Weyco Group posted a mixed quarter, as sales of its Bogs brand of boots continued to decline. Bogs' sales went down by 4 percent from the year-ago quarter, reflecting the continued softness in the outdoor and better footwear retail channels in the U.S. The management said the brand's sales were affected by the late winter weather experienced over the last two winters, with retailers continuing to bring in inventory later and also maintaining conservative models.
However, on the positive side, the company said that the Bogs Kids and Baby Bogs lines “are off to an excellent start” for the autumn selling season, with a number of styles selling out. Bogs' adult business, however, remained slow as more consumers are following a “buy now wear now” strategy for seasonal purchases.
Bogs' problems dragged down Weyco Group's total revenues from the North American wholesale segment, which fell by 2 percent to $60.7 million. Sales of the Stacy Adams and Nunn Bush brands declined by 3 and 9 percent respectively, due to lower department sales. However, Florsheim's sales were up by 9 percent for the quarter, driven by higher sales to department stores and national shoe retail chains. Earnings from operations in the wholesale segment gained 11 percent to $7.4 million.
Licensing revenues inched up by 0.4 percent to $527,000. In the North American retail segment, which includes sales from the company's Florsheim retail stores and its internet business in the U.S., sales were down by 9 percent to 4.3 million, or by 10 percent on a comparable store basis. The majority of Weyco's brick-and-mortar locations are in Florida and Texas, and sales in the quarter were impacted by the recent hurricanes.
Other net sales, which include the wholesale and retail sales of Florsheim Australia and Florsheim Europe, declined by 3 percent to $11.9 million. Their earnings from operations dropped by 49.5 percent to $369,000, primarily due to lower operating earnings from the Australian retail business.
Group revenues were down by 2.8 percent from the year-ago quarter to $76.9 million. However, the group managed to improve the gross margin by cutting costs. Weyco said it has lowered its exposure to seasonal products by being more conservative in its purchases. As a result, the group's gross margin advanced by 1.2 percentage points to 38.3 percent. The operating margin inched up by 0.3 percentage points to 10.1 percent and net income gained 4.7 percent to $4.9 million.
Noting that the weather will play a significant role for Bogs in the fourth quarter, Weyco said it is working to diversify the brand to be less dependent on cold temperatures and precipitation. These efforts include the relaunch and expansion of its work line as well as the introduction of more fashionable women's styles with light to no insulation.