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Weyco Reports Second Quarter Sales and Earnings

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WEYS: Weyco Group, Inc. Announces Second Quarter 2023 Financial Results, Declares Cash Dividend - Consolidated net sales down 10% to $67.0 million, but gross earnings increased to 43.3% of net sales; Earnings from operations rose 18% to $6.7 million; Net earnings a record $4.9 million, up 8% over previous year. Declares cash dividend of $0.25 per share.
Positive
  • Consolidated gross earnings increased to 43.3% of net sales; Earnings from operations rose 18% to $6.7 million; Net earnings a second-quarter record of $4.9 million, or $0.50 per diluted share, up 8% over previous year; Retail segment net sales a second-quarter record of $7.6 million, up 3% compared to previous year.
  • Cash dividend declared of $0.25 per share to all shareholders of record on August 25, 2023, payable September 29, 2023.
Negative
  • Consolidated net sales down 10% compared to record second-quarter sales of $74.4 million in 2022; Net sales in wholesale segment down 13% compared to record sales of $59.0 million in the second quarter of 2022; Net sales of Florsheim Australia totaled $7.9 million, down slightly compared to $8.0 million in the second quarter of 2022.

MILWAUKEE, Aug. 01, 2023 (GLOBE NEWSWIRE) -- Weyco Group, Inc. (NASDAQ: WEYS) (“we,” “our,” “us” and the “Company”) today announced financial results for the quarter ended June 30, 2023.

Second Quarter 2023
Consolidated net sales were $67.0 million, down 10% compared to record second-quarter sales of $74.4 million in 2022. Consolidated gross earnings increased to 43.3% of net sales compared to 40.0% of net sales in last year’s second quarter, due mainly to higher gross margins in our North American wholesale segment. Earnings from operations rose 18% to $6.7 million, from $5.7 million in the second quarter of 2022. Net earnings were a second-quarter record of $4.9 million, or $0.50 per diluted share, up 8% over our previous record of $4.5 million, or $0.47 per diluted share, last year.

North American Wholesale Segment

Net sales in our wholesale segment were $51.5 million, down 13% compared to record sales of $59.0 million in the second quarter of 2022. Sales were lower across all our major brands due to reduced demand in 2023 following record growth in 2022. Net sales of the Stacy Adams, Florsheim, BOGS and Nunn Bush brands declined 17%, 11%, 35%, and 1%, respectively, for the quarter.

Wholesale gross earnings were 37.0% of net sales in the second quarter of 2023 compared to 33.7% of net sales last year. Gross margins improved as a result of selling price increases implemented in 2022 to address higher costs. Wholesale selling and administrative expenses totaled $13.7 million for the quarter, compared to $15.7 million last year, which constituted 27% of net sales in both periods. Wholesale operating earnings rose to $5.4 million for the quarter, up 28% compared to $4.2 million last year.

North American Retail Segment

Net sales in our retail segment were a second-quarter record of $7.6 million, up 3% compared to our previous record of $7.4 million in 2022. The increase was primarily due to higher sales volumes across all our e-commerce websites.

Retail gross earnings as a percent of net sales were 66.2% and 67.4% in the second quarters of 2023 and 2022, respectively. Selling and administrative expenses for the retail segment totaled $4.0 million for the quarter compared to $3.9 million last year. As a percent of net sales, retail selling and administrative expenses were 52% in both 2023 and 2022. Retail operating earnings were $1.1 million in both the second quarters of 2023 and 2022.

Other

Our other operations consist of our retail and wholesale businesses in Australia, South Africa, and Asia Pacific (collectively, “Florsheim Australia”). Net sales of Florsheim Australia totaled $7.9 million, down slightly compared to $8.0 million in the second quarter of 2022. In local currency, Florsheim Australia’s net sales were up 7% for the quarter, with sales up in both its retail and wholesale businesses. The decrease in sales in U.S. dollars was due to the weakening of the Australian dollar relative to the U.S. dollar compared to last year.

Florsheim Australia’s gross earnings were 62.4% of net sales compared to 61.3% of net sales in last year’s second quarter. Its operating earnings were $276,000 for the quarter versus $365,000 last year. This decrease was primarily due to lower operating earnings in Asia.

“Sales eased during the second quarter, after 2022 and the first quarter of 2023 exhibited record-breaking growth,” stated Thomas W. Florsheim, Jr., Chairman and CEO. “Our results reflect what is happening in the larger retail environment, as retailers are well-stocked with inventory. Despite the reduction in sales, we achieved record bottom-line earnings for the quarter, as efforts to improve gross margins and contain selling and administrative expenses continued to pay off. As we move into the second half of the year, we face headwinds going up against last year’s record third and fourth quarter results, which were lifted by pipeline fill and strong consumer demand. We remain focused on investing in and developing our core brands for success over the long-run.”

On August 1, 2023, our Board of Directors declared a cash dividend of $0.25 per share to all shareholders of record on August 25, 2023, payable September 29, 2023.  

