Weyco Group, Inc. (NASDAQ: WEYS) (“we,” “our,” “us” and the
“Company”) today announced financial results for the quarter ended
March 31, 2024.
First Quarter 2024
Consolidated net sales were $71.6 million, down
17% compared to record first-quarter sales of $86.3 million in
2023. Consolidated gross earnings increased to 44.7% of net sales
compared to 43.1% of net sales in last year’s first quarter, due to
higher gross margins in our North American wholesale segment.
Earnings from operations were $8.3 million, down 21% from record
first-quarter operating earnings of $10.4 million in 2023.
First-quarter 2024 net earnings were $6.7 million, or $0.69 per
diluted share, compared to record first-quarter net earnings of
$7.4 million, or $0.78 per diluted share, last year.
North American Wholesale Segment
Net sales in our wholesale segment were $56.2
million, down 20% compared to record sales of $69.9 million in the
first quarter of 2023. Our BOGS brand experienced the largest
decrease, with sales down 48% for the quarter, as retailers reduced
orders due to the current surplus of product in the outdoor
footwear market. Sales of the Florsheim, Stacy Adams, and Nunn Bush
brands were down 11%, 16%, and 13%, respectively, for the quarter,
due to reduced demand following record sales growth early last
year.
Wholesale gross earnings were 39.6% of net sales
compared to 38.2% of net sales last year. Gross margins improved as
a result of lower inventory costs, primarily inbound freight.
Wholesale selling and administrative expenses totaled $14.9 million
for the quarter compared to $17.9 million 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% in 2024 and 26% in
2023. Wholesale operating earnings totaled $7.4 million for the
quarter, down 16% from $8.8 million in 2023, primarily due to lower
sales.
North American Retail Segment
Net sales in our retail segment were a
first-quarter record of $9.8 million, up 10% over our previous
record of $8.9 million in the first quarter of 2023. The increase
was primarily due to higher sales on our BOGS and Florsheim
websites.
Retail gross earnings as a percent of net sales
were 65.3% and 66.3% in the first quarters of 2024 and 2023,
respectively. 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.
Other
Our other operations historically included our
retail and wholesale businesses in Australia, South Africa, and
Asia Pacific (collectively, “Florsheim Australia”). We ceased
operations in Asia in 2023, and are in the final stages of winding
down that 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% from $7.5 million in the first quarter of 2023.
In local currency, its net sales were down 24%, due mainly to lower
sales in Asia as a result of the closing of our 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’s gross earnings were 60.2%
of net sales for the quarter and 60.5% of net sales last year.
Florsheim Australia generated operating losses of $0.4 million for
the 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 / (Expense)
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 included interest earned on cash in
the U.S. and Canada while prior year included interest expense
incurred on outstanding debt balances during the period.
“Our wholesale volumes were down for the
quarter, compared to a record first quarter last year,” stated
Thomas W. Florsheim, Jr., Chairman and CEO. “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.”
On May 7, 2024, our Board of Directors declared
a cash dividend of $0.26 per share to all shareholders of record on
May 17, 2024, payable June 28, 2024. This represents an increase of
4% above the previous quarterly dividend rate of $0.25.
Conference Call Details:Weyco Group will host a
conference call on May 8, 2024, at 11:00 a.m. Eastern Time to
discuss the first quarter 2024 financial results in more detail. To
participate in the call, you will first need to pre-register
online. Pre-registration takes only a few minutes and you may
pre-register at any time, including up to and after the call start
time. To pre-register, please go to:
https://register.vevent.com/register/BI53041dfd66254c298904b65f23a18c67.
The pre-registration process will provide the
conference call phone number and a passcode required to enter the
call. A replay will be available for one year beginning about two
hours after the completion of the call at the following webcast
link: https://edge.media-server.com/mmc/p/mbeotfrt. The conference
call will also be available in the investor relations section of
Weyco Group’s website at www.weycogroup.com.
About Weyco Group:Weyco Group, Inc., designs and
markets quality and innovative footwear principally for men, but
also for women and children, under a portfolio of well-recognized
brand names including: Florsheim, Nunn Bush, Stacy Adams, BOGS,
Rafters, and Forsake. The Company’s products can be found in
leading footwear, department, and specialty stores, as well as on
e-commerce websites worldwide. Weyco Group also operates Florsheim
stores in the United States, Australia, and South Africa.
