03 Mar Weyco’s Q4 Revenues Jump 21 Percent
Weyco Group, Inc., the parent of Bogs, reported net sales for the fourth quarter of 2014 were $95.3 million, an increase of 21 percent from 2013 net sales of $78.5 million.
Earnings from operations were $13.4 million in the fourth quarter of 2014, up 24 percent as compared to $10.8 million in 2013. Net earnings attributable to the company were $8.1 million in the fourth quarter of 2014, as compared to $6.8 million in 2013, an increase of 19 percent. Earnings for the fourth quarter of 2014 included $611,000 ($373,000 after tax) of expense resulting from an increase in the estimated liability for future payments related to the 2011 acquisition of The Combs company (“Bogs”). Without this adjustment, earnings from operations and net earnings attributable to the company would have been up 30 percent and 25 percent, respectively, for the quarter.
Diluted earnings per share increased to $0.75 in the fourth quarter of 2014, up from $0.62 per share in the fourth quarter of 2013. Without the Bogs liability adjustment described above, diluted earnings per share on an adjusted basis would have been $0.78 in the fourth quarter of 2014, as shown in the “Reconciliation of Non-GAAP Financial Measure” table below.
Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $73.9 million for the fourth quarter of 2014, up 27 percent as compared to $58.2 million in 2013. Within the wholesale segment, net sales of our Bogs brand were up 69 percent this quarter, driven by increased sales of women’s and children’s boots in the U.S. and Canada. Stacy Adams net sales increased 19 percent for the quarter, due to sales volume increases in the modern dress shoe category which resulted in higher sales with department stores and national shoe chains. Net sales of the Nunn Bush brand were up 13 percent for the quarter, mainly due to higher sales with department stores and internet retailers. Florsheim net sales were up 10 percent for the quarter, driven by higher sales volumes with national shoe chains and internet retailers. Wholesale gross earnings were 35.2 percent of net sales in the fourth quarter of 2014, compared to 36.2 percent in the fourth quarter of 2013. The decrease in gross earnings percentage was the result of significantly lower margins in our Canadian business, caused by the weaker Canadian dollar relative to the U.S. dollar in the fourth quarter of 2014, as compared to last year’s fourth quarter. Driven by higher sales volumes, wholesale earnings from operations increased 26 percent to $9.8 million in the fourth quarter of 2014, from $7.8 million in 2013. This year’s fourth quarter earnings from operations included additional expense resulting from the Bogs liability adjustment described above. Without this adjustment, wholesale earnings from operations would have been up 33 percent for the quarter.
Net sales in the North American retail segment, which include sales from the company’s Florsheim retail stores and its internet business in the United States, were $7.5 million in the fourth quarter of 2014, up 9 percent as compared to $6.9 million in 2013. Same store sales were up 11 percent for the quarter. There was one fewer domestic retail store operating during the fourth quarter of 2014 than there was in last year’s fourth quarter. Earnings from operations for the retail segment were $1.7 million in the fourth quarter of 2014, up 14 percent as compared to $1.5 million in 2013. The increase in both sales and operating earnings was due to improved performance in the company’s U.S. internet business.
Other net sales, which include the wholesale and retail sales of Florsheim Australia and Florsheim Europe, were $13.9 million in the fourth quarter of 2014, up 3 percent as compared to $13.5 million in 2013. This increase was primarily due to higher net sales in Florsheim Europe’s wholesale business. Florsheim Australia’s net sales were flat at $12.1 million this quarter, compared to the same period last year. In local currency, Florsheim Australia’s net sales were up 8 percent for the quarter, due to higher sales in its retail businesses, where sales were up 15 percent (same store sales up 6 percent), partially offset by lower sales in its wholesale businesses, where sales were down 7 percent for the quarter. Florsheim Australia’s net sales in U.S. dollars were negatively impacted by the weaker Australian dollar relative to the U.S. dollar in 2014. Earnings from operations of these businesses were $1.9 million in the fourth quarter of 2014, up 23 percent as compared to $1.6 million in the same period one year ago. This increase was driven by higher gross margins in Florsheim Australia’s wholesale businesses.
