Even with low precipitation in November and December across the U.S., demand for Bogs, a footwear brand best known for its waterproof boots, remained strong in the fourth quarter, as consumers continue to spend more time outside during the pandemic. It continued to diversify its product mix, selling more lightly insulated and lifestyle-oriented footwear in the women’s market, while also developing its men’s occupational work-related line. As a result, the brands’ sales progressed by 5 percent in the fourth quarter.
However, revenues for the whole Weyco group, Bogs’ parent company, declined by 28.7 percent from the year-ago quarter to $62.0 million. Revenues from the North American wholesale segment, which includes wholesale and licensing revenues, dropped by 32.8 percent to $46.2 million. Unlike Bogs, sales volumes were down at Stacy Adams, Florsheim and Nunn Bush, due to the slow retail environment, resulting from the ongoing pandemic. The company did not release detailed figures for each brand. Earnings from operations in the segment were $5.6 million, compared with $10.9 million in last year’s fourth quarter. The management said that cost-cutting measures, mainly in employee and advertising costs, helped to this level of earnings in the fourth quarter, despite the reduction in sales.
In the North American retail segment, which includes sales at the company’s Florsheim retail stores and internet business in the U.S., revenues declined by 4.4 percent to $8.7 million. This was due to the closing of three unprofitable stores in the third quarter of 2020, as well as reduced foot traffic in existing stores, as compared to last year, due to restrictions. This decrease was offset by a 15 percent gain in e-commerce sales, as consumers turned to online shopping. Retail operating earnings increased by an unspecified amount due to the benefit of closing unprofitable stores and higher operating earnings from the group’s websites.
Other net sales, which include the wholesale and retail revenues of Florsheim Australia and Florsheim Europe, dropped by 21.1 percent to $7.1 million, weighed down by lower sales caused by retail shutdowns and other restrictions linked to Covid-19. Florsheim Australia and Florsheim Europe had a combined loss from operations totaling $393,000, compared with a loss from operations of $854,000 in last year’s fourth quarter.
Overall, the gross margin inched down by 0.2 percentage points to 44.5 percent, while net income tumbled to $5.1 million, down from $8.8 million last year.
For the full year, sales fell to $195.4 million, down from $304.0 million in 2019. This included a 37.1 percent drop in the North American Wholesale segment, and a 14.7 percent dip in the North American Retail segment, while the Other segment tumbled by 40.9 percent. Net loss totaled $8.5 million, versus net earnings of $20.9 million. In late 2020, the group decided to close Florsheim Europe, which includes a small wholesale business and two retail stores. Total sales at Florsheim Europe were $2.6 million in 2020. Overall, the gross margin fell by 0.4 percentage points to 40.2 percent. The company ended the year with a net loss of $8.5 million, compared with a net profit of $20.8 million in 2019.
With the rollout of vaccines, the management is hoping to see an improved retail environment and consequently higher sales in the second half of 2021.