Weyco Group, Inc. reported wholesale sales of Bogs were down 5 percent for the third quarter, mainly with outdoor and online retailers.
Net sales for the third quarter of 2018 were $78.4 million, an increase of 2 percent compared to third quarter 2017 net sales of $76.9 million. Earnings from operations increased 3 percent to $8.0 million in the third quarter of 2018, from $7.8 million in the third quarter of 2017.
Net earnings attributable to the company rose 27 percent to $6.3 million in the third quarter of 2018, up from $4.9 million in last year’s third quarter. Net earnings were positively impacted by the lower U.S. federal tax rate this year. Diluted earnings per share were 60 cents per share in the third quarter of 2018 and 48 cents per share in the third quarter of 2017.
Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $63.2 million in the third quarter of 2018, up 4 percent compared to $60.7 million in the third quarter of 2017.
Among other brands within the wholesale segment other than Bogs, net sales of the Stacy Adams brand were up 17 percent for the quarter, primarily due to higher sales to department stores and national shoe chains. Florsheim net sales were up 8 percent, due to sales volume increases across the majority of distribution channels. Net sales of the Nunn Bush brand were flat for the quarter. Licensing revenues were approximately $530,000 in both the third quarters of 2018 and 2017.
Gross earnings for the North American wholesale segment increased to 34.4 percent of net sales in the third quarter of 2018, from 33.9 percent of net sales in last year’s third quarter. Earnings from operations for the wholesale segment were $7.6 million in the third quarter of 2018, up 3 percent compared to $7.4 million in the same period last year. The increase was primarily due to higher sales and gross margins.
Net sales in the North American retail segment, which includes sales from the company’s Florsheim retail stores and its internet businesses in the United States, were $4.9 million in the third quarter of 2018, up 15 percent compared to $4.3 million in the third quarter of 2017. Same store sales (which includes U.S. internet sales) were up 20 percent for the quarter, due mainly to increased sales on the company’s websites. Driven by higher online sales, retail earnings from operations rose to $428,000 in the third quarter of 2018, from $17,000 in the third quarter of 2017.
Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $10.3 million in the third quarter of 2018, down 14 percent compared to $11.9 million in the third quarter of 2017. The decrease was primarily due to a 16 percent reduction in net sales at Florsheim Australia. In local currency, Florsheim Australia’s net sales were down 9 percent for the quarter, with sales down in both its wholesale and retail businesses. The weaker Australian dollar relative to the U.S. dollar also contributed to the decrease in Florsheim Australia’s net sales this year. Earnings from operations of Florsheim Australia and Florsheim Europe were $8,000 in the third quarter of 2018, compared to $369,000 in the same period last year. The decline between years was primarily due to lower sales at Florsheim Australia.
During the third quarter, David Venner, director of Seraneuse Pty Ltd, the minority interest shareholder of Florsheim Australia Pty Ltd, provided notice and tendered to the company his shares, which represented a 45 percent equity interest in Florsheim Australia, in accordance with the Shareholders Agreement dated January 23, 2009. The Shareholders Agreement allowed him to tender the shares, at his discretion, anytime on or after January 23, 2014. Accordingly, the company purchased the minority interest in Florsheim Australia for $3.7 million on August 30, 2018, and the company now owns 100 percent of Florsheim Australia.
“We are pleased with the results of our North American businesses this quarter,” stated Thomas W. Florsheim, Jr., the company’s chairman and CEO. “Not only did our wholesale segment post gains in both sales and operating earnings, but our websites had a particularly strong quarter, boosting our overall operating results for the period. Overseas our businesses continue to struggle in a tepid retail environment. As we look ahead to the fourth quarter, our focus continues to be on growing our core brands, as well as improving the profitability of our international businesses.”
