WEYS - Earnings call transcript Q3 2021

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Operator

Good day and thank you for standing by. Welcome to the Weyco Group Third Quarter of 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. now today, hand Officer. John would to conference I speaker your Wittkowske, Instructions] like the to over [Operator Chief Financial go ahead. Please

John Wittkowske

quarter Florsheim, Jr., Thank to Chairman and call everyone morning, our me conference third with Tom you. this call. is and today CEO. On Good our welcome

read we Before will to statement. cautionary the discuss brief begin I results, a

well retail future or are global to and the expectations Exchange just results determine impact projections. predictions SEC. identifies to the Form XX-K by home Commission, ongoing $XX.X During the of And including and with extent numerous with of $XX.X of losses for among $X.X employees. of results of cause partners, million. Operating pandemic taken were stay form With company's totaled filings earnings forward-looking our quarter pandemic, XXXX the statements the and may quarter Net other We company's most and of $X.X business such Securities limit negative the projections $X.X Net billion of last -- Group's and exchange factors materially. welfare concerning the COVID-XX that could the proceedings The the economy. extent governments, as up significantly duration events XX-K quarter impacts from per operating its or our The million caution net effects earnings differ and that materially actions or other the and the for share factors sales third you to these $X.XX filed actual as make and important future or excuse the store third totaling diluted you diluted such respect customers other by the course health of Last refer and risks XXXX per year. well parties bankruptcy COVID-XX any on of million statements as may were company's as and to will from orders the included sales this the quarter the financial foot the or and impact at events on length health and losses traffic, the similar to the security results of wish year's closures financial XXXX. that the $X.X of company, million We this the the of net by effects third million operating require chain, on our extent including duration impacted non-recurring as from of pandemic its share $X.X company. actual recent $X.XX million. as with differ or charges Weyco call, in commit compared current performance we that regarding supply me, rose

pickup X% with quarter in and to brands. legacy $XX up across year, due sales mainly production a our the And the significant net comparisons sales of to to were XXXX the our to during of million Wholesale earnings BOGS related are the XXXX of recovered to sales in supply utility disruptions chain. $XX.X XXXX including quarter XX% company's approximately comparisons and such, compared for the for There operating XXXX XX% across third sales American therefore XXXX levels. As North to of appropriate, the demand all shipping quarter levels., third sales limited as selected overall In net for rose may down all brands million with was quarter segment, the quarter, have quarter. of global the last were for we

space quarter, third our We goods finished caused in improvement and the supply which October, this global from from expect rest which in bottlenecks us The net the XX.X% delays in of we constrained sales in third earnings to also quarter shortage decrease quarter net and currently in see of paying bring were the receipt margin million to are increased costs sales million in included caused in the of began meet get we through premiums quarter. shipments. the gross continue expenses XX.X% our should largely in quarter to suppliers Selling compared XXXX our supply $XXX,XXX margins administrative compared our non-recurring we gross capacity increased help to for Due increase deliveries in was the by with in are ships. chain were Asia. $XX to a million of the products. gross that on product in third However, suppliers, to shipping year's of from the demand order Wholesale XXXX. for the paying $XX.X in an XXXX Last in chain, often container charges. $XX.X

by $X.X will available and wage of subsidies not U.S. U.S. those approximately received governments. be is reduced the from Third time It at known the of fourth this quarter subsidies Canadian quartet were the in million XXXX in whether expenses wage XXXX.

Last same-store of three result sales for the sales a Retail -- in down The were just brick-and-mortar of brick-and-mortar levels a has XXXX, the sales sales lower million expenses million quarter of Same-store Third as quarter the were four surpassed Retail U.S. stores segment to were million the and operating significantly pandemic. e-commerce last in in XXXX. company locations. the $X.X administrative in XX%. and second due quarter quarter $X.X from charges. $X.X brick-and-mortar closed third and net currently non-recurring the rose $X Wholesale of XX% active XX% million the XXXX, quarter year's to third sales quarter from Net million in of sales North up selling sales. third earnings of higher third higher earnings operating expenses. American in increase by quarter third in included third quarter up retail in XXXX of third of due for XXXX, unprofitable quarter quarter $X.X the XXXX year

