Bogs Sales Grow 37 Percent in Third Quarter

Weyco Group Inc. said its Bogs footwear brand again set the pace for wholesale revenue growth in the third quarter ended Sept. 30.

Weyco, which also owns several brown shoe brands as well as the Florsheim retail chain, reported net sales for the third quarter ended Sept. 30, were $87.4 million, an increase of 5 percent from 2013 net sales of $83.1 million. Earnings from operations increased 5 percent to $9.0 million in the third quarter of 2014, compared to $8.6 million in 2013. Net earnings attributable to the company were $5.5 million in the third quarter of 2014, up 2 percent from $5.4 million in 2013.  Diluted earnings per share increased to $0.51 per share in the third quarter of 2014, from $0.50 per share in the third quarter of 2013.

Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $68.0 million for the third quarter of 2014, up 5 percent as compared to $64.8 million in 2013.  Within the wholesale segment, net sales of our BOGS brand increased by 37 percent for the quarter, driven by higher sales volumes across all major distribution channels.

“We are excited about the growth of our BOGS brand in both the U.S. and Canada, however, our legacy brands continue to face a tepid retail environment and challenges with a few key retailers,” stated Thomas W. Florsheim, Jr. the company’s Chairman and CEO. “We feel the business with our legacy brands has now stabilized and we anticipate rounding out the year with another strong quarter for BOGS.”

Stacy Adams net sales were up 10 percent for the quarter, with strong sales in the modern dress shoe category. Nunn Bush and Florsheim net sales were down 12 percent and 9 percent, respectively, for the quarter. The decline at Nunn Bush was primarily due to lower sales with department stores. Florsheim net sales were down due to lower sales volumes with department stores and independent retailers.

Wholesale gross earnings were 31.7 percent of net sales in the third quarter of 2014, compared to 32.6 percent in the third quarter of 2013. The decrease in gross margins was driven by the impact of significantly lower margins in our Canadian business, caused by the weaker Canadian dollar relative to the U.S. dollar in the third quarter of 2014, as compared to last year’s third quarter.  Earnings from operations for the wholesale segment were $7.4 million in the third quarter of 2014, up 5 percent as compared to $7.1 million in the same period last year. This increase was primarily due to higher net sales.

Net sales in the North American retail segment, which include sales from the company’s Florsheim retail stores and its internet business in the United States, were $5.4 million in the third quarter of 2014, up 2 percent as compared to $5.2 million in 2013. Same store sales were up 6 percent for the quarter. There were two fewer domestic retail stores during the third quarter of 2014 than there were in last year’s third quarter. Earnings from operations for the retail segment were $638,000 in the third quarter of 2014, up 25 percent as compared to $512,000 in 2013.  This increase was due to the benefit of closing underperforming stores and improved performance at both brick and mortar stores and the company’s U.S. internet business.

Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $14.0 million in the third quarter of 2014, up 7 percent as compared to $13.1 million in 2013.  The majority of other net sales were generated by Florsheim Australia.  Florsheim Australia’s net sales were up 9 percent for the quarter.

This increase was due to higher sales in both its retail businesses, where sales were up 4 percent (same store sales up 1 percent), and its wholesale businesses, where sales were up 18 percent. Florsheim Australia’s wholesale businesses were up this quarter, driven by a significant increase in the Asian market and a smaller increase in the Australian market. Earnings from operations of these businesses were $936,000 in the third quarter of 2014, down 6 percent as compared to $1.0 million in the same period last year. This decrease was primarily due to lower wholesale gross margins and higher retail selling and administrative expenses at Florsheim Australia.

On Nov. 3, 2014, the company’s Board of Directors declared a cash dividend of $0.19 per share to all shareholders of record on Dec. 9, 2014, payable Jan. 2, 2015.
.