- Earnings call transcript Q3 2022

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Operator

Good day, and thank you for standing by. Welcome to the Weyco Group Third Quarter 2022 Earnings Release 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. to Anderson, conference Officer. Weyco like speaker to now Judy today, Group's would hand over the your I Chief Financial please go Judy ahead.

Judy Anderson

Group's and call with Good welcome today and is third Kyle. COO. everyone, Jr., me John XXXX conference our Florsheim Florsheim, Weyco President Chairman quarter this you discuss and call On Thank earnings. Tom to CEO; morning, to and our

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

XX-K segment. make course section projections these future wish other recent and materially. of of regarding this that refer current the annual the you performance our statements to may the our our we During most Risk predictions $X.X inflation million differ earnings our American and to million mainly last XX% record statements We our margins last year's you Securities third for record net or the actual of of XX% Exchange a from on call, financial Commission reached million, entitled that to operating in the were and $X.X XXXX. in of higher report the our our risks uncertain demand diluted products, and of wholesale quarter $XX.X compared direct sales sales third projections more gross American in in net on a our diluted just quarter caution our in record year. third We pandemic. more share, North were forward-looking due Factors or of of could to expectations up earnings for events sales up Quarterly XX% with Overall, a events of indirect may million the and earnings $XX are North the quarter year's $XX.X concerning than Form a net of third the million. other XXX% to $XX.X double COVID-XX materially and wholesale or in consumer company. to gross up share quarter last future Quarterly results Consolidated million XX% filings impact record from Net million, and to compared $XX.X were $X.XX earnings factors differ or continuing sales, $XX.X that discussion XXXX. effects per than per and a including net operating segment XX.X% to to increased costs compared important results million, cause

increase quarter and this last strong caused higher abnormally delays, quarter year's demand third which to low supply prices, was to quarter. While due consumer ship in chain part the some fourth to selling third of sales orders were due

quarter record our wholesale peak demand levels supported This and shipments. inventory business our experienced

short anticipate quarter, XXXX to fourth last that the we due to forward sales quarter. will quarter fourth sales shift year's to Looking of the fall our in third

sales The compared $XX.X last of declined expenses selling However, third overall from sales margins the Wholesale XX.X% freight result XXXX inbound year. net XX% due administrative on of of prices million were China quarter volumes. a for largely higher year. of coming million XXXX. sales $XX.X and XX% during costs expected employee with increase lower to our as the quarter of sales rates net increased as quarter. to Gross the of net freight higher compared was period net same last the containers is were sales of XX.X% to half earnings in of associated outpace second Wholesale and gross costs to the improved selling XXXX or or

last and XXXX, $X.X North net year. wage year up retail to due $XX.X $X.X American third XXXX, to rose Retail businesses retail sales million The up $X a record gross earnings $X.X for e-commerce for brick-and-mortar stores. higher and million respectively. in administrative volumes earnings the were as million the expenses the XXXX were higher million third quarter $X.X quarter increase subsidies. and year. offset were Wholesale quarters Selling Retail the outbound major $X.X in $X.X XX.X% XX.X% brands expenses reduced of was and decrease quarter the websites. across higher year's and to sales million expenses of of gross as in primarily for earnings advertising. sales were margins. mainly $XXX,XXX The of Additionally, our Net was by primarily to versus segment operating operating quarter government in at from were XXX% of third four percent sales totaled last million sales third higher the administrative XX% quarter Sales our compared and last primarily The from up were the selling expenses. higher million, earnings increase the a e-commerce by quarter due also lower freight last our due to million to domestic was for third quarter due from segment of XXXX.

