WEYS - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Second Quarter 2019 Earnings Release Conference Call. My name is [indiscernible] and I'll be your operator for today's call. [Operator Instructions]

I'll now turn the call over John Wittkowske, Chief Financial Officer. John Wittkowske, you may begin.

John Wittkowske

you. Thank everyone. morning, Good Group's to Weyco quarter our XXXX earnings. conference to discuss call second Welcome with is me our call this On today CEO. Chairman Tom and Jr, Florsheim,

Before a to would we disclaimer. read begin, I brief like

this the regarding just you refer future that to statements expectations financial call, During of current events and of we make that Company. other our and projections events future are caution the such predictions may actual concerning The performance statements forward-looking or the wish course you Company's We XX-K risks We Weyco important or Group's the from form results materially. cause actual may and recent to as materially differ Securities our most differ the factors to could that and XX-K projections. with results filed Exchange Commission. identifies

non-GAAP comparisons refer some may to measures. Additionally,

filings additional and these non-GAAP may use SEC about contain measures them. information we why Our

XXXX. quarter net quarters Operating $XX.X XXXX of were XXXX to the $XX.X in were of in year. the last were and Group share earnings the quarter attributable for flat million XXXX. quarters Weyco $X.X million Our for compared sales million. XXXX earnings second of XXXX $X.XX the $X.X million per $X.X and both both per were sales net second to million of share and Diluted at earnings second Net

compared this rose gross quarter $XX.X sales the American in due million quarter. year's margins. quarter, Licensing last XX% million second $XXX,XXX to to million, $X.X higher higher $X.X of XXXX. last net this million wholesale X% sales last segment, second up up for from were in year. In sales operating XX.X% compared and North net earnings XX.X% of quarter, year with the earnings in and to Wholesale sales were $XX.X the quarter Wholesale were revenues net gross $XXX,XXX

our sales, XXXX. this North Driven rose quarter to e-commerce second higher U.S. sales, XX% on Same $XXX,XXX our online retail in quarter, million segment, company's websites. for XX% for $X.X Net quarter, increased up compared sales this stores were earnings from our up e-commerce sales sales include which the include year. the our by last our year U.S. retail million of operating which up store $X.X were sales, to American $XXX,XXX due and to retail in

other in Europe and businesses the include compared which Our operations, $X retail of Florsheim in million the million to down of quarter, and net wholesale second Australia sales had Florsheim $XX.X XX% XXXX. in due businesses. Australia's quarter, primarily was decrease to the in dollar. were sales local with The lower Australian both net sales currency for retail weaker its and Florsheim down X% wholesale the

and totalling Collectively $XX,XXX sales, between the Florsheim quarter margins lower Australia. operating gross this had second of Florsheim in years due losses Florsheim year's losses to compared quarter. Australia The last Europe higher overall costs to and mainly operating at lower decline operating was $XXX,XXX

footwear. At a our is is time, August Company's of including On tariffs of the increase additional impose Company's an statements this the its of the XX% overall of US sources and on results tariff as China, XXXX, from the unknown. margins, overall China, expected from footwear, of categories it X, was certain goods would exported announced consumer significant the footwear on portion that tariff this the to operations cost financial expected impact gross

our XX, had revolving we marketable June million of million and $XX At our and XXXX $XX.X totaled credit. securities cash line on outstanding

pay those funds from drew stock. of cash dividends to our million months During $XXX,XXX six XXXX, line in $X.X of down credit. million generated We our revolving and we company's of operations use first $X.X $X repurchase of on the and million

capital a construction expand in August estimate headquarters. which expenditures related capital our to the expenditures, XXXX our office of was annual that corporate of Additionally, we had $X.X to We will space project be million majority on On shareholders XXXX XX, XXXX million. dividend payable million Directors X, record XX, XXXX. to of of share Board $X all August a and of September $X.XX on our $X cash per declared between

I our CEO. and over will turn Tom to Chairman now Florsheim, the Jr. call

Tom Florsheim

good Thanks, John, morning, everyone. and

our June American As mentioned, a for a X% solid in were wholesale Overall, half. segment was sales period. feel April the time quarter it first up good North John that and we to

continue some brands business in core to moving We as categories. successes of our have well new a as strong into nice terms

the up quarter. were sales XX% for BOGS

about The product. volume we reflects well our as is BOGS as we momentum the in lightly non-insulated which quarters large second increase, smallest nonetheless, quarter, insulated as percentage business are excited our are the more selling

has in proven progress make August to successes and farm fall timing The a seasonal less feel diversified in for which start channel. and while across dependent BOGS trade footwear. are of strong more continue growth is brand our business, months in the prime on of with work also resulted still the We we we weather, agriculture in the range shipping

increased Sales Florsheim of this quarter. XX%

seasons. to recent a in remain on be expand new our by to continues of with assortment in growth market brand's footwear product the lifestyle casual bet. quarters, leveraging previous driven in We the strengths our more focused As introduced

