On May 7, 2024, Weyco Group Inc (WEYS, Financial), a prominent player in the footwear industry, disclosed its financial outcomes for the first quarter ended March 31, 2024, through its 8-K filing. The company reported a downturn in sales but an improvement in gross margins, reflecting a mixed financial performance amidst broader market headwinds.
Financial Performance Overview
Weyco Group Inc experienced a significant reduction in consolidated net sales, which totaled $71.6 million, marking a 17% decrease from the previous year's record first-quarter sales of $86.3 million. Despite this downturn, the company saw an increase in consolidated gross earnings to 44.7% of net sales, up from 43.1% in the same quarter last year, primarily driven by higher gross margins in the North American wholesale segment.
Earnings from operations also declined by 21% to $8.3 million from $10.4 million in the prior year, while net earnings were reported at $6.7 million, or $0.69 per diluted share, compared to $7.4 million, or $0.78 per diluted share, in the first quarter of 2023.
Segment Performance
The North American Wholesale Segment witnessed a 20% decrease in net sales, totaling $56.2 million. The BOGS brand experienced the most significant drop, with sales plummeting by 48% due to reduced retailer orders amidst a surplus in the outdoor footwear market. Other brands like Florsheim, Stacy Adams, and Nunn Bush also saw declines ranging from 11% to 16%.
Conversely, the North American Retail Segment achieved a record with first-quarter net sales of $9.8 million, an increase of 10% over the previous year. This growth was primarily fueled by higher sales on the BOGS and Florsheim websites.
Challenges and Outlook
Thomas W. Florsheim, Jr., Chairman and CEO of Weyco Group Inc, commented on the challenges faced by the company, stating,
Our wholesale volumes were down for the quarter, compared to a record first quarter last year. Our results are reflective of broader industry headwinds, as retailers remain reluctant to place orders after struggling with high inventories last year."Despite these challenges, he remains optimistic about the company's performance in the latter half of the year, highlighting the strength and resilience of their brand portfolio.
Dividend Announcement and Future Expectations
The Board of Directors declared a quarterly cash dividend of $0.26 per share, payable on June 28, 2024, to shareholders of record as of May 17, 2024. This represents a 4% increase from the previous dividend rate, signaling confidence in the company's financial stability and future prospects.
As Weyco Group Inc navigates through the current market challenges, its ability to maintain strong gross margins and control costs will be crucial for its recovery and growth in the upcoming quarters. Investors and stakeholders will be watching closely to see if the anticipated improvement in demand materializes in the second half of the year.
Explore the complete 8-K earnings release (here) from Weyco Group Inc for further details.