last While The operating had most four the $XXX,XXX up e-commerce of this their earnings due was $X.X year's locations million and operating driven improved e-commerce million increase XXXX. of of locations and improved Retail charges. by $X.X sales segment earnings. benefit quarter, remaining XXXX exceeded at to included in earnings Retail from growth, active losses also of for have Last the $X.X million closing losses brick-and-mortar year earnings of the at non-recurring unprofitable performance stores, brick-and-mortar of company's levels. higher

majority of October, sales that $X.X include sales South for difficulty] Florsheim Our in of South COVID imposed in million Victoria. losses XXXX year's $X.X of and in in as which of Australia. in included reopen businesses in a deferred a were of of XXXX. wholesale compared recovery quarter of be quarter million there retail in the line net Wales for million Last Australia $X.X Stores the operating the and and cash, Europe $X.X $XX.X allowed charges. shutdowns. $X.X during final due and was where both losses $X.X quarter its our quarter and currently COVID-XX investments all in company for Florsheim Florsheim in wholesale lockdowns we to due the Florsheim income million sales to marketable quarter hindered non-recurring stores of reopen for assets securities at third down to result business. At year's tax down being of improved $XXX,XXX had expect were offset of will XXXX XXth, up amounts Australia's been company's quarter, Europe, outstanding $X third tax million fourth Collectively Europe the of year's Last credit. significantly and in New in other totaled Business Australia, the to the expense large our related in developments. million begun operating tax tax related no largely revolving and quarter and $X.X XXXX. has our third lower company's The a million third of closed stores New the Australia were quarter Florsheim losses retail foreign partially Florsheim compared quarter have included in operations, retail provision and $X.X and Wales the number Australia is Florsheim short-term winding was [technical write-off this by provision adverse stages XXXX with to sales of Last to million the totaled to in September absent subsidiaries. improvement the of XXXX. The on of million the increase had at Australia as performance of million of compared businesses, The XXXX by losses

of million investments, first company nine repurchased $XX.X cash of generated million million in and $X.X dividends we the months million of from invested stock. We operations. short-term XXXX, $X.X $X.X paid in During our

will call of Chairman I declared like XXst. share would on turn had of now XXth record of per $X.X a estimate XXXX the million. Xnd, and Tom dividend between We Directors Forsake XXXX, to expenditures. capital all On acquire shareholders our capital payable $X.X also brand [ph] spent million and December to $X.XX expenditures $X Florsheim, November $XXX,XXX be over cash We million on November to Board and of to our that the approximately annual CEO.

Thomas Florsheim

Thanks, good John and morning everyone.

of demand excited record business and all our are trajectory brands. we about seeing We the across are

fourth We of While the XXXX bottlenecks the fundamentals the momentum. due wholesale quite to through are the be good were anticipate throughout end quarter to and inventory well-positioned should XXXX strong. versus flow down improved chain, sales supply business our with

quarter. for Asia. for enter factory selling shipping retail. was the all wholesale reflected down X% segments as BOGS entirely the across robust decrease our we Sales delays are Our base category The business BOGS from at BOGS in and production principal season

are inventory has and we And spot planned, deliveries interest The from a as throughout originally consumer our the the be has in than us later a the While bright we holidays. pandemic. much towards outdoor BOGS working been with boot expect in increased category brand. better to partners had retail situation benefited are

the business, our moving a remained which will we significant business, BOGS progress classic enthused developing boot opportunities toward lifestyle offer weather casual made sales have the the additional about are of successful we foundation While forward. growth

and Florsheim but experienced level. brands, for all Adams the in in reduced a Early Stacy substantially legacy for her shoes. demand rugged spike dress demand pandemic, and dress casual strong at the Regarding retail comfort casual was performance and footwear, casual Nunn there athletic, Bush

for we we in product. working toward regard and issues, and began to With inventory to shift see office by exacerbated unprepared pipeline as return social the and occasions. normal the restrictions, And were to chain more refined subsequent especially a levels. supply been other brands demand. social back loosening to the closets and rollout formal surge more footwear for has finished vaccines their consumers March evaluated to Retailers in of The situation fill restock in the transportation have been and categories a of of subsequent

working believe and anticipate we developments are have in within casual a position category. gained inventory relatively market the delays we chasing our through have While better within demand into have market although, and demand. dress unpredictable well XXXX demand, share pandemic that We been competitors impact dress we could and strong the

footwear the refined athletic the inspired market brands casual While with into encouraged of resurgence wider we the and outdoor the expand market, casual, are of more oriented we're to also shoes. of true traditional legacy pleased with our by the ability offerings

