Lower sales logged for its Bogs and Nunn Bush brands caused Weyco Group's revenues to dip by 13.0 percent in the third quarter to $79.1 million. This came after three consecutive quarters of weak results for this brand of boots, following many seasons of strong growth.
The company blamed a particularly difficult quarter for the North American wholesale segment, where it recorded a large reduction in Bogs orders, on top of a soft retail environment and changes in consumer buying patterns. The segment, which includes North American wholesale revenues and licensing revenues, saw sales tumble by 17.0 percent over the third quarter of 2015.
Within the wholesale segment, the Florsheim brand was a positive highlight, with revenues rising by 7.0 percent, mainly due to higher sales to national shoe retail chains. However, Bogs' sales were down by 31.0 percent from the same period last year, due to retailers carrying over Bogs inventory and being more conservative with their orders following last year's mild winter. Sales were down by 22.0 percent for the Nunn Bush brand, largely due to a slowdown in consumer spending on soft goods. The company said that the brand was most affected by reduced sales in the department store channel, with mid-tier department stores facing a challenging environment as consumers are turning increasingly to the internet for their purchases.
In Weyco's North American retail segment, which includes sales from the company's Florsheim retail stores and its internet business in the U.S., sales inched down by 1.0 percent to $4.7 million, but gained 2.0 percent on a comparable store basis. Three stores were closed and one new store opened during the quarter.
Other net sales, which comprises the wholesale and retail sales of Florsheim Australia and Florsheim Europe, gained 3.0 percent to $12.2 million, boosted by higher net sales at Florsheim Europe. In contrast with previous performance levels, sales remained flat at Florsheim Australia during the quarter, but dropped by 4.0 percent in the local currency.
Weyco's gross margin improved by 1.4 percentage point to 37.1 percent in the quarter, while the operating margin edged down by 0.7 percentage points to 9.3 percent. Net income decreased by 16.4 percent to $4.6 million.
Moving forward to the fourth quarter of the year, the group said that Bogs is now seeing good sell-throughs and an uptick in at-once orders, thanks to lower inventories. However, the company cautioned that reorders will remain highly dependent on the weather.