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Weyco Reports First Quarter Sales and Earnings

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Weyco Group, Inc. (NASDAQ: WEYS) reported financial results for Q1 2021, with net sales of $46.9 million, down from $63.6 million in Q1 2020. Net earnings increased to $1.3 million, up from $1.2 million, with diluted earnings per share at $0.14 compared to $0.12 last year. The North American Wholesale Segment saw net sales of $33.4 million, a decrease from $52.7 million in the prior year, impacted by the pandemic. Conversely, BOGS brand sales rose 32%. The company declared a cash dividend of $0.24 per share and will hold a conference call on May 5, 2021.

Positive
  • Net earnings increased to $1.3 million from $1.2 million in Q1 2020.
  • Diluted earnings per share rose to $0.14 from $0.12 in the prior year.
  • Sales of the BOGS outdoor brand rose 32% in Q1 2021.
  • Gross margins improved to 34.5% of net sales from 31.8% in Q1 2020.
  • Net sales from Florsheim Australia grew by 39% in Q1 2021.
Negative
  • Net sales fell to $46.9 million from $63.6 million in Q1 2020.
  • North American Wholesale Segment sales dropped to $33.4 million from $52.7 million.
  • Earnings from operations decreased to $1.4 million from $2.8 million.

MILWAUKEE, May 04, 2021 (GLOBE NEWSWIRE) -- Weyco Group, Inc. (NASDAQ: WEYS) (the “Company”) today announced financial results for the quarter ended March 31, 2021.

First Quarter 2021
Net sales were $46.9 million compared to first quarter 2020 net sales of $63.6 million. Earnings from operations increased to $1.6 million from $1.3 million in the first quarter of 2020. Net earnings were $1.3 million compared to $1.2 million in last year’s first quarter. Diluted earnings per share were $0.14 per share versus $0.12 per share in the first quarter of 2020.

North American Wholesale Segment
Net sales were $33.4 million compared to $52.7 million in the first quarter of 2020. Last year’s first quarter included approximately two-and-a-half months of sales that occurred before the pandemic struck the U.S. In mid-March 2020 much of the country shut down, which resulted in a sharp drop in sales in the last few weeks of the quarter. First quarter 2021 sales continue to be impacted by the effects of the ongoing pandemic, resulting in lower demand for dress and dress-casual footwear. However, sales of the BOGS outdoor brand rose 32% in the first quarter of 2021, as consumers continue to spend more time outdoors during the pandemic.

Gross earnings were 34.5% of net sales compared to 31.8% of net sales in last year’s first quarter. Last year’s gross margins were negatively impacted by a 15% tariff on certain footwear imported from China beginning in September 2019; the tariff was later reduced to 7.5% in February 2020. Gross margins improved in the first quarter of 2021 because the Company sold through much of the higher-tariffed inventory during 2020. Selling and administrative expenses were $10.2 million, or 31% of net sales, compared to $14.0 million, or 27% of net sales, in last year’s first quarter. First quarter 2021 expenses were reduced by approximately $1.8 million due to government wage subsidies. Additionally, wages and advertising costs were down for the quarter as a result of the Company’s cost-cutting measures. Earnings from operations were $1.4 million compared with $2.8 million in the first quarter of 2020. The decrease was due to lower sales, partially offset by higher gross margins and lower selling and administrative expenses.

North American Retail Segment
Net sales were $5.6 million compared to $4.8 million in last year’s first quarter. Same store sales were up 32% for the quarter due to a 36% increase in e-commerce sales, mainly BOGS, offset by a 5% decline in brick-and-mortar same store sales. The Company had four fewer brick-and-mortar stores operating at March 31, 2021, as compared to March 31, 2020. Operating earnings were $756,000 compared to operating losses of $89,000 in last year’s first quarter. The improvement was due to the benefit of closing unprofitable stores and higher earnings from the Company’s e-commerce businesses.

