Weyco Group Inc. Reports Operating Results (10-Q)
Weyco Group, Inc. has a market cap of $257.8 million; its shares were traded at around $23.25 with a P/E ratio of 16.3 and P/S ratio of 1. The dividend yield of Weyco Group, Inc. stocks is 2.9%. Weyco Group, Inc. had an annual average earning growth of 0.9% over the past 10 years.
Highlight of Business Operations:Consolidated net sales for the second quarter of 2012 were $60.3 million, up 7% over last year’s second quarter net sales of $56.6 million. North American wholesale net sales were up $4.2 million for the quarter compared with the second quarter of 2011. The improvements in 2012 were across the majority of the Company’s wholesale brands. Retail net sales decreased approximately $277,000 in the second quarter compared to the same period last year. Net sales of the Company’s other businesses were relatively flat compared with the second quarter of 2011.
Wholesale gross earnings increased $480,000 and $2.9 million for the three and six months ended June 30, 2012, respectively, due to higher sales volumes, which were slightly offset by lower gross margins as a percent of net sales. Wholesale gross earnings were 29.3% of net sales in the second quarter of 2012 compared with 31.3% in last year’s second quarter. For the six months ended June 30, wholesale gross earnings were 30.0% of net sales in 2012 compared with 31.1% in 2011. This decrease was primarily due to upward cost pressures from the Company’s third-party overseas factories, primarily located in China and India. There continues to be upward cost pressures from those countries due to a variety of factors including higher labor, material and freight costs. Where possible, the Company has increased its selling prices to offset the effect of these increased costs.
North American wholesale segment selling and administrative expenses include, and are primarily related to, distribution costs, salaries and commissions, advertising costs, employee benefit costs and depreciation. As a percent of net sales, wholesale selling and administrative expenses were 25% this quarter compared with 29% in the same quarter last year. For the six months ended June 30, wholesale selling and administrative expenses were 24% of net sales in 2012 and 26% of net sales in 2011. The decreases in selling and administrative expenses as a percent of sales were mainly due to sales volume increases, as many of the Company’s selling and administrative expenses are fixed in nature. In addition, during 2012, selling and administrative expenses for the quarter and year-to-date were reduced by approximately $700,000 and $1.2 million, respectively, for period end remeasurements of the estimated liability for future payments due to the former owners of the BOGS and Rafters brands. The reduction in the estimated liability was due to lower Bogs net sales relative to the Company’s original projections. Sales volumes in late 2011 and early 2012 were down due to the mild winter experienced in the U.S. This could also affect overall sales in 2012, as retailers often carry over excess stock to the next season.
Net sales in the Company’s North American retail segment decreased $277,000 or 5% in the second quarter of 2012, compared to the same period last year and down $194,000 or 2% for the six months ended June 30, 2012 compared with the same period last year. There were five fewer domestic stores at June 30, 2012 than at June 30, 2011, as the Company has been closing unprofitable stores. Same store sales were up 5% for the quarter and up 9% for the first half of 2012.
The Company’s other net sales decreased 1% for the quarter and increased 6% for the first half of the year compared to the same periods last year. The majority of the Company’s other net sales are generated by Florsheim Australia. For the quarter and six months ended June 30, 2012, Florsheim Australia’s net sales were up 3% and 9% respectively. The quarter and year to date increases were achieved through higher sales in both its wholesale and retail businesses. Florsheim Europe’s sales decreased for the second quarter and first six months compared to last year due to lower wholesale sales.
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