Weyco Group, Inc. reported consolidated net sales in the first quarter ended March 31 were a first-quarter record of $81.4 million for the period compared to $46.9 million in 2021.

Consolidated gross earnings were 35.8 percent of net sales for the quarter compared to 41.2 percent of net sales in last year’s first quarter. The decrease in gross margins was due to lower wholesale margins. Earnings from operations totaled $5.4 million compared to $1.6 million in the first quarter of 2021. Quarterly net earnings rose to $4.1 million, or $0.42 per diluted share, up from $1.3 million, or $0.14 per diluted share, last year.

Last year’s first-quarter results were impacted by the continuing effects of the pandemic and therefore comparisons of first quarter 2022 financial performance to 2021 may have limited use. Therefore, selected comparisons to 2019 (pre-COVID) are included as appropriate. Net sales for the first quarter of 2022 exceeded 2019 levels by 10 percent. The company’s operating earnings also improved, beating 2019 levels by 6 percent.

North American Wholesale Segment
Net sales in the wholesale segment were a first-quarter record of $67.1 million compared to $33.4 million in the first quarter of 2021, with sales up across all of the company’s brands. Last year’s first-quarter sales of its legacy brands (Florsheim, Stacy Adam, and Nunn Bush) were lower than normal because the pandemic impacted sales of dress and dress-casual footwear.

Sales of the Bogs outdoor brand, which were less affected by the pandemic, rose 72 percent for the quarter, with sales up across all major distribution channels. The wholesale segment experienced significant growth in the first quarter of 2022, with net sales surpassing 2019 levels by 13 percent. Not only did Florsheim and Bogs achieve record first-quarter sales, but sales of the Nunn Bush brand beat 2019 levels by 24 percent. Stacy Adams sales reached 80 percent of 2019 sales levels for the quarter.

Wholesale gross earnings were 30.0 percent of net sales compared to 34.5 percent of net sales in last year’s first quarter. The decrease in gross margins was primarily due to higher inbound freight costs as the company continued to pay premium rates during the quarter. Wholesale gross margins are expected to improve in mid- to late-2022 as the supply chain stabilizes and negotiated price increases with customers go into effect.

Selling and administrative expenses for the wholesale segment totaled $15.3 million for the quarter compared to $10.2 million in last year’s first quarter. The increase was largely due to higher employee costs as the company’s sales volumes have increased. Additionally, last year’s first-quarter expenses were reduced by approximately $1.8 million in government wage subsidies. As a percent of net sales, selling and administrative expenses were 23 percent in 2022 and 31 percent in 2021. Expenses were down relative to sales because many of the company’s costs do not vary directly with sales. Wholesale operating earnings rose to $4.8 million for the quarter from $1.4 million in 2021 due to higher sales partially offset by lower gross margins and higher selling and administrative expenses.

North American Retail Segment
Net sales in the retail segment were a first-quarter record of $7.9 million compared to $5.6 million in 2021. Same-store sales rose 39 percent, due to a 38 percent increase in e-commerce sales (with online sales up for all brands) and higher brick-and-mortar sales. Last year’s brick-and-mortar sales were down as a result of the pandemic. Retail net sales in the first quarter of 2022 surpassed the 2019 level by 41 percent. While most of this increase was driven by e-commerce growth, brick-and-mortar sales at its four remaining locations collectively exceeded 2019 levels.

Retail gross earnings, as a percent of net sales, were 65.9 percent and 65.3 percent in the first quarters of 2022 and 2021, respectively. Selling and administrative expenses for the retail segment were $4.4 million for the quarter compared to $2.9 million last year. The increase was primarily due to higher e-commerce expenses, primarily freight and advertising.

Retail operating earnings were $828,000 for the quarter compared to $756,000 last year. This increase was primarily due to improved performance at active brick-and-mortar locations. Earnings from our e-commerce businesses were down slightly for the quarter, as increased sales were offset by higher expenses.

Other
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 this business. As a result, 2022 operating results of the “other” category reflect only that of Florsheim Australia.

Other net sales for the first quarter of 2022 totaled $6.4 million compared to $7.9 million in 2021. The decrease was due to the closing of Florsheim Europe and lower sales at Florsheim Australia. Florsheim Australia’s net sales fell eight percent for the quarter, with sales down in its wholesale and retail businesses. The weakening of the Australian dollar relative to the U.S. dollar also contributed to the decrease, as Florsheim Australia’s net sales in local currency were only down 2 percent for the quarter. Retail sales in Australia, which account for a majority of Florsheim Australia’s sales, were up 7 percent for the quarter in local currency, but these results were offset by lower sales in Asia due to additional lockdowns imposed in Hong Kong during the quarter. Florsheim Australia’s net sales for the first quarter of 2022 reached 89 percent of 2019 levels.

Other operating losses totaled $243,000 for the quarter versus operating losses of $481,000 last year. The improvement between periods was primarily due to the shedding of losses at Florsheim Europe.

“Our sales continued to surge during the first quarter of 2022, hitting record levels, fueled by strong demand in our North American wholesale and retail segments,” stated Thomas W. Florsheim, Jr., chairman and CEO. “We received a large number of containers during the quarter which enabled us to fulfill much of the increased demand, despite supply chain delays. While the supply chain shows indications of improving as inflows of product into the U.S. are increasing, we still anticipate continued headwinds in the near to medium term. Our wholesale backlog currently remains very strong, and we look forward to carrying on this positive momentum as we move throughout the year.”

On May 3, 2022, the company’s Board of Directors declared a cash dividend of $0.24 per share to all shareholders of record on May 27, 2022, payable on June 30, 2022.

Photo courtesy Weyco Group/Bogs