Other
Other net sales, which include the wholesale and retail sales of Florsheim Australia and Florsheim Europe, were $7.9 million compared to $6.1 million in the first quarter of 2020. This increase was due to 39% sales growth at Florsheim Australia, as compared to the prior year’s first quarter, with sales up in both its wholesale and retail businesses. The stronger Australian dollar relative to the U.S. dollar also contributed to the increase, as Florsheim Australia’s net sales in local currency were up 19% for the quarter. Collectively, Florsheim Australia and Florsheim Europe had operating losses totaling $481,000 compared to operating losses of $1.3 million in the first quarter of 2020. The reduction in operating losses was due to improved performance at Florsheim Australia.

“As expected, sales of our legacy brands remained depressed in the first quarter as a result of the ongoing pandemic,” stated Thomas W. Florsheim, Jr., the Company’s Chairman and CEO. “However, we are seeing signs of improvement, as orders accelerated within our wholesale business late in the quarter. At retail our performance was strong due to the growth in e-commerce, and we are also seeing a resurgence in sales overseas, particularly at Florsheim Australia. We look forward to building on this momentum as we move throughout the year.”

On May 4, 2021, the Company’s Board of Directors declared a cash dividend of $0.24 per share to all shareholders of record on May 28, 2021, payable on June 30, 2021.

Conference Call Details:

Weyco Group will host a conference call on May 5, 2021, at 11:00 a.m. Eastern Time to discuss the first quarter 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: http://www.directeventreg.com/registration/event/4483678. 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/yw2xz7h4. A recording of 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, and Rafters. 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 and Australia, as well as in a variety of international markets.

Forward-Looking Statements
This 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 the results of Weyco Group to be materially different from any future results expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the Company’s ability to: (i) successfully market and sell its products in a highly competitive industry and in view of changing consumer trends, consumer acceptance of products and other factors affecting retail market conditions; (ii) procure its products from independent manufacturers; and (iii) other factors, including those detailed from time to time in Weyco Group’s filings made with the SEC. With respect to the COVID-19 pandemic, numerous factors will determine the extent and length of the impact on the Company, including the extent and duration of the pandemic and its impact on the global economy; actions taken by governments, such as stay-at-home and similar orders that, among other effects, require retail store closures or limit foot traffic; the financial health of the Company’s customers and business partners, including the effects of any bankruptcy proceedings by such parties; the performance/resiliency of the Company’s supply chain; and the health and welfare of the Company’s employees. Weyco Group undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

For more information, contact:

John Wittkowske
Senior Vice President and Chief Financial Officer
414-908-1880

WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
 
      
   Three Months Ended March 31,
    2021   2020 
   (In thousands, except per share amounts)
      
Net sales $46,900  $63,584 
Cost of sales  27,595   40,407 
Gross earnings  19,305   23,177 
      
Selling and administrative expenses  17,671   21,836 
Earnings from operations  1,634   1,341 
      
Interest income  131   149 
Interest expense  (7)  (51)
Other income, net  138   407 
      
Earnings before provision for income taxes  1,896   1,846 
      
Provision for income taxes  571   684 
      
Net earnings $1,325  $1,162 
      
Weighted average shares outstanding    
 Basic  9,680   9,781 
 Diluted  9,686   9,786 
      
Earnings per share    
 Basic $0.14  $0.12 
 Diluted $0.14  $0.12 
      
Cash dividends declared (per share) $0.24  $0.24 
      
      
Comprehensive income (loss) $1,365  $(1,258)
      


WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
    
    
 March 31,  December 31,
  2021   2020 
 (Dollars in thousands)
ASSETS:
Cash and cash equivalents$24,860  $32,476 
Investments, at fair value 20,011   - 
Marketable securities, at amortized cost 1,483   2,215 
Accounts receivable, net 32,317   34,631 
Income tax receivable 853   1,374 
Inventories 47,340   59,025 
Prepaid expenses and other current assets 3,951   4,610 
     Total current assets 130,815   134,331 
    