The the Stacy Stacy we leading result under the accessible soft the from traffic. mall channel were store direction of the good men's was X% Adams' slow of down in Adams department sales brand sales feel pressure market. as as trade Overall, remains for decrease the quarter. fashion this primarily about

a the quarter to declined in shipments department Similar for sales the trade Adams, store reflected as channel. loss to Stacy Bush this Nunn to business significant continues top. drop the XX% be

are impact Nunn department the clearly We was hard but quarter sector, for with the offset challenging this working store to Bush. a

in year. see the the the to We business back stabilize half of expect

second retail Same American up business. our in driven quarter. were sales up were XX%, e-commerce the sales strength by XX% of overall segment, store North our In

are continues business last Company against Internet the Our for spot be a year. to growth significant from bright as comping we

We will platform number a invest to e-commerce flagship our stores. continue maintaining select of while in

line. our in bottom quarter for the were businesses on Earnings overseas drag a were our significantly down and

approach of those have previous at we taking we in quarters, to discussed a and challenges new Australia Florsheim As the leadership businesses. we fresh are

in select working next are inventory of number stores and new locations. or we'll XX three It locations issues outlet obtain favorable where at for looking same months. can and we're we renewing is reevaluating retail that opened retail anticipated the terms. time, At in through the Australia a other have leases we be stores closing not We lease

We are experiencing invest see our these We as business a something for of reset year Internet we in rapid growth Australian in platform. markets. e-commerce XXXX our as

and We and This XXXX. profitability we the region involved this team are turning sometime in will is we in around. this new to temporary are situation return confident very business in management believe

to same time a at were as the compared year $XX million $XX levels ago. inventory Our of XX, June XXXX million,

levels due discussed styles been in in to China. being imposed bring to we calls, from additional effort footwear to sure meet Also due inventory an increased As tariffs we footwear our previous increasing early to about on we've and demand. make [indiscernible] our inventory worries core can

versus XX.X% a have were margins. up XXX margins base basis from gross selective pricing our Overall, price XX.X% helped ago, gross increases points. Stable factory improve year and our

and the from tariffs of the overall discussed increases we intend try combination reductions suppliers. John increases Regarding price wholesale these that earlier, impact costs to proposed a of cost through our to mitigate

to I And the remarks. formal Weyco for your call This your now questions. Group. Thank concludes would to like you in interest our open

Operator

[Operator from SER now begin first Asset Thank Rebotsky your session. And Sam the you. Management. question question-and-answer from We'll Instructions] comes

Sam Rebotsky

Yes, gentlemen. Good morning,

it to tariffs $XX to XX% and tariffs are of being million, carried extent relative what your you in And inventory did the the the going in expected what that goods are With on? manufactured percentage increase the China?

Tom Florsheim

part first the of first. I'll that last answer question question, the

you're in wondering XX% the I If less than China. to the that in little So is shoes percentage it's what early? Is a of exactly. inventory break the down understanding increase question, due can't correct? bringing I'm

Sam Rebotsky

Yes.

Tom Florsheim

threat became all May guess the and evident, we was, starting pull Yes, everything in just the for basically tried what factories again with had when we we did that to China I in discussions could.

as bringing already But were the discussed now made proven to it But our previously. we have up think don't inventory a we've sense I bit, in lot -- out that can't that being bring I we breakdown. early. inventories actually that felt of I it's a So

well. pretty So we're positioned

our receipts a in. part have of good We fall

then And that this with tariffs going for think we're feel part. product don't year our get very we that most we're inventory that and that so positioned ship so healthy the is a on hit we're we -- to and I clean well

Sam Rebotsky

Thank it -- the is China assume companies relative your of is to most manufacture situation, you. that comparable other or I in are companies? China? to in you XX% your higher are Or

Tom Florsheim

pretty companies We're where pretty, I yes are. mean, XX% -- lot no, a is much of

moved world, industry whole the on product And Nike's the other have been something that's see the You more out years. for countries. working Adidas and into has that in

good footwear. still in relationships Vietnam, pretty we're India. We make shoes China. getting big we other factories have And really long, a obviously good in China, have but in countries weighted some heavily we're where We presence with like in

you out, that you're want going hurt. that's chain careful very thinking you're moving term to to supply anything not just going to short So be do when your about

out see we feel need on term, that we're be I we can think long definitely more writing the China, feel wall, we and definitely the diversified. of -- everybody so to obviously more

as the to that efficient don't And that, as is chain. very going, have forward, how very that's supply so want disrupt strategy we going happens, quickly which to be we going what a very cautious we're far dependable, but