Our other of retail Florsheim historically businesses have Australia operations and Europe. and included Florsheim the wholesale

disclosed, as company Florsheim previously However, the closed Europe.

to Australia. third compared of being a million the revolving the third credit. we due on million, million $XXX,XXX the other sales to at its losses Last for $X.X XXXX to online of of third September quarter. cash, of of million for Australia. higher quarter outstanding businesses. $XX.X marketable sales due improved COVID-XX Florsheim Australia. $XX totaled $XX.X resulted XXXX retail the a to stores and operating quarter XXXX, was due had XX% up our the wholesale were $XXX,XXX and million higher Other earnings $X.X performance Other short-term in of quarter In Florsheim up in results for result At large category number totaled local a net retail XX, sales sales Australia reflect currency, in sales related As negatively by quarter year's only Florsheim businesses from quarter recovered operating closed our the Florsheim that for our majority last lockdowns, investments to were securities increase and XX% and operating both impacted line the The Australia's in of year. which net of

During on credit funds $XX.X $X.X pay we million our to our line the nine million drew XXXX, to used company first liquidated in million and investment dividends of of We stock. months $X.X and repurchase $X.X of of securities. million

In of addition, our inventory mainly purchases. a to net operation use $XX.X in million cash fund resulted

approximately of expenditures. We million also had $X.X capital

XXXX the a $X.X annual record capital all that like January XXXX. our X, of November Tom per and X, between million Chairman On $X share XXXX to and to dividend I of expect November Jr., million. We over XX, $X.XX Board to XXXX, will call expenditures on Florsheim shareholders Directors declared our now turn cash be payable would CEO. of

Thomas Florsheim

Thanks Judy, and good morning everyone.

straight overall our a are wholesale resulted fourth sales. excited of the which We very of strength business, in quarter record about

Judy strong wholesale supply nearly third when large position of As issues. The XX% inventory part relative our increase third to in up to chain our business mentioned, the year's constrained our were was reflects versus last due quarter. quarter shipments XXXX,

XXXX, achieved at nearly profitability record wholesale a byproduct quarter. our levels However, also our for of and our up comparison a for as very and shipments the third retailer to quarter consumer was of In both strong were company demand the we XX% pre-pandemic footwear. good performance a

accomplishment economic of of this proud We insecurity. in particularly this heightened period are

its changeover our largest Florsheim record. me, very has and the experiencing our aesthetic. increases Bush footwear positive third XX% significant toward occasion-oriented market boosted in are Florsheim, registering and XX% The quarter lifestyle Florsheim from We continues of also and had legacy a its largest with more sales on casual Adams gains Stacy legacy had -- prevailed Bush XX%, demand during a excuse for XXXX, respectively. The traditional over and third resulting with all trend quarter Nunn strong Both brands the to record cycle across of Nunn and on and away of in-home dress-up that brands. work-oriented pandemic had

in brands space from We casual certain pulled dress the as dress footwear less competition benefited have pandemic. back and this during from

different and brands. range push casual good years, product refined future us which We of a understanding but work and few experimented what our footwear last in for during doesn't focused long-term us remain the expanded also The development, remain strengthening for given our better believe assortment we towards to we all as to footwear, market have the works growth pandemic for casual a for categories the has Over on for casual opportunity will learning our in mid-term. has provided the brands. near

outdoor our shipments. group, up versus and it of product XX% In for BOGS a record last quarter is was BOGS terms year

heightened XXXX of position of As consumer backlog the conference orders. the to in to discussed chain in a during allowing issues outdoor and navigating In us off on better calls, much pandemic business inventory of we took to try strong XXXX, our the meet deliver much height and are we supply demand. spent previous XXXX

In expanded casual our addition, with lifestyle market BOGS share and picked particular more beyond up have we . in styles in classic women's and products sales our category. the have

the are fourth into majority believe oversaturated validity good demand to believe product as have our clear quarter, outdoor become these into we of a styles will has and future. softened it we navigate inventory the with last As the We we to in somewhat position year. is has BOGS the head that that in consumer market well relative changes

anticipated the Forsake due second has As supply chain onboarding slower challenges. we quarter mentioned, to call, our been than conference in of

