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Weyco with mixed quarter results

Aug 9, 2019 United States
Weyco with mixed quarter results
The Wilwaukee-based group announced financial results for the quarter ended on the 30th of June 2019. Net sales for the period down by 1%
"Our North American businesses had another good quarter, driven by strong performance of our Florsheim and BOGS brands at wholesale and on our websites", stated Chairman and CEO Thomas W. Florsheim, Jr., adding: "The growth in these segments was offset by losses in our international businesses due to the soft retail environment overseas. As we move into the second half of the year, we remain focused on growing our brands domestically, as well as improving the profitability of our international businesses. Relating to the proposed tariffs, we intend to try to mitigate the overall impact of these cost increases through a combination of wholesale price increases and cost reductions from our suppliers".


Second Quarter Results

Net sales for the second quarter of the year totalled 60.5 million US dollars, down by 1% compared to second quarter of 2018 (60.9 million US dollars). Net earnings attributable to the company totalled 1.5 million US dollars for the quarter, down by 7% compared to 1.6 million US dollars in last year's second quarter.

Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, reached 46.1 million US dollars for the second quarter of 2019, up by 1% (45.6 million US dollars in the second quarter of 2018). Within the wholesale segment, BOGS and Florsheim second quarter net sales rose by 48% and by 14%, respectively, due to sales volume increases across most major distribution channels. These sales increases were offset by lower sales of the Nunn Bush and Stacy Adams brands (declines of 20% and 6%, respectively). Licensing revenues totalled 636 000 US dollars in the second quarter of 2019 (472 000 US dollars in similar period last year).

Net sales in the North American retail segment, which include sales from the company's Florsheim retail stores and its e-commerce businesses in the United States, totalled 5.4 million US dollars in the second quarter of 2019, up by 17% compared to 4.6 million US dollars in the second quarter of 2018.  Same store sales (which include US e-commerce sales) were up by 14% for the quarter due to increased sales on the company's websites. Retail earnings from operations rose to 401 000 US dollars this quarter, from 222 000 in last year's second quarter, mainly driven to higher online sales volumes.

Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were 9.0 million US dollars in the second quarter of 2019, down by 15% compared to 10.6 million US dollars in the second quarter of 2018. This decrease was primarily due to a 10% decline in net sales at Florsheim Australia, caused mainly by the translation of the weaker Australian currency into US dollars.  Florsheim Australia's net sales in local currency were down by 3% for the quarter, with lower sales in both its retail and wholesale businesses. Collectively, Florsheim Australia and Florsheim Europe had operating losses totalling 749 000 US dollars in the second quarter of 2019, compared to operating losses of 23 000 US dollars in the second quarter of 2018. The decline between years was primarily due to lower sales, lower overall gross margins, and higher operating costs at Florsheim Australia.

Impact of the US-China trade war

Following the announcement made on the 1st of August 2019 about the additional 10% tariff on certain categories of consumer goods exported from China, including footwear and considering that the company sources a significant portion of its footwear from China, Weyco is expecting this to increase the overall cost of its footwear. At the time of the announcement of the second quarter results, the expected impact of the tariffs on the company's gross margins, results of operations and overall financial statements is still unknown. 

FOR THE LATEST ON THE US-CHINA TRADE WAR FOLLOW THIS LINK.

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