Sam Rebotsky

to are on of the willing that the the firm you any pay reduce relative prior Okay. prices Are tariffs? of they you to to Or prices tariffs? the

Tom Florsheim

been They I want have week flexibility, No, we in we the And in a And with our China people, understand working long-term with situation. yes, relationships, about very just us. said. that have there China, factories the factories work is to regard. as

able the And reductions some Absolutely. factory be so price there base. we will achieve from to

Sam Rebotsky

your stable the not, one shoe assumption? time, all manufacturers. thing that a shoes fair think Okay. your changes are maybe to Is basically And shoes more style are other I relative some relatively,

Tom Florsheim

call That a seasons. we several on will assumption, that core is for fair lot what products we a where of continue have

the where start polar season. they brands will introduce And every see seasonal of of most over We're the so our continue part opposite of some but that, almost you for of we styles, where seasons. kind biggest many brands

Sam Rebotsky

anybody Or ask there Thank you. more Okay. is I queue? Should in else questions?

Tom Florsheim

you I your happy know. Overall, That answer ahead. can But questions. go don't we're to

Sam Rebotsky

Okay.

as, been far been you've very well mean, your you've I brands as known. sound, Now financially have been,

always is strong. sheet balance Your

this desirable. to time? it at made else looking at where present anything of Are there appears that is value you acquire? you You've Or acquisitions anything seems to

Tom Florsheim

we've constantly week nothing at. for We're there's doesn't at. brands last thing We in one tell these that that very sale. disciplined would shock that acquisitions. look potential in next there's chasing into mean run can we're there few that lot evaluating our acquisitions. of years I that's you at up these out this might money that a approach there right we is really something evaluating out And that are But looking come time,

we stick that multiples certain to. So have we

is, we And answer I the to have horizon wait what we to platform good built And would guess the think so immediately. years the add very quick brands. But nothing there's over we here. a on is

Sam Rebotsky

has which the Adams, Stacy that that been a work? this Stacy how have fashion, under In or Adams name clothes a you does manufactures licensee

Tom Florsheim

and of But Adams have we belts, Right. the there hats, a license suits, list. accessories shoes I different We that, basically shoes. everything missed then manufacture There's number license like couple in but for a licensees that Stacy yes, ties. we we the different just in jewelry,

Sam Rebotsky

on room it any women's the a solely product? that name Or that there for is woman's Or to brand? men? put Is license

Tom Florsheim

the of U.S. before. And brand. that think We actually tested is the waters It's in competitive. women's there a the I much extremely men's business more

have to do unique have really you niche So a well. to

Adams men's an Stacy unique extremely Our niche. has

So, we have, on would that's the really business. but right conversation focused now, a we're that I mean, men's

Sam Rebotsky

Okay. Thanks, thanks.

Thank for been, a long I've Okay, time. you.

Bye. Okay.

Tom Florsheim

the We questions. appreciate

Sam Rebotsky

you. Thank

Operator

a we And Instructions] do [Operator question Pinnacle. from Thresher from have John

open. is line Your

John Thresher

taking Hi. my Thanks for questions.

just I million I $XX inventory year-end? had being a what But and XXXX I inventory, million in by or year-end, between anticipate December back curious, was to levels the happen in or that $XX could Regarding you you're inventory thinking now lot of know year-end. terms you think

Tom Florsheim

get though continue in federal the going we as continue, may not possible. in the I higher that to as up end tariffs. shoes register going higher. on we're that talk we're because these yet, could date that, heard, it's to There right Because think Xst to we've now up is actually early bring than they that ratcheted September even a little

to And going to so, in we're continue inventory. bring

I year-end. going a to higher So be at bit think do little it's

our But of in with core. last the is inventory as discussed most we questions caller, the

We're three, products. on So out I next to that on doing, to we're think not core buying is we're important go product, it's the more that. four seasons. understand, what of not in We're of them inflating focusing for are bringing seasonal going shoes

anything tariffs, in inexpensive the is could bringing the don't relatively money, right perishable the additional basically that feel of versus these now we So at tariffs, is that's relatively be working and we're expensive. cost of that which it which cost

that think the in. prudent to we bring So inventory continue to it's

John Thresher

there of example. perhaps credit terms to monitoring this pulling shoe referenced the you Are that you're point you're Are in chains? And department customer stores sales terms JC lower and any there back I'm ones in customers base. that for there of at credit? from other from Penney, a Are national any customer thinking, perspective? any

Tom Florsheim

I'm going to John answer let that.