Forward-Looking StatementsThis press release
contains certain forward-looking statements within the meaning of
the “safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995. Various factors could cause our results to be
materially different from the results expressed or implied by such
forward-looking statements. Such factors include, but are not
limited to, the impact of inflation generally and, specifically,
increases in our costs for materials, labor and other manufacturing
inputs, a slow down or contraction in the overall U.S. or
Australian economies, our ability to successfully market and sell
our products in a highly competitive industry and in view of
changing and unpredictable consumer trends, our ability to
successfully procure our products from independent manufacturers on
a timely basis, consumer acceptance of products and other factors
affecting retail market conditions, increased interest rates, the
uncertain impact of the wars in Ukraine and Israel and the related
economic and other sanctions imposed by the U.S. and European
Union, and other factors detailed from time to time in our filings
made with the Securities and Exchange Commission, including our
annual report on Form 10-K filed on March 14, 2024, which are
incorporated herein by reference. We undertake no obligation to
update publicly any forward-looking statements, whether as a result
of new information, future events, or otherwise.
For more information, contact:
Judy AndersonVice President, Chief Financial
Officer and Secretary414-908-1833
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WEYCO GROUP, INC. AND
SUBSIDIARIESCONSOLIDATED CONDENSED STATEMENTS OF
EARNINGS AND COMPREHENSIVE
INCOME(UNAUDITED) |
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
71,558 |
|
|
$ |
86,294 |
|
Cost of sales |
|
39,551 |
|
|
|
49,132 |
|
Gross
earnings |
|
32,007 |
|
|
|
37,162 |
|
|
|
|
|
|
|
Selling and administrative
expenses |
|
23,756 |
|
|
|
26,776 |
|
Earnings from
operations |
|
8,251 |
|
|
|
10,386 |
|
|
|
|
|
|
|
Interest income |
|
905 |
|
|
|
139 |
|
Interest expense |
|
— |
|
|
|
(385 |
) |
Other expense, net |
|
(95 |
) |
|
|
(130 |
) |
|
|
|
|
|
|
Earnings before provision
for income taxes |
|
9,061 |
|
|
|
10,010 |
|
|
|
|
|
|
|
Provision for income taxes |
|
2,411 |
|
|
|
2,565 |
|
|
|
|
|
|
|
Net
earnings |
$ |
6,650 |
|
|
$ |
7,445 |
|
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
|
Basic |
|
9,436 |
|
|
|
9,483 |
|
Diluted |
|
9,580 |
|
|
|
9,545 |
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
Basic |
|
$ 0.70 |
|
|
|
$ 0.79 |
|
Diluted |
|
$ 0.69 |
|
|
|
$ 0.78 |
|
|
|
|
|
|
|
Cash dividends declared (per
share) |
|
$ 0.25 |
|
|
|
$ 0.24 |
|
|
|
|
|
|
|
Comprehensive
income |
$ |
5,631 |
|
|
$ |
7,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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WEYCO GROUP, INC. AND
SUBSIDIARIESCONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED) |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
2024 |
|
2023 |
|
(Dollars in thousands) |
ASSETS: |
|
|
|
|
|
Cash and cash equivalents |
$ |
78,348 |
|
|
$ |
69,312 |
|
Marketable securities, at
amortized cost |
|
— |
|
|
|
215 |
|
Accounts receivable, net |
|
42,098 |
|
|
|
39,275 |
|
Income tax receivable |
|
— |
|
|
|
245 |
|
Inventories |
|
61,960 |
|
|
|
74,890 |
|
Prepaid expenses and other
current assets |
|
3,641 |
|
|
|
6,172 |
|
Total current assets |
|
186,047 |
|
|
|
190,109 |
|
|
|
|
|
|
|
Marketable securities, at
amortized cost |
|
6,360 |
|
|
|
6,354 |
|
Deferred income tax benefits |
|
1,052 |
|
|
|
1,096 |
|
Property, plant and equipment,
net |
|
28,970 |
|
|
|
29,504 |
|
Operating lease right-of-use
assets |
|
11,153 |
|
|
|
12,520 |
|
Goodwill |
|
12,317 |
|
|
|
12,317 |
|
Trademarks |
|
33,168 |
|
|
|
33,168 |
|
