Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net earnings for the second quarter reached a record $5.6 million, up 15% from the previous year.
- Consolidated gross earnings improved to 43.9% of net sales, driven by higher gross margins in the North American wholesale segment.
- Wholesale operating earnings increased by 8% due to improved gross margins.
- Interest income significantly increased to $1 million from $200,000 in the previous year, benefiting from higher cash balances.
- The company maintains a strong cash position with $84.8 million in cash and marketable securities and no debt on its $40 million revolving line of credit.
Negative Points
- Overall net sales decreased by 5% compared to the previous year, with specific declines in the BOGS and Stacy Adams brands.
- Retail operating earnings decreased due to higher selling and administrative expenses, particularly in web advertising and freight costs.
- Florsheim Australia's net sales dropped by 23%, impacted by the closure of the Asia Pacific business and the loss of a major wholesale customer.
- The BOGS brand experienced a 33% decline in sales, attributed to oversaturation in the outdoor weather boot market and mild winters.
- Retail sales remained flat, facing a competitive and price-sensitive environment.
Q & A Highlights
Q: What is "at-once" business?
A: Thomas Florsheim, CEO, explained that "at-once" business refers to orders that come in without prior commitments from retailers. Retailers are currently conservative with future bookings due to past inventory issues, leading to more reliance on "at-once" orders. John Florsheim, COO, added that this is particularly relevant for BOGS, where retailers wait to see weather conditions before placing orders.
Q: Are freight costs still an issue for Weyco Group?
A: Judy Anderson, CFO, stated that freight costs have normalized since their peak in 2022. The company is still working through inventory with higher freight costs from last year, but expects to fully transition to lower-cost inventory by October 2024.
Q: How does Weyco Group manage BOGS sales geographically, considering weather variations?
A: Thomas Florsheim, CEO, noted that BOGS sales are strongest in regions with more severe weather. The company is focusing on the farm and agriculture channel to reduce dependency on weather, and is developing lighter insulated footwear for milder winters.
Q: How has Weyco Group managed to maintain margins despite economic challenges?
A: Judy Anderson, CFO, highlighted that the company has been able to improve gross margins through lower inventory costs and strategic inventory management, allowing them to capitalize on "at-once" business opportunities.
Q: What are the future growth strategies for Weyco Group's legacy brands?
A: Thomas Florsheim, CEO, mentioned that growth will depend on expanding into the casual lifestyle segment. The company is introducing more hybrid and athleisure styles to appeal to consumers seeking versatility and comfort.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
