World Footwear

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Weyco: net sales down by 35.7% in 2020

Mar 31, 2021 United States
Weyco: net sales down by 35.7% in 2020
The Milwaukee-based footwear group has announced financial results for the quarter and year ended on the 31st of December 2020. Net sales were down by 28.7% in the last quarter of the year. Accumulated loss for the year reached 35.7%
“We are pleased to report that, despite the challenging business environment brought on by COVID-19, Weyco Group returned to profitability in the fourth quarter”, stated Thomas W. Florsheim, Jr., the Company’s Chairman and CEO. “As we look ahead to 2021, we believe that at least the first half of the year will continue to be impacted by the pandemic, but with the rollout of vaccines, we are hoping to see an improved retail environment and consequently, higher sales, in the second half of the year. With our new leaner operations, coupled with our strong balance sheet, we believe we are well-positioned for growth and profitability as conditions improve", he concluded.

Fourth Quarter 2020

Net sales for the last quarter of the year totalled 62.0 million US dollars compared to fourth quarter 2019 net sales of 86.9 million US dollars, resulting in a decline of 28.7%. Earnings from operations totaled 7.9 million US dollars compared to 11.5 million US dollars in the fourth quarter of 2019 (-31.3%). Net earnings totaled 5.1 million US dollars compared to 8.8 million US dollars in last year’s fourth quarter (-42.0%). Diluted earnings per share were 0.52 US dollars per share versus 0.90 US dollars per share in the fourth quarter of 2019.

Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, reached 46.2 million US dollars compared to 68.8 million US dollars in the fourth quarter of 2019 (-32.8%). Earnings from operations for the wholesale segment totaled 5.6 million US dollars compared to 10.9 million US dollars in last year’s fourth quarter (-48.6%). Sales volumes were down across the group's three men’s legacy brands due to the slow retail environment resulting from the ongoing pandemic; however the BOGS outdoor brand increased by 5% for the quarter, as consumers continue to spend more time outdoors.

Net sales in the North American retail segment, which include sales from the company’s e-commerce businesses and brick and mortar stores in the United States, totaled 8.7 million US dollars compared to 9.1 million US dollars in last year’s fourth quarter (down by 4.4%). Retail earnings from operations totaled 2.7 million US dollars for the quarter, up from 1.5 million US dollars last year (an increase of 80%). Retail sales decreased due to the closing of three unprofitable stores in the third quarter of 2020, as well as reduced foot traffic in existing stores, as compared to last year, resulting from the pandemic. This decrease was offset by a 15% increase in e-commerce sales, due to consumers turning to online shopping in the COVID-19 environment. Retail operating earnings increased due to the benefit of closing unprofitable stores and higher operating earnings from Weyco's websites.

Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were 7.1 million US dollars compared to 9.0 million US dollars in the fourth quarter of 2019 (declining by 21.1%), and also decreased as a result of the pandemic. Collectively, Florsheim Australia and Florsheim Europe had a combined loss from operations totalling 393 000 US dollars compared to a loss from operations of 854 000 in last year’s fourth quarter (-54.0%).

Full Year 2020

Overall net sales for 2020 reached 195.4 million US dollars compared to 304.0 US dollars million in 2019 (decrease by 35.7%). Loss from operations totaled 7.6 million US dollars in 2020 compared to earnings from operations of 27.0 million US dollars in 2019 (fall of 72.0%). Adjusted earnings from operations were 4.3 million US dollars in 2020. Net loss totaled 8.5 million US dollars, or (0.87) US dollars per diluted share, in 2020 compared to net earnings of 20.9 million US dollars, or 2.10 US dollars per diluted share, in 2019 (a decline of 59.3%). Adjusted net earnings reached 3.2 million US dollars, or 0.32 US dollars per diluted share, in 2020.

North American Wholesale Segment

Net sales were 152.2 million in 2020 compared to 242.1 million US dollars in 2019, down by 37.1%. Net sales of the Stacy Adams, Florsheim, and Nunn Bush brands were down significantly as compared to last year due to the effects of the pandemic. BOGS net sales were down slightly for the year, though business improved as the year went on as consumers spent more time outside. Licensing revenues were 1.2 million US dollars in 2020 and 3.0 million US dollars in 2019, down by 60%, in line with reductions in licensees’ sales of branded products. Gross earnings as a percent of net sales were 35.5% in 2020 versus 36.6% in 2019. The decrease in gross margins was largely due to additional costs related to the tariff on certain footwear imported from China, and higher overseas freight costs. Earnings from operations were 975 000 US dollars in 2020 compared to 27.8 million US dollars in 2019. Adjusted earnings from operations were 5.8 million US dollars in 2020.

North American Retail Segment
Net sales were 21.5 million US dollars in 2020 and 25.2 million US dollars in 2019, declining by 15.0%. The decrease was due to fewer stores in 2020 as a result of the closure of unprofitable stores, and a significant decline in brick-and-mortar same store sales due to the pandemic. This decrease was partially offset by a 9% increase in e-commerce sales, due to consumers turning to online shopping in the COVID-19 environment. Loss from operations totaled 1.1 million US dollars in 2020 compared to earnings from operations of 2.8 million US dollars in 2019. Adjusted earnings from operations totaled 1.5 million US dollars for 2020.

Other

The company’s other businesses had combined net sales of 21.7 million US dollars in 2020 compared to 36.7 million US dollars in 2019. The decrease was due to lower net sales at both Florsheim Australia and Florsheim Europe, as a result of the pandemic. Collectively, Florsheim Australia and Florshiem Europe had a combined loss from operations totalling 7.5 million US dollars in 2020 compared to a loss from operations of 3.5 million US dollars last year. In late 2020, Weyco decided to close Florsheim Europe, which includes a small wholesale business and two retail stores. Total sales at Florsheim Europe were 2.6 million US dollars in 2020. The company incurred approximately 1.6 million US dollars of costs in 2020 related to the closing of Florsheim Europe; these costs are included in the non-GAAP adjustments noted below. Adjusted loss from operations for the company’s other operations was 3.1 million US dollars in 2020.

Image credits: Adeolu Eletu on Unsplash

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