Other assets |
|
24,204 |
|
|
|
24,274 |
|
Total assets |
$ |
303,271 |
|
|
$ |
309,342 |
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY: |
|
|
|
|
|
Accounts payable |
$ |
5,789 |
|
|
$ |
8,845 |
|
Dividend payable |
|
— |
|
|
|
2,352 |
|
Operating lease liabilities |
|
3,671 |
|
|
|
3,979 |
|
Accrued liabilities |
|
9,718 |
|
|
|
14,446 |
|
Accrued income tax payable |
|
1,950 |
|
|
|
— |
|
Total current liabilities |
|
21,128 |
|
|
|
29,622 |
|
|
|
|
|
|
|
Deferred income tax
liabilities |
|
11,765 |
|
|
|
11,819 |
|
Long-term pension
liability |
|
13,447 |
|
|
|
13,412 |
|
Operating lease
liabilities |
|
8,412 |
|
|
|
9,531 |
|
Other long-term
liabilities |
|
411 |
|
|
|
465 |
|
Total liabilities |
|
55,163 |
|
|
|
64,849 |
|
|
|
|
|
|
|
Common stock |
|
9,508 |
|
|
|
9,497 |
|
Capital in excess of par
value |
|
72,016 |
|
|
|
71,661 |
|
Reinvested earnings |
|
184,914 |
|
|
|
180,646 |
|
Accumulated other
comprehensive loss |
|
(18,330 |
) |
|
|
(17,311 |
) |
Total equity |
|
248,108 |
|
|
|
244,493 |
|
Total liabilities and equity |
$ |
303,271 |
|
|
$ |
309,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
WEYCO GROUP, INC. AND
SUBSIDIARIESCONSOLIDATED CONDENSED STATEMENTS OF
CASH FLOWS (UNAUDITED) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2024 |
|
2023 |
|
(Dollars in thousands) |
CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
|
|
Net earnings |
$ |
6,650 |
|
|
$ |
7,445 |
|
Adjustments to reconcile net earnings to net cash provided by
operating activities - |
|
|
|
|
|
Depreciation |
|
584 |
|
|
|
643 |
|
Amortization |
|
66 |
|
|
|
69 |
|
Bad debt expense (recovery) |
|
44 |
|
|
|
(13 |
) |
Deferred income taxes |
|
(35 |
) |
|
|
(23 |
) |
Net foreign currency transaction gains |
|
(9 |
) |
|
|
(48 |
) |
Share-based compensation expense |
|
367 |
|
|
|
338 |
|
Pension expense |
|
220 |
|
|
|
347 |
|
Loss on disposal of fixed assets |
|
18 |
|
|
|
— |
|
Increase in cash surrender value of life insurance |
|
(105 |
) |
|
|
(105 |
) |
Changes in operating assets and liabilities - |
|
|
|
|
|
Accounts receivable |
|
(2,865 |
) |
|
|
520 |
|
Inventories |
|
12,928 |
|
|
|
21,297 |
|
Prepaid expenses and other assets |
|
2,633 |
|
|
|
1,943 |
|
Accounts payable |
|
(3,053 |
) |
|
|
(8,411 |
) |
Accrued liabilities and other |
|
(5,301 |
) |
|
|
(3,208 |
) |
Accrued income taxes |
|
2,194 |
|
|
|
2,192 |
|
Net cash provided by operating activities |
|
14,336 |
|
|
|
22,986 |
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
|
|
Proceeds from maturities of marketable securities |
|
215 |
|
|
|
510 |
|
Purchases of property, plant and equipment |
|
(170 |
) |
|
|
(659 |
) |
Net cash provided by (used for) investing activities |
|
45 |
|
|
|
(149 |
) |
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
|
|
Cash dividends paid |
|
(4,664 |
) |
|
|
(4,561 |
) |
Shares purchased and retired |
|
(5 |
) |
|
|
(1,540 |
) |
Net proceeds from stock options exercised |
|
— |
|
|
|
16 |
|
Payment of contingent consideration |
|
— |
|
|
|
(500 |
) |
Proceeds from bank borrowings |
|
— |
|
|
|
29,018 |
|
Repayments of bank borrowings |
|
— |
|
|
|
(39,514 |
) |
Net cash used for financing activities |
|
(4,669 |
) |
|
|
(17,081 |
) |
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
(676 |
) |
|
|
(67 |
) |
|
|
|
|
|
|
Net increase in cash and cash equivalents |
$ |
9,036 |
|
|
$ |
5,689 |
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS at
beginning of year |
|
69,312 |
|
|
|
16,876 |
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS at
end of year |
$ |
78,348 |
|
|
$ |
22,565 |
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW
INFORMATION: |
|
|
|
|
|
Income taxes paid, net of refunds |
$ |
207 |
|
|
$ |
205 |
|
Interest paid |
$ |
— |
|
|
$ |
423 |
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