Marketable securities, at amortized cost 11,804   12,800 
Deferred income tax benefits 1,218   1,235 
Property, plant and equipment, net 30,196   30,759 
Operating lease right-of-use assets 10,538   9,613 
Goodwill 11,112   11,112 
Trademarks 32,868   32,868 
Other assets 24,164   24,001 
     Total assets$252,715  $256,719 
    
    
LIABILITIES AND EQUITY:
Accounts payable$6,605  $8,444 
Operating lease liabilities 4,048   4,245 
Accrued liabilities 10,640   11,656 
     Total current liabilities 21,293   24,345 
    
Deferred income tax liabilities 3,001   2,914 
Long-term pension liability 33,191   33,534 
Operating lease liabilities 8,565   7,734 
Other long-term liabilities 245   267 
     Total liabilities 66,295   68,794 
    
Common stock 9,735   9,797 
Capital in excess of par value 67,723   67,178 
Reinvested earnings 136,927   138,955 
Accumulated other comprehensive loss (27,965)  (28,005)
     Total equity 186,420   187,925 
     Total liabilities and equity$252,715  $256,719 
    

        

WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
      
 
   Three Months Ended March 31,
    2021   2020 
   (Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:   
 Net earnings$1,325  $1,162 
 Adjustments to reconcile net earnings to net cash   
  provided by operating activities -   
  Depreciation 623   733 
  Amortization 82   71 
  Bad debt expense 17   145 
  Deferred income taxes 39   360 
  Net foreign currency transaction gains (115)  (356)
  Share-based compensation expense 545   351 
  Pension expense -   111 
  Increase in cash surrender value of life insurance (150)  (135)
 Changes in operating assets and liabilities -   
  Accounts receivable 2,273   4,878 
  Inventories 11,700   18,704 
  Prepaid expenses and other assets 572   2,176 
  Accounts payable (1,839)  (8,477)
  Accrued liabilities and other (1,425)  (5,410)
  Accrued income taxes 522   680 
      Net cash provided by operating activities 14,169   14,993 
      
CASH FLOWS FROM INVESTING ACTIVITIES:   
 Proceeds from maturities of marketable securities 1,720   4,510 
 Purchases of investment securities (20,011)  - 
 Purchases of property, plant and equipment (73)  (1,797)
       Net cash (used for) provided by investing activities (18,364)  2,713 
      
CASH FLOWS FROM FINANCING ACTIVITIES:   
 Cash dividends paid (2,319)  (4,694)
 Shares purchased and retired (1,079)  (1,304)
 Proceeds from bank borrowings -   11,883 
 Repayments of bank borrowings -   (18,932)
       Net cash used for financing activities (3,398)  (13,047)
      
 Effect of exchange rate changes on cash and cash equivalents (23)  (277)
      
 Net (decrease) increase in cash and cash equivalents$(7,616) $4,382 
      
CASH AND CASH EQUIVALENTS at beginning of period 32,476   9,799 
      
CASH AND CASH EQUIVALENTS at end of period$24,860  $14,181 
      
SUPPLEMENTAL CASH FLOW INFORMATION:   
 Income taxes paid, net of refunds$24  $235 
 Interest paid$7  $51 
      


FAQ

What are Weyco Group's Q1 2021 financial results?

Weyco Group reported Q1 2021 net sales of $46.9 million, down from $63.6 million in Q1 2020, with net earnings of $1.3 million and diluted earnings per share of $0.14.

How did the pandemic affect Weyco Group's sales?

The ongoing pandemic negatively impacted sales, particularly in the North American Wholesale Segment, which saw a decline from $52.7 million to $33.4 million.

What were the sales trends for BOGS in Q1 2021?

In Q1 2021, BOGS sales increased by 32% as consumers spent more time outdoors.

What dividend did Weyco Group declare in May 2021?

Weyco Group declared a cash dividend of $0.24 per share, payable on June 30, 2021.

Weyco Group Inc

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