We will a of believe fall back introducing of positioned are brand the number in of a year. XXXX the styles be for and well the next in relaunch process new for half

by sales retail driven Our strong up quarter sales. were the mainly e-commerce for XX%

pleased that have by e-commerce flat-lined are the statistics footwear as industry year-over-year. sales largely We solid growth indicate

is track efficient prior shipping to consumers profitability new while advertisers' the become target years. and competitive and to the in to due advertising ability space to Shipping has SG&A with higher privacy advertising. related settings in expense and less effectively some surge respects digital costs, limiting e-commerce our increases However, significantly more costs, primarily comparison to fuel down

sales we Florsheim on Australia were by Sales up Florsheim getting both maintaining shutdowns. forward, were retail As costs Last versus Australian and trend. with in significantly higher currency move sales our businesses. year wholesale while markets are line, COVID our growth local in our we impacted the in XXXX XX% in focused

successfully quarter, navigated the new During management to warehouse. Australian our team a transition third

are opening both Australian With our strong Florsheim exhibiting business the momentum. of and the up BOGS markets,

year sales an become of third will BOGS part in model record that straight and expect business market. important has it of this have our We

the back to We for region. Australia by the are in pleased bounce the turnaround and profitability

of million Our September as was up million, overall $XX.X from inventory end year. of XX the $XXX last September XXXX, at

calls, demand in for been we've our building to our product. discussed inventories previous meet As the

our improve and to more earlier continues have supply consistent. inventories our this shorter As chain higher record explained delivery helped in third and drive call, results. times The quarter become

a receipt to earlier planned inventory For fall of ensure to we to normal for on-time spring be of our delivery year this and customers. XXXX, of than

planned XXXX, allow we As norms, manufacturing fall have us to to closer bring for times product of to which returned season. our a historical closer lead

gross overall price XX.X% to freight margins last was increases margin costs. Our to year. XX% inbound lower and due compared improved Gross

downward, remains increased would in now above levels, interest freight Weyco remarks. we costs Group, concludes pre-pandemic This to like for questions. formal you to see continuing open your to are our While the I your to margins. helped freight drive move Thank call which and

Operator

line Instructions] from the Wright David Investment of your [Operator now first David Trust open. is question comes Your from line L.P. Henry

Thomas Florsheim

morning, David. Good

David Wright

two have questions. I Hey.

have the quarter? you any did First, in latest repurchase share

Judy Anderson

total for We did. just -- a $XXXXXX. quarter the at XX,XXX cost We shares of

David Wright

$XXX,XXX? shares XX,XXX-ish that so XX,XXX, And to - at XX,XXX out shares works

Judy Anderson

Yes. correct. of... average That's An

David Wright

in And Thanks. the the has been balance increased allocation, profitability appreciate ties question I'd a stock with and Okay. the of it's I what thinking pickup super about with overall I I your is the capital always course, hasn't if and sheet. earnings, in the And was with -- that? company know and buyback that conservative with great thoughts. just wondered dividend been it on you years. great -- noticed And this Board's X.X don't then your second but

Thomas Florsheim

just I the that the a not globally. Sure. And think for macroeconomic and of not agree The uncertainty Weyco facing thinking would clouds talking just I'm everyone upcoming in uncertainty it's there's behind uncertainty maintaining horizon that, is just amount the Group, we're our -- year. on same a lot the dividend lot at that about of

dividend our so, viewpoint way again, mean, out balance -- as we're is would pointed the our the be the to times I to conservative are until plan you eventually start increases guess, to -- are going I sheet our wait And predictable. we're our same. our dividend more and but increasing

David Wright

your appreciate $XXX,XXX much, luck Right. And only I about and forward. a Well, position. out of would on a I increase is a quarter, point that's Thanks that fair very comments just money. going real good question. $X.XX share my

Thomas Florsheim

Thank you.

Operator

open. Deysher question line of Your is line your the Fund. Value John, John from now comes from Pinnacle next

John Deysher

Good morning, Tom. Good morning, Judy.