Our pandemic brands, consumer towards well throughout new success at as has sell-throughs our design and having selling we're getting focus the and the as categories with both level. placed casualizing in been

pandemic lifestyle move trends will changing between ratio reflecting balanced dress have and and truly casual forward, course, footwear we legacy our a business of the more world. As

terms of our up Retail quarter XX%. In third were U.S. sales our segment,

mentioned, in sites performance our the U.S. in strong growth and driver the of XXXX. stores U.S. our versus are in performing XX% by four XXXX was e-commerce versus last from with the majority The exceeding well, driven the brick-and-mortar period sales XX% up sales of our John As same year

growth building our to to our continue platform We invest e-commerce out maintain in momentum.

brick-and-mortar stores important the sales, direct-to-consumer in and is our Weyco e-commerce becoming business With increase driver unprofitable business a profit more the the reduction in in our model.

in our international and and in resulting Zealand wholesale in third both temporary retail Turning New to sales overseas impacted shipments business. performance. the Renewed Australia in setback a lockdowns our quarter,

a prior Since calls, profitability towards which and the platform. made South loss have shutdown tolerance of been reestablishing conference these Africa. As zero our pandemic, markets our Zealand, the markets shutting Florsheim Pacific in quarter. leveraging headway we Australia, the in or New business, mentioned the focused in leases unfavorable Rim encompasses Auckland in we beginning the in case and good and have Australia of Australia in Unfortunately, on e-commerce subsequent stores the policy the renegotiating for resulted and

reap we the market While disappointed benefits past the that we we stages, development, remain confident now this will and reopening the made ultimately over are of with year. Australia changes is the

XXth and XXth. distribution the are at with a to weeks, fulfill transit we left inventory. is $XX.X $XX.X we inventory on numbers million quarter. With and of be September now much and transit greater beginning much between news, number supplier than is June a running we for seeing inventory the an September in inventory in normal. demand inventory was paid The times in versus has of being encouraged compared a in now XX% that that of approximately of of are large we facility. XX% amount weeks four of and These is increased This of include transit on-hand Historically as containers is our inventory to and position Our welcome receiving the total at we fourth to to will to wholesale inventory in eight six are was typically transit have current excess percentage an our times XX% bottleneck transit million of order, loosen up total XXth. is been

freight Our margins are -- resulting currently being and material higher higher expense. factory by from costs, both impacted raw increases currently

from gross were our was this margins in price prior basis our unable backlog the for large quarter XXX XXXX to prices at of the discussed, wholesale third to factory fall for John in XX.X% down period the of the we XX.X% As same were Much to cover increases, but increases freight. covered year. points

to will have to our but least raised have As margin prices mitigate continue move margins, we of some into through we half first XXXX, at year. the that on the expect pressure impact we our

continues As pay-off. demand XXXX, aggressively strategy encouraged inventories to that stretch of final brands and the is to move for we that our the build into we starting are of our strong all our

for longer up backlog would open And buys your to Group. call your Weyco longer to our times. our continue to both increased cover Also, factory concludes and questions. lead both transit inventory to for you normal our formal larger offset This build We levels move [technical orders and in the the on continue timeline to difficulty]. remarks. Thank to placing in-season our place like we try times interest than to I now

Operator

first question [indiscernible]. Thank you. [Operator Our comes Lewis from Instructions]

Your line is open.

