Weyco Group Inc. reported net sales for the third quarter of 2017 were $76.9 million, a decrease of 3 percent as compared to third quarter 2016 net sales of $79.1 million.
Earnings from operations were $7.8 million in both the third quarters of 2017 and 2016. Net earnings attributable to the company increased 7 percent to $4.9 million in the third quarter of 2017, up from $4.6 million in last year’s third quarter. Diluted earnings per share were 48 cents per share in the third quarter of 2017 and 44 cents per share in the third quarter of 2016.
Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $60.7 million in the third quarter of 2017, down 2 percent as compared to $62.2 million in the third quarter of 2016. Within the wholesale segment, net sales of the Stacy Adams and Nunn Bush brands were down 3 percent and 9 percent, respectively, for the quarter, due to lower department store sales. These brands, however, did see some increases in other trade channels. Bogs third quarter net sales were down 4 percent for the quarter, due to lower sales with outdoor retailers. Florsheim sales were up 9 percent for the quarter, due to higher sales to department stores and national shoe chains. Licensing revenues were $527,000 in the third quarter of 2017 and $525,000 in last year’s third quarter.
Gross earnings for the North American wholesale segment increased to 33.9 percent of net sales in the third quarter of 2017, from 32.2 percent in last year’s third quarter. Earnings from operations for the wholesale segment were $7.4 million in the third quarter of 2017, up 11 percent as compared to $6.7 million in the same period last year. The increase was primarily due to higher wholesale gross margins and lower selling and administrative expenses this quarter.
Net sales in the North American retail segment, which includes sales from the company’s Florsheim retail stores and its internet business in the United States, were $4.3 million in the third quarter of 2017, down 9 percent as compared to $4.7 million in 2016. Same store sales (which includes U.S. internet sales) were down 10 percent for the quarter due to decreased sales at both brick and mortar locations and on the company’s websites. The majority of our brick and mortar locations are in Florida and Texas, and sales this quarter were impacted by the recent hurricanes. Earnings from operations for the retail segment were $17,000 in the third quarter of 2017, as compared to $313,000 in the third quarter 2016. The decrease was mainly due to lower sales.
Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $11.9 million in the third quarter of 2017, down 3 percent as compared to $12.2 million in the third quarter of 2016. The decrease was due to lower net sales at both Florsheim Australia and Florsheim Europe. Florsheim Australia’s net sales, which accounts for the majority of other net sales, were down 2 percent for the quarter. In local currency, Florsheim Australia’s net sales were down 6 percent for the quarter, with lower sales in both its retail and wholesale businesses. Earnings from operations of Florsheim Australia and Florsheim Europe were $369,000 in the third quarter of 2017 and $731,000 in the same period last year. The decrease between years was primarily due to lower operating earnings in Florsheim Australia’s retail businesses.
In the first quarter of 2017, the company retrospectively adopted a new accounting rule that required the company to reclassify the non-service cost components of pension expense from selling and administrative expenses to other expense, net, in the Consolidated Condensed Statements of Earnings and Comprehensive Income (Unaudited). The decrease in other expense, net, this quarter was primarily due to a $316,000 decrease in the non-service cost components of pension expense. Pension expense decreased in 2017 as a result of freezing benefits under the pension plan, effective December 31, 2016.
“While the changing retail environment continues to impact our top-line sales growth, we are pleased to announce a bottom line earnings increase for the quarter,” stated Thomas W. Florsheim, Jr., the company’s chairman and CEO. “This earnings increase reflects our ongoing efforts to improve gross margins and control costs in our wholesale business.”
On October 26, 2017, the company’s Board of Directors declared a cash dividend of 22 cents per share to all shareholders of record on December 4, 2017, payable January 2, 2018.
