8 million in 2019. Adjusted earnings from operations totaled $1.5 million for 2020.

Other
The company’s other businesses had combined net sales of $21.7 million in 2020 compared to $36.7 million in 2019. The decrease was due to lower net sales at both Florsheim Australia and Florsheim Europe, as a result of the pandemic. Collectively, Florsheim Australia and Florsheim Europe had a combined loss from operations totaling $7.5 million in 2020 compared to a loss from operations of $3.5 million last year. In late 2020, we decided to close Florsheim Europe, which includes a small wholesale business and two retail stores. Total sales at Florsheim Europe were $2.6 million in 2020. The company incurred approximately $1.6 million of costs in 2020 related to the closing of Florsheim Europe; these costs are included in the non-GAAP adjustments noted below. Adjusted loss from operations for the company’s other operations was $3.1 million in 2020.

“We are pleased to report that, despite the challenging business environment brought on by COVID-19, Weyco Group returned to profitability in the fourth quarter,” stated Thomas W. Florsheim, Jr., the company’s Chairman and CEO. “We are encouraged by these results as they demonstrate that the strategic decisions and cost-cutting measures we took in 2020 enabled us to be profitable at diminished sales volume. As we look ahead to 2021, we believe that at least the first half of the year will continue to be impacted by the pandemic, but with the rollout of vaccines, we are hoping to see an improved retail environment and consequently, higher sales, in the second half of the year. With our new leaner operations, coupled with our strong balance sheet, we believe we are well-positioned for growth and profitability as conditions improve.”

On March 9, 2021, the company’s Board of Directors declared a quarterly cash dividend of $0.24 per share to all shareholders of record on March 19, 2021, payable March 31, 2021.

Photo courtesy Bogs