Weyco Group, Inc. reported that third-quarter net sales fell 13 percent to $84.2 million, compared to record third-quarter sales of $97.0 million in 2022.

Consolidated gross margin increased 240 basis points to 43.0 percent of net sales compared to 40.6 percent of net sales in last year’s third quarter, said to be due mainly to higher gross margins in the company’s North American wholesale segment.

Quarterly earnings from operations were $12.4 million, down 12 percent compared to record operating earnings of $14.2 million in 2022.

Quarterly net earnings totaled $9.3 million, or 98 cents per diluted share, in Q3, compared to net earnings of $10.8 million, or $1.12 per diluted share, in Q3 last year.

North American Wholesale Segment
Net sales in the company’s wholesale segment were down 15 percent to $69.5 million in Q3, compared to sales of $81.6 million in the third quarter of 2022. The decrease was said to be primarily due to a 42 percent decline in Bogs sales year-over-year, compared to record sales for the brand last year. The company said that retailers reduced orders due to the current saturation of product in the outdoor footwear market, and due to the mild start to fall.

  • Florsheim net sales were down 7 percent, compared to record sales for the brand in last year’s third quarter.
  • Sales of the Nunn Bush brand were up 11 percent, with the increase reportedly driven in part by incremental sales in the casual and hybrid categories, and new programs with a few large retailers. Stacy Adams’ sales were down 1 percent.

Wholesale gross margin was 38.6 percent of net sales in the third quarter, compared to 36.3 percent of net sales last year. Gross margins reportedly improved as a result of lower inventory costs compared to last year, primarily related to inbound freight costs.

Selling and administrative expenses (SG&A) for the wholesale segment were $15.6 million for the quarter, compared to $16.7 million in Q3 last year. The decrease was said to be primarily due to lower employee costs, mainly commission-based compensation. As a percent of net sales, SG&A expenses were 22 percent and 21 percent of net sales in the third quarters of 2023 and 2022, respectively.

Wholesale operating earnings totaled $11.3 million for the quarter, down 13 percent from $12.9 million last year, due primarily to lower sales.

The quarter was described by the company in a release as “the second most profitable third quarter in terms of wholesale operating earnings, second only to last year.”

North American Retail Segment
Retail net sales were a third-quarter record of $7.6 million, up 6 percent over the previous record of $7.1 million in 2022. The increase was said to be due to higher sales across all the company’s domestic e-commerce websites, with the largest increases at Bogs and Florsheim.

Retail gross earnings as a percent of net sales were 65.4 percent and 66.3 percent in the third quarters of 2023 and 2022, respectively.

Selling and administrative expenses for the retail segment totaled $4.0 million, or 53 percent of net sales, for the quarter compared to $3.9 million, or 55 percent of net sales, in Q3 last year.

Third-quarter retail operating earnings rose to $926,000, up 12 percent compared to $825,000 last year, due mainly to the increase in web sales.

Other Operations
Other operations consist of the company’s retail and wholesale businesses in Australia, South Africa, and Asia Pacific (collectively, Florsheim Australia).

Net sales of Florsheim Australia totaled $7.1 million, down 14 percent year-over-year compared to $8.2 million in the third quarter of 2022. In local currency, net sales were down 10 percent, primarily in the wholesale businesses.

Florsheim Australia’s gross margin was 61.6 percent of net sales in Q3, compared to 61.4 percent of net sales in last year’s third quarter.

Operating earnings were $256,000 for the quarter versus $476,000 last year. The decrease was said to be primarily due to lower earnings in Australia’s wholesale businesses, as a result of lower sales.

“Our wholesale volumes were down for the quarter, as many of our retail partners worked to pare back higher levels of inventory,” stated Thomas W. Florsheim, Jr., chairman and CEO of Weyco. “Though sales declined, we delivered healthy operating earnings for the quarter relative to sales, as efforts to improve gross margins and control costs have continued to bolster our profitability. At retail our e-commerce businesses continued to perform well, signaling the strength of our major brands in the U.S. We paid off our debt in the quarter and our cash flows currently remain strong. Our strong financial position enables us to withstand changes in the retail environment while also giving us the flexibility to allocate capital to support our future growth initiatives.”

On November 7, 2023, Weyco’s Board of Directors declared a cash dividend of 25 cents per share to all shareholders of record on November 27, 2023, payable on January 2, 2024.

Photo courtesy Bogs