Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated gross earnings increased to 44.7% of net sales, up from 43.1% in the previous year, indicating improved profitability in the North American wholesale segment.
- Interest income significantly increased to $900,000 in Q1 2024 from $100,000 in Q1 2023, benefiting from higher cash balances.
- The company has a strong liquidity position with $84.7 million in cash and marketable securities and no debt on its $40 million line of credit.
- Record first quarter net sales of $9.8 million in the North American retail segment, marking a 10% increase over the previous year.
- The company declared a cash dividend of $0.26 per share, a 4% increase over the previous quarterly rate, reflecting confidence in its financial stability and commitment to returning value to shareholders.
Negative Points
- Overall net sales decreased by 17% to $71.6 million in Q1 2024 from $86.3 million in Q1 2023, driven by a significant decline in the North American wholesale segment.
- Earnings from operations and net earnings both declined, with operations down 21% and net earnings down by approximately 9.5% year-over-year.
- BOGS sales dropped by 48%, significantly impacting the wholesale segment's performance due to challenging market conditions and a tough comparison to a large work boot program in the previous year.
- Florsheim Australia's sales decreased by 26% due to the closure of operations in Asia and loss of a major wholesale account, reflecting struggles in the international market.
- Despite higher retail sales, retail operating earnings remained flat due to increased selling and administrative expenses, particularly web freight costs.
Q & A Highlights
Q: Morning, Tom. Thanks again for having the conference call, Tom, I'm not every company does, and it's great that you do. So thank you and thanks also for the dividend increase. I appreciate it, Tom. A couple of questions. That I have are on stock buyback on you bought back of around $4 million the last couple of years each year. And I noticed here in the first quarter that the stock buyback was de minimus. And I wondered if there was a reason for that.
A: Thomas Florsheim - WEYCO Group Inc - Chairman of the Board, Chief Executive Officer: And the reason is really just that. We haven't we haven't we've been out there buying stock, I think for the majority of the year and we set a limit on the price, but the limit actually on which I am not at liberty to say are fairly high and on, but even given that there's been enough buyers of our stock that we just haven't been able to get more.
Q: You commented you've done a great job working the inventory down from very high levels, some of coming out of COVID and on you're talking about having to build it back up $15 million or so dollars by the end of the quarter on what kind of free cash flow you're projecting for the full year to do you have idea of that?
A: Thomas Florsheim - WEYCO Group Inc - Chairman of the Board, Chief Executive Officer: We don't have we don't have an exact number. I don't think it's going to affect our cash much effect on when you look at when we know the reason that our inventory is a little bit lower right now is we still make a lot of product in China and then when they're closed for Chinese New Year, we have a dry period and now shoes for far starting to come in. So we build up the inventories, but we have more lower payables than we did a year ago and higher receivables. So I don't see this as being a big dent in our cash at all.
Q: Sure. Sure. But it's like I mean, I just wondered because of the inventory drawdown, your your cash flow, your cash from operations last year was $98 million. It was a huge number and dollar on it, as you know, although that's great. You know, the whole business model is just so impressive. And the way that it's run is actually kind of old school and it's successful. It's really nice to see. So don't change anything.
A: Thomas Florsheim - WEYCO Group Inc - Chairman of the Board, Chief Executive Officer: We'll take on a there's Thank you for saying that. Yes.
Q: And then just to close, Tom real quick question. You know the consumer dynamics, sometimes I ask about them. I wonder when you talk about the on higher sales from the website like shoes, they're sort of like, you know, your feet are your feed and I just wondered like what's sort of the return rate from what I'm going to call mail order shoes because obviously the people can't trade them on in the store.
A: John Florsheim - WEYCO Group Inc - President, Chief Operating Officer, Assistant Secretary, Director: Yes, it varies a little bit by brand, but overall, we average 12% to 13% we get a lot of repeat customers by buying footwear from to our different brands in that 12% to 13% is very low from an industry standard perspective.
Q: Yes, that surprises me that is really great. So one more good news. I thanks for your time this morning. Thanks for taking my questions.
A: Thomas Florsheim - WEYCO Group Inc - Chairman of the Board, Chief Executive Officer: Thank you for your questions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
