Weyco Group, Inc. posted a 17 percent decline in consolidated net sales in the first quarter, failing to comp against record sales in the year-ago Q1 period. Net sales in the 2024 Q1 period were $71.6 million for the period ended March 31, compared to net sales of $86.3 million in the 2023 Q1 period.

Consolidated gross margins increased to 44.7 percent of net sales in Q1, compared to 43.1 percent in last year’s first quarter, due to higher gross margins in the company’s North American wholesale segment.

Consolidated earnings from operations were $8.3 million, down 21 percent from record first-quarter operating earnings of $10.4 million in 2023.

First-quarter 2024 consolidated net earnings were $6.7 million, or 69 cents per diluted share, compared to record first-quarter net earnings of $7.4 million, or 78 cents per diluted share, in Q1 last year.

“Our wholesale volumes were down for the quarter, compared to a record first quarter last year,” stated Thomas W. Florsheim, Jr., chairman and CEO of Weyco Group, Inc. “Our results are reflective of broader industry headwinds, as retailers remain reluctant to place orders after struggling with high inventories last year. Despite these current challenges, our sell-throughs at wholesale remain strong, and our retail segment posted another record quarter, which is a testament to the strength of our brands across North America. Although we expect sales to remain soft through the second quarter, we are optimistic that demand will improve in the back half of the year.”

North American Wholesale Segment
Wholesale segment net sales were $56.2 million, down 20 percent year-over-year compared to record sales of $69.9 million in the first quarter of 2023. The Bogs brand reportedly experienced the largest decrease, with sales down 48 percent for the quarter, as retailers reduced orders due to the surplus of inventory in the outdoor footwear market.

Sales of the Florsheim, Stacy Adams and Nunn Bush brands were down 11 percent, 16 percent and 13 percent, respectively, for the quarter due to reduced demand following record sales growth early last year.

Wholesale gross margins were 39.6 percent of net sales in the first quarter, compared to 38.2 percent of net sales in Q1 last year. Gross margins reportedly improved due to lower inventory costs, primarily inbound freight.

Wholesale selling and administrative expenses totaled $14.9 million for the quarter compared to $17.9 million in Q1 last year. The decrease was primarily due to lower employee costs, including commission-based compensation. As a percent of net sales, wholesale selling and administrative expenses were 27 percent in 2024 and 26 percent in 2023.

Wholesale operating earnings totaled $7.4 million for the quarter, down 16 percent from $8.8 million in 2023, primarily due to lower sales.

North American Retail Segment
Retail segment net sales had a first-quarter record of $9.8 million, up 10 percent over the company’s previous record of $8.9 million in the first quarter of 2023. The increase was primarily due to higher sales on the Bogs and Florsheim websites.

Retail gross margins were down 100 basis points year-over-year to 65.3 percent of net sales in the first quarter.

Retail operating earnings were flat at $1.3 million in both 2024 and 2023. Higher retail sales were offset by increased selling and administrative expenses this year, primarily web freight.

Florsheim Australia Segment
Florsheim Australia was formerly part of the “Other” operations segment that historically included the company’s retail and wholesale businesses in Australia, South Africa and Asia Pacific, collectively referred to as “Florsheim Australia.” Weyco ceased operations in Asia in 2023 and is in the final stages of winding down the business. As a result, the 2024 operating results of the “Other” category primarily reflect that of Australia and South Africa.

Net sales of Florsheim Australia were $5.5 million, down 26 percent from $7.5 million in the first quarter of 2023. In local currency, net sales were down 24 percent, due mainly to lower sales in Asia due to the closing of its Asia operations and the mid-year 2023 loss of a sizeable wholesale customer in Australia. 

Retail sales in Australia were also down for the quarter due to the challenging retail environment.

Florsheim Australia gross margins were 60.2 percent of net sales for the quarter and 60.5 percent of net sales last year.

Florsheim Australia generated operating losses of $0.4 million for the 2024 Q1 period, down compared to operating earnings of $0.3 million in last year’s first quarter. The decrease was primarily due to lower sales.

Other Income | Expenses
Interest income totaled $0.9 million in the first quarter of 2024 compared to $0.1 million in last year’s first quarter. Interest expense was zero for the quarter compared to $0.4 million last year. This year it included interest earned on cash in the U.S. and Canada while the prior year included interest expense incurred on outstanding debt balances during the period.

On May 7, 2024, the company’s Board of Directors declared a cash dividend of 26 cents per share to all shareholders of record on May 17, 2024, payable June 28, 2024. This represents an increase of 4 percent above the previous quarterly dividend rate of 25 cents per share.

Image courtesy Bogs