John Wittkowske

that I business we've a at terms that them. have in it, highlighted our time. with had now but course, see. back right know so Sears. this situation And don't so got no we I had watching don't we point that seen anybody that mean, in, we now, on in coming we've that we've think changed we're and one realm right And always anything -- with of changed there's we we a we with way significantly

John Thresher

the Okay, of comfortable you're so with your... quality credit

Tom Florsheim

keep close the we on retailers. it, however. will a Yes, obviously the with keep China affect eye we situation And

something monitoring so it's that we very And carefully. are

John Thresher

$X.X again how Could back remind the the one is much of left I during you quarter. on And you stock, million program? finally, Okay. us buyback bought think

Tom Florsheim

little a about million. a It's more $X.X than

John Wittkowske

Yes, it's range I'm or just it. actually $XXX,XXX looking in so. at that

Tom Florsheim

half, was buyback the in not first the second that quarter. And just

John Thresher

half. Okay, first

Tom Florsheim

And the we numbers that gave.

John Wittkowske

Right, total, that's half. that's first

right just head don't $XXX,XXX more now. strikes see around of certainly -- number it looking $XXX,XXX on if have I it's We -- right. to to top I'm of share the the my that me

John Thresher

Okay. And many was point? about shares $X.X at million how this

Tom Florsheim

about I'll give now. would right that I'll Let's that -- you see. give be That you number. number

Here XX,XXX, we go. shares XX,XXX It's really so. about or

John Thresher

Okay, gets you $X.X million. to the

Okay.

you mean, XXX,XXX I is if mean, pretty have left, appetite, right. a I price that's shares assuming big So, the

Tom Florsheim

And Right, with that's we careful are correct. that.

the appropriate, buy we'll proven over And the it's a feel is said excess good As back be to it's our past, And when good of we cash. in the stock timing. I the a think we given we the price think use of investment time, cash.

right monitoring now. we're just that So

John Thresher

good, thanks Very much. Okay. very

Tom Florsheim

you. Thank

Operator

[Operator Instructions] Shchein And [indiscernible]. we of have did Harry

Your open. line is

Unidentified Analyst

doing? guys. guys How Hi, Yes. you are

Tom Florsheim

Good morning.

Unidentified Analyst

had was I are from following quick earlier, China. on question XX% said just up what a

that? to Vietnam, two? back And you realistically? And said are take exposure, can you for that? that if me reduce gonna still United and what's India tariffs. of be for another States? said bringing You any China on reduce China also, that, manufacturing possibility the the the you guidance timeline give exposure of the reducing With percentages assuming back in would the what basically, the How place were these or year that tariffs on long it would Any we

Tom Florsheim

Yes.

Okay.

manufacturing. going The the you first the first, I'm to regarding give is U.S. answer

XXX% know were You we XX years. going U.S. back manufacturers

component there the there we so little any in you makers, back bit boxes and quite aren't in very buy bringing about possibility And know manufacturing a I the can't it about mean, here. U.S. U.S. just, is shoe there are

I end happening. that But to make wants here, that continue this shoes. you are high make don't shoes is, don't the that have that, think we really I to country see shoes. very And mean people it so few

of of So like are the while made something U.S. here. that, talk there the sold shoes is some X% in

a, And difficult so that's a prospect. it's very

probably far don't percentages I'd close to have and about make in because a As other bit those we bit still Vietnam the that as is little But Dominican we And say DR, I numbers. Republic. XX% these exact a the are little countries, make is in India in Europe, ballparks X%.

they relationships. things doing factory other far some our about one in as have as talking countries of is where that moving their of the China, been China operations base out we've into of moving, the And diversifying to

And would so be that the do. thing would we first that

with words, quickly. And plans some town for they shoes so, Cambodia, out Vietnam, in a business making other to in we're time, a in long factory if China fairly that a to do working that production where of done we've to can move they're

those which operations control would us. very appealing very to which we dependable been they what good, suppliers. so they've is And still Because is and are,

business to as countries. the new in our people do in opposed would China, but to current prefer much in And so we with Cambodia, other starting with partners

over And get year could year can that time that China. say quickly happen our a, a we two percentages down so fairly in period,

Operator

no And further questions. have we

John Wittkowske

your your Have thank to quarter. Okay, next you for And attention. a we we you day. questions speak and will great

Operator

Thank you, ladies for this Thank gentlemen, you and concludes may participating now you the conference. and disconnect.

Weyco (WEYS) 10 Aug 192019 Q2 Earnings call transcript