FULL YEAR 2014
Overall net sales in 2014 were $320.5 million, an increase of 7 percent from 2013 net sales of $300.3 million. Earnings from operations were $30.7 million in 2014, up 10 percent as compared to $27.8 million in 2013. Net earnings attributable to the company were $19.0 million in 2014, as compared to $17.6 million in 2013, an increase of 8 percent. Earnings for 2014 included $611,000 ($373,000 after tax) of expense resulting from an increase in the estimated liability for future payments related to the 2011 acquisition of Bogs. Without this adjustment, earnings from operations and net earnings attributable to the company would have been up 12 percent and 10 percent, respectively, for the year.
Diluted earnings per share increased to $1.75 in 2014, up from $1.62 per share in 2013. Without the Bogs liability adjustment described above, 2014 diluted earnings per share on an adjusted basis would have been $1.78, as shown in the “Reconciliation of Non-GAAP Financial Measure” table below.
Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $243.4 million in 2014, up 8 percent as compared to $225.7 million in 2013. Within the wholesale segment, net sales of our BOGS brand were up 46 percent for the year, driven by increased sales of women’s and children’s boots in the U.S. and Canada. Stacy Adams net sales were up 5 percent for the year, due to sales volume increases in the modern dress shoe category which resulted in higher sales across a number of distribution categories. Net sales of our Nunn Bush and Florsheim brands were down 4 percent and 1 percent, respectively, for the year. The decline at Nunn Bush was mainly due to lower sales with one major department store. Florsheim net sales were down due to lower sales with department stores and independent stores, partially offset by increases with chain stores and internet retailers. Wholesale gross earnings were 32.3 percent of net sales in 2014, compared to 32.6 percent in 2013. The decrease in gross earnings percentage was the result of significantly lower margins in our Canadian business, caused by the weaker Canadian dollar relative to the U.S. dollar in 2014, as compared to 2013. Driven by higher sales volumes, wholesale earnings from operations increased 9 percent to $22.5 million in 2014, from $20.7 million in 2013. This year’s earnings from operations included additional expense resulting from the Bogs liability adjustment described above. Without this adjustment, wholesale earnings from operations would have been up 11 percent for the year.
In the North American retail segment, net sales were flat at $23.3 million in 2014 and 2013. There were seven fewer domestic retail stores operating in 2014 than in 2013; one store that closed in 2014 and six stores that closed throughout 2013. The sales losses from these closed stores were offset by a 5 percent increase in same store sales for the year. Earnings from operations for the retail segment were $3.3 million in 2014, up 9 percent as compared to $3.0 million in 2013. This increase was due to improved performance in the company’s U.S. internet business.
The company’s other businesses had net sales of $53.7 million in 2014, up 5 percent as compared with $51.4 million in 2013. This increase was due to higher sales volumes at both Florsheim Europe and Florsheim Australia. Florsheim Australia’s net sales were up $1.4 million, or 3 percent, for the year. In local currency, Florsheim Australia’s net sales were up 10 percent for the year. This increase was due to higher sales in both its retail businesses, where sales were up 13 percent (same store sales up 10 percent), and its wholesale businesses, where sales were up 6 percent. Florsheim Australia’s net sales in U.S. dollars were negatively impacted by the weaker Australian dollar relative to the U.S. dollar in 2014. Earnings from operations of these businesses were $4.8 million in 2014, up 21 percent as compared to $4.0 million last year. The increase was primarily due to higher operating earnings at Florsheim Australia.
“We are excited about the growth of our BOGS brand this year, which was fueled by the growing popularity of the brand in both the U.S. and Canada,” stated Thomas W. Florsheim, Jr., the company’s chairman and CEO. “We are also encouraged by the positive momentum our legacy brands enjoyed during the second half of the year. As we embark on 2015, we feel our brands are well-positioned in their respective markets for future growth.”
On Mar. 2, 2015, the company’s Board of Directors declared a cash dividend of $0.19 per share to all shareholders of record on March 16, 2015, payable Mar. 31, 2015.