Conference Call Details:
Weyco Group will host a conference call on August 2, 2023, at 11:00 a.m. Eastern Time to discuss the second 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: https://register.vevent.com/register/BI726a74a9d3c34a38be79e77125b402ff. 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/4mykyd7u. 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 and Australia, as well as in certain other 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 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 war in Ukraine 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 13, 2023, 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 Anderson
Vice President, Chief Financial Officer and Secretary
414-908-1833

WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
 
         
  Three Months Ended June 30,  Six Months Ended June 30,
   2023   2022   2023   2022 
  (In thousands, except per share amounts)
         
Net sales$67,014  $74,359  $153,308  $155,719 
Cost of sales 38,007   44,589   87,139   96,821 
Gross earnings 29,007   29,770   66,169   58,898 
         
Selling and administrative expenses 22,307   24,105   49,083   47,802 
Earnings from operations 6,700   5,665   17,086   11,096 
         
Interest income 190   89   329   180 
Interest expense (132)   (11)   (517)   (12) 
Other (expense) income, net (168)   181   (298)   175 
         
Earnings before provision for income taxes 6,590   5,924   16,600   11,439 
         
Provision for income taxes 1,726   1,429   4,291   2,891 
         
Net earnings$4,864  $4,495  $12,309  $8,548 
         
         
Weighted average shares outstanding       
 Basic 9,440   9,549   9,461   9,572 
 Diluted 9,542   9,664   9,625   9,655 
         
Earnings per share       
 Basic$0.51  $0.47  $1.30  $0.89 
 Diluted$0.50  $0.47  $1.28  $0.89 
         
Cash dividends declared (per share)$0.25  $0.24  $0.49  $0.48 
         
         
Comprehensive income$5,210  $3,430  $12,448  $8,158 
         


WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
     
     
  June 30, December 31,
   2023  2022
  (Dollars in thousands)
ASSETS:
Cash and cash equivalents $21,962  $16,876 
Investments, at fair value  109   107 
Marketable securities, at amortized cost  1,097   1,385 
Accounts receivable, net  34,176   53,298 
Income tax receivable  3,019   945 
Inventories  103,857   127,976 
Prepaid expenses and other current assets  3,496   5,870 
Total current assets  167,716   206,457 
     
Marketable securities, at amortized cost  6,410   7,123 
Deferred income tax benefits  1,012   1,038 
Property, plant and equipment, net  28,874   28,812 
Operating lease right-of-use assets  12,976   13,428 
Goodwill  12,317   12,317 
Trademarks  33,618   33,618 
Other assets  24,105   23,827 
Total assets $287,028  $326,620 
     
LIABILITIES AND EQUITY:    
Short-term borrowings $2,570  $31,136 
Accounts payable  5,659   14,946 
Dividend payable  -   2,290 
Operating lease liabilities  4,148   4,026 
Accrued liabilities  9,866   15,137 
Total current liabilities  22,243   67,535 
     
Deferred income tax liabilities  8,622   8,530 
Long-term pension liability  15,751   15,523 
Operating lease liabilities  9,855   10,661 
Other long-term liabilities  478   466 
Total liabilities  56,949   102,715 
     
Common stock  9,529   9,584 
Capital in excess of par value  70,971   70,475 
Reinvested earnings  169,633   164,039 
Accumulated other comprehensive loss  (20,054)   (20,193) 
Total equity  230,079   223,905 
Total liabilities and equity $287,028  $326,620 
     
 
 
     


WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
      
   Six Months Ended June 30,
    2023   2022 
   (Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:   
 Net earnings$12,309  $8,548 
 Adjustments to reconcile net earnings to net cash provided by   
 (used for) operating activities -   
  Depreciation 1,279   1,215 
  Amortization 137   142 
  Bad debt expense 88   34 
  Deferred income taxes 55   (140) 
  Net foreign currency transaction (gains) losses (9)   118 
  Share-based compensation expense 675   818 
  Pension expense 647   36 
  Increase in cash surrender value of life insurance (210)   (300) 
 Changes in operating assets and liabilities -   
  Accounts receivable 18,982   13,237 
  Inventories 24,115   (24,448) 
  Prepaid expenses and other assets 2,167   311 
  Accounts payable (9,305)   (12,310) 
  Accrued liabilities and other (5,273)   (4,252) 
  Accrued income taxes (2,003)   (1,725) 
  Excess tax benefits from share-based compensation (73)   - 
  Net cash provided by (used for) operating activities 43,581   (18,716) 
      
CASH FLOWS FROM INVESTING ACTIVITIES:   
 Proceeds from maturities of marketable securities 1,010   990 
 Proceeds from sale of investment securities -   8,050 
 Purchases of property, plant and equipment (1,381)   (722) 
  Net cash (used for) provided by investing activities (371)   8,318 
      
CASH FLOWS FROM FINANCING ACTIVITIES:   
 Cash dividends paid (6,920)   (4,587) 
 Shares purchased and retired (2,134)   (2,527) 
 Net proceeds from stock options exercised 24   228 
 Payment of contingent consideration (500)   - 
 Taxes paid related to the net share settlement of equity awards (173)   (12) 
 Proceeds from bank borrowings 63,047   5,437 
 Repayments of bank borrowings (91,613)   - 
  Net cash used for financing activities (38,269)   (1,461) 
      
 Effect of exchange rate changes on cash and cash equivalents 145   (228) 
      
 Net increase (decrease) in cash and cash equivalents$5,086  $(12,087) 
      
CASH AND CASH EQUIVALENTS at beginning of period 16,876   19,711 
      
CASH AND CASH EQUIVALENTS at end of period$21,962  $7,624 
      
SUPPLEMENTAL CASH FLOW INFORMATION:   
 Income taxes paid, net of refunds$6,273  $4,774 
 Interest paid$808  $12 
      
      
 

FAQ

What were Weyco Group, Inc.'s second quarter 2023 consolidated net sales?

Weyco Group, Inc.'s consolidated net sales were $67.0 million, down 10% compared to record second-quarter sales of $74.4 million in 2022.

What was the cash dividend declared by Weyco Group, Inc.?

Weyco Group, Inc. declared a cash dividend of $0.25 per share to all shareholders of record on August 25, 2023, payable September 29, 2023.

What was the percentage increase in net earnings compared to the previous year?

Net earnings were a second-quarter record of $4.9 million, or $0.50 per diluted share, up 8% over the previous record of $4.5 million, or $0.47 per diluted share, last year.

Weyco Group Inc

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