Weyco Group, Inc.’s earnings improved in the second quarter ended June 30 as sales were up 29 percent. Bogs increased 35 percent to represent record second-quarter sales.
Second Quarter 2022
Consolidated net sales were a second-quarter record of $74.4 million, up 29 percent compared to $57.6 million in the second quarter of 2021. Consolidated gross earnings were 40.0 percent of net sales compared to 39.4 percent of net sales in last year’s second quarter, with gross margins up in both our North American wholesale and retail segments. Earnings from operations rose 25 percent to $5.7 million, from $4.5 million in the second quarter of 2021. Quarterly net earnings rose to a second-quarter record of $4.5 million, or $0.47 per diluted share, from $3.8 million, or $0.39 per diluted share, last year.
North American Wholesale Segment
Net sales in our wholesale segment were a second-quarter record of $59.0 million, up 41 percent compared to $41.9 million in the second quarter of 2021. Demand fueled the growth in our wholesale segment, with all of its brands posting sales gains over last year. Net sales of the Florsheim and Stacy Adams brands each rose 47 percent for the quarter, while sales of the Nunn Bush and Bogs brands increased 25 percent and 35 percent, respectively, for the quarter. Florsheim and Bogs achieved record second-quarter sales, on top of record first-quarter sales for the two brands.
Wholesale gross earnings were 33.7 percent of net sales in the second quarter of 2022 compared to 32.4 percent of net sales last year. Gross margins improved as Spring 2022 price increases took effect, and due to lower inbound freight costs, overall demand for container space from China eased during the quarter.
Selling and administrative expenses were $15.7 million, or 27 percent of net sales, for the quarter, compared to $10.9 million, or 26 percent of net sales, last year. The increase was largely due to higher employee costs associated with the company’s increased sales volumes. Last year’s second quarter expenses were also reduced by $1.8 million in government wage subsidies. Wholesale operating earnings rose to $4.2 million in the second quarter of 2022, up 58 percent from $2.7 million last year, due mainly to higher sales volumes and gross margins.
North American Retail Segment
Net sales in the retail segment were a second-quarter record of $7.4 million, up 20 percent compared to $6.2 million in the second quarter of 2021. The increase was primarily due to higher sales volumes across all its e-commerce websites. Its e-commerce businesses continue to reflect the strength of its brands.
Retail gross earnings as a percent of net sales were 67.4 percent and 65.6 percent in the second quarters of 2022 and 2021, respectively. Retail gross margins benefited from higher selling prices and lower inbound freight costs this year. Selling and administrative expenses for the retail segment totaled $3.9 million for the quarter compared to $2.9 million last year. The increase was due to higher e-commerce expenses, primarily outbound freight and advertising.
Retail operating earnings were $1.1 million for the quarter, down 5 percent compared to $1.2 million last year. The decrease was primarily due to lower earnings from our e-commerce businesses, as higher sales were offset by higher selling and administrative expenses.
The company’s other operations have historically included the wholesale and retail businesses of Florsheim Australia and Florsheim Europe; however, as previously disclosed, the company closed Florsheim Europe and is in the final stages of winding down the business. As a result, the 2022 operating results of the “other” category reflect that of Florsheim Australia.
Other net sales for the second quarter of 2022 were $8.0 million, down 16 percent compared to $9.5 million in the second quarter of 2021. The decrease was largely due to the closing of Florsheim Europe, but also due to a 4 percent decline in net sales at Florsheim Australia. The weakening of the Australian dollar relative to the U.S. dollar led to this decrease, as Florsheim Australia’s net sales in local currency were up 4 percent for the quarter, due to higher sales in its retail businesses partially offset by lower sales in its wholesale businesses.
Other operating earnings were $365,000 for the quarter versus $718,000 last year. This decrease was primarily due to lower operating earnings in Australia’s wholesale division.
“The second quarter marked our third consecutive quarter of record sales, and we also posted our highest ever net earnings for the period,” stated Thomas W. Florsheim, Jr., Chairman and CEO. “These results reflect the strong consumer demand we’ve experienced over the past several months. Gross margins also improved during the quarter as price increases took effect and inbound freight costs moderated. We saw strong quarter and first-half results and continue to work diligently to control supply chain costs and build inventory levels. While inflation and the overstock of certain categories of consumer goods have recently dampened retail demand in the U.S., sell-through data for our footwear remains strong and backlogs continue to exceed last year by a healthy margin. Although we believe the pace of our revenue growth could slow down in the back half of 2022, we are optimistic that our overall positive trend will continue.”
On August 2, 2022, the company’s Board of Directors declared a cash dividend of $0.24 per share to all shareholders of record on August 26, 2022, payable on September 30, 2022.
Photo courtesy Bogs