Unidentified Analyst

you're lot over just will be good was continue. year. report. And don't people I optimistic you which it's to X%, next of wondering seem A assume fairly realize a about paying I

book You've about financially value got makes strong. company $X $XX, very in cash which and a of the

You and haven't mentioned been -- a up shareholder I until recently.

where are buybacks, mentioned you that in still You buybacks progress under stand or do consideration, manner? in

Thomas Florsheim

consideration. In under We stock back did in still recent earlier They're buyback not stock. most bought the XXXX. we quarter

that third again priced, mean, to we position quarter we looking buyback. the what going I quarter. are was that stock when is at And fourth priced. are as we're it under feel be as the on clearly, that And is Our under right far buybacks in we now our believe in the

continue So, stock. to to we're going buyback

shares XXX,XXX stock something to back. authorization buy like We of have

the And time from time. to so, we buying market will be in

Unidentified Analyst

In of many you in stores have brick-and-mortar? do the terms terms left retail retail how stores, of

Thomas Florsheim

it. in four. and over one in we that brick-and-mortar we Well, have have Africa, pretty The shopping Auckland, in store XX and we one have mostly U.S., And Australia stores for Hong then we is only biggest presence -- in where stores. in much that's South shops store brick-and-mortar have Asia, in Kong the

had number brick-and-mortar XX a in of less total while than U.S. the big So today. the brick-and-mortar of is And stores we presence

have four in of stores about the a over in Australia very as U.S. the we're stand on that website profitable. the be right brick-and-mortar. than we've focus where money today financial our -- actually very is make slowly with on it's are We're is have closing up. model struggle the direct. web profitable And -- where driven. the leases number, -- we have we decade, reduced we now Australia, that to different all feel really brick-and-mortar back, able And stores, to still we've in retail our consumer last in Going been business number and total is come and We good them

and grow open additional business to going stores. possibly that we're to So, continue

does your So, that question? answer

Unidentified Analyst

Basically, not now had going is that eventually apparently your what thought because stores. discontinue that's going be to Australia I perhaps saying you're case. the to And the you're

Thomas Florsheim

a going to renegotiated at not open stores put Florsheim in dominant better leases to us going pandemic The past there. case. feel of is be got the And We much forward. were in the that is work did very the still that That over unprofitable, opportunities position that the brand during Australia. looking where additional we we stores has we're year out

John Wittkowske

the a our it's limited really large stores places. for market retail there's of of There's Australia, type there. store product. in mean, go from very buy of number of I our wholesale to to That's a versus people the different accounts accounts, still standpoint us. department And but wholesale couple one main

that down as on focusing with our we're take bit well. So, little there, starting is a supplementing to off which and website that

is think Australia the for the going the the there So, that we distribution retail is is really -- really us. in be long-term down in to way

Unidentified Analyst

feel How online I your you you're about do sales? go them more increasing you making How about know them. dynamic? do

Thomas Florsheim

what say more making …? do you When you dynamic, them

Unidentified Analyst

you're XX% how mean, do exposure? your to do online? if you In year, get XX% get other a I you how words, increasing

Thomas Florsheim

our versus XX% at is retail as a our front we critical are that analytics that grow base big you web those through but in that development. continue because we've in now, we're big quarter, And strong. comparison the XX that website. think -- $X.X XX% a we of Yeah. we more has the have the over I we future. we different And percentages we people growth investing this And backend lot been that stores for on the which few our web lot and get that have our we And had mean, when that actually really And U.S. is because in when It in see past harder kind though investing to years right website. increases, versus and the to been tools is and it's see and U.S. U.S. hire end you the last we And tools. the to a is the grow in way the is to resources XXXX. we're operating And you amazing the to year did in percentage it, is web of consumer very where investing back us. past had million earnings being pleased think of model goes the through about retail grown. in direct record had in profitability customers a

really So website count because the grown. profitability. our reduced helped brick-and-mortar is four was to really And the overall we've profitable, brick-and-mortar profitable, the and It's that's less stores. very

we're to trying to growth. question, lot to We your continue of room just think drive in to there's to continue for So that it, a still answer going and committed to we're growth. invest that

Unidentified Analyst

got in that's terms I Is can there any activity see thought what of cash an you've In growth, least, in area? online. at subjected any $X to acquisition additional

