Weyco Group, Inc. reported that net sales were $16.7 million for the second quarter ended June 30, down approximately 72 percent compared to $60.5 million in the year-ago quarter. Operating losses totaled $13.0 million for the quarter, down from operating earnings of $1.9 million in the second quarter of 2019. The company’s net loss totaled $8.9 million for the quarter, compared to net earnings of $1.5 million in last year’s second quarter. Diluted loss per share was 91 cents in Q2, compared to diluted earnings per share of 15 cents in Q2 last year.
COVID-19 significantly impacted the company’s second-quarter results. The company said that a majority of retailers, including its retail stores, were closed for a majority of the quarter due to government orders, and business recovery has been slow. As a result, the company experienced significant sales volume losses during the quarter which led to substantially lower second-quarter earnings.
Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $9.3 million in the second quarter of 2020 compared to $46.1 million in the second quarter of 2019. Net sales across all of the company’s brands were down significantly in all major categories as a result of retail shutdowns due to COVID-19. Licensing revenues declined to $141,000 in the second quarter of 2020 from $636,000 in last year’s second quarter in line with reductions in licensees’ sales of branded products.
Gross earnings for the North American wholesale segment were 34.7 percent of net sales in the second quarter of 2020 compared to 35.1 percent of net sales in last year’s second quarter. The wholesale segment had operating losses totaling $10.2 million for the quarter compared to operating earnings of $2.2 million in last year’s second quarter. The losses in Q2, included the write-off of approximately $3.3 million in receivables as a result of the J.C. Penney bankruptcy filing in May 2020, offset by $1.4 million of income from the U.S. and Canada government wage subsidies.
Net sales in the North American retail segment, which include sales from the company’s Florsheim retail stores and its e-commerce businesses in the U.S., were $3.6 million in the second quarter versus $5.4 million in the second quarter of 2019. Same-store sales (which include U.S. e-commerce sales) were down 31 percent for the quarter due to retail store closures partially offset by higher sales on the company’s website. The retail segment had operating losses totaling $856,000 for the quarter, down from operating earnings of $401,000 in last year’s second quarter due to larger operating losses at brick & mortar stores.
Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $3.7 million in the second quarter of 2020, down from $9.0 million in the second quarter of 2019. The decrease was due to lower net sales at both Florsheim Australia and Florsheim Europe resulting from retail shutdowns. Collectively, Florsheim Australia and Florsheim Europe had operating losses totaling $2.0 million for the quarter, compared to operating losses of $749,000 in the second quarter of 2019. The losses this quarter included the write-down of approximately $1.0 million of obsolete inventory at Florsheim Asia and $1.3 million of income from rent and wage subsidies recognized during the period.
“Cost management and liquidity remain top priorities of the company during this challenging time,” stated Thomas W. Florsheim, Jr., Chairman and CEO. “We are taking measures to right-size our cost structure in light of decreased demand. Our balance sheet and liquidity remain strong which we believe affords us the ability to withstand the economic effects of the current pandemic situation.”
On August 4, 2020, the company’s Board of Directors declared a cash dividend of 24 cents per share to all shareholders of record on August 28, 2020, payable September 30, 2020.