Thomas Florsheim

you add? do to want anything John,

John Wittkowske

couple the of balance. A Yeah. cash Sure. things on

In we're the maybe pandemic might looking know. don't of year call it, we're your way might believe things those very you balance think and on there, bit Just the a result of, pointed some mean, We always to strong sheet. some -- We yes, as of available shape the -- and a everything out or happened earlier, we question. that two. I -- come in roundabout acquisitions it's little financial for a that's a as nutshell, answer next

stronger. half it, been and number able year think So, out to the one, withstand a we last come of we've, and

because us, looking. as at a that we a that we've our something look going hurt you the the inventory go see are inventories, that. misleading little So, of We're way of growth but we're is that as frivolously to can it's that if always pandemic. purchase far always that in the think type decline cash sense And for there. in balance, had in the market not some will you We

up. back inventory our building we're Now

lot that and be to we're probably there's months demand. so because bit, is of balance certainly And a six fluctuating little inventories, the next a cash going to nine increasing over our

to Tom it's hard As get in. been mentioned, product

away. product So, a and coming right in lot our of is sold

right want we market acquisitions, nutshell, a for inventories a here make a we think can and we build money. because leverage in lot But to very lot a that we So, of good that we we the acquisitions, those always the up. do of have if are platform in get

Unidentified Analyst

Your so -- is information your said in you that the doing your very boot in business well. far given indicates in you've work activity, us your -- very,

Or to anomaly maybe is outside. on Now, it in that your be the happens to are be area? just an because concentration pandemic, main of more going that people

Thomas Florsheim

business, future or as about the has what up out and come were in hibernation. asking BOGS doing of the pandemic, were really which only the well we business more you held well, remained because That call strong is business, our people people we is really Are have getting out active acquisitions saying outdoor activities. outdoor -- during

going do at the so, driven that earlier which That's acquisitions brand, which a buy expanding in in driven growing our was is which in but portfolio, purchased the we have drove we this look us much area to partly -- we're category. That's is Forsake smaller brand, that of outdoor a the same -- And to to a that space, continue because business. brand year. outdoor interest

Unidentified Analyst

low companies them as years cap very -- no yours, I've sometimes many all companies, the such in The at stocks. happen which trading a there's actually in invested of

exposure out financial possibility your giving community. you additional a there's trying your has find sales, However, to discovered. if you're noticed interest increase volume company, company type that your the in can they look will by along maybe terms trading every have at their wonder if help start of in is been of company that in move more increasing shares XX,XXX terms that I or I once position, earnings you I of some is to day, any in what of to and really And analysts that that and

Thomas Florsheim

in is get stock enough because have suggestions trade Yeah. to volume In area. they're cover companies doesn't analysts, the We're the basis. that from doesn't big the what past daily have open trading we've going -- attention a just that just much that found it to to really

And but there. open we're so, it's suggestions basically, to hard just to their attention get

Unidentified Analyst

would Okay. help. certainly Because that

company who's of not the terms Somebody sales, covering but was in analysts, was there -- that some earnings. projecting

look If through you of opportunities -- investor saw where conferences the that. do industry in you move. your at that's type get hopefully able you'll attend bought exposure Yahoo any to you that other I Do be And to relations that in terms of method? or,

John Wittkowske

opportunities of There out some are those been that have there.

really We decided, as We being that. those after Florsheim, we We a do decided did while have not for acquisition to ago. or did us, was purchased valuable. which significant we do that a do not

sure that opportunity we think there I'll I be I had something materially our would next We're -- think arise. it do about, the that to if the on changed things to do company, something an arose if basis, opportunity large really ongoing really sense where acquisition the not But to and makes talk that. on those say a an or time that.

our wise a But being and with percentage we low in really a much that be way right haven't a people. bit float little that, to covering company. mentioned, We at might it some Tom to interest volume exposure wise, will of so as but take look other get now our found

Unidentified Analyst

much. Thanks I appreciate answers. the very Okay.

Thomas Florsheim

you for questions. Thank your

Unidentified Analyst

Sure.

Operator

I'd I'm to currently further Wittkowske turn time. the [Operator call this to John Instructions] like back showing closing questions at no for you. Thank remarks. over And

John Wittkowske

will year. your Thank great you day. for you talk the very in much Weyco Have a Group. with of And after interest the we end

Operator

Thank for conference This concludes you today's participating. call.

disconnect. now may You

Weyco (WEYS) 8 Nov 212021 Q3 Earnings call transcript