Thomas Florsheim

John. Hi,

Judy Anderson

morning. Good

John Deysher

A morning. of Good plan? the couple repurchase left is much How questions. on share

Judy Anderson

a million. X.X shares, million less little X.X than

John Deysher

X.X million shares.

the inventory year-end to Okay, drive would got $XXX obviously, much sales. it. The how much quarter -- million, But you inventory expect ended and that how come say? at you do down by helped

Thomas Florsheim

it the probably but through It's actually quarter up we year little pretty a down, We And expect it's come we're John. exactly slightly a much little go just will to predict a then it as bit to million. and few go second at possible that and move it'll first higher we end up quarter. hard -- but peak, into as

John Deysher

up? going it is Why

Thomas Florsheim

the in the pretty have mess. the spring was What brought in experienced we is all early, bit challenge were we few our actually what we was on we still on a of our time of the when ship because inventory purchasing that fall. And difficulty last chain in supply quarters, this customer big in time. inventory to faced spring did we inventory orders here still And getting a

we've our lead longer up supply moving because times from timelines, factories. and been for And of trying to the we're the so purchasing chain --

fall And and inventory XXXX brought that's reason the our so, that we and inventory spring early. for

getting the season. containers We lead seeing will back closer the we what to again But and is times much ones issues we're it's sometimes unfortunately. held almost are always up supply levels. and pre-pandemic normalizing, need, still buying get chain you Now have where to

we're closer contemplate, as much for what bringing So bring fall be to that to able our in XXXX, need. in we'll we

bring And help us to so that's going down inventories.

John Deysher

So, think down start will when... inventory you come to

Thomas Florsheim

Second quarter, next year.

John Deysher

Second quarter XXXX.

Okay.

to are I it than of as know wasn't know. competitive and it Let's e-com they And two close second. they talk doing very money a that making Mean headwinds probably the years get it's are a there frankly, you coming. freight, you just portfolio exactly about e-commerce to a just What turnaround their business they profitable? for ago. were it's or because decided few one companies our stronger months ultimately see didn't -- advertising,

steps curious business just I'm what that taking get you're profitable? So, specific to

John Florsheim

is fuel freight, yes based business of there with John, terms costs e-commerce is has is this than SG&A year very less it's also got didn't in and some less advertising spending a that because in the which Florsheim. privacy do was John, the us It we and expenditures and costs on this Yes. target, profitable to very, with higher to year. John our higher on of to settings away in third there and having do ago. that quarter on actually -- out more it detailed ability profitable last have from Tom, competition

happy go sort our to to And not the sure SG&A ability which So, is we're had try from deals into area very And with it this with We see stay from we're We're for some of a right with actually standpoint, we're we a that we then budget. our an it's is advertising year. get things line. freight profitable freight and shipping the of to on so happened very period time freight business more doing to try happy -- quarter, as to costs perspective, that business. pressures carriers, e-commerce, the renegotiate in our focus e-commerce nice our our we've is really but what's of our making now, grow standpoint. getting an line, around some a competitive and more main from in costs fourth

reach that we and us we're more have but want us we've of, using other consumers consumers. of how that terms better out efficiently have this do targeting efficiently. we of new in added our advertise customers, where will and year. to tools beta terms in that in allow and more -- new phase, allow number doing that to of We're to just terms something in attributing that a just conversions hopes we're we The thing, advertising It's that too pick prospect to this

John Deysher

Okay.

seeing When do those of anticipate So, steps you impact there. the changes? of lots positive

John Florsheim

Well, I huge get fourth in now think e-commerce. going quarter, we're right numbers in some the to

pressure quarter. anticipate, fourth would e-commerce our the under I in So growth being

As costs a in to What that's we're to should we fourth in immediately from have -- as quarter last that going get didn't standpoint, in in I line. -- far fourth the SG&A, the going pressure able had great profitability quarter, be should growth expenses. -- to where our given terms but happen very We topline from a in had have is more We of terms our year, more didn't we this were standpoint. growth we get there's but we sales. a there's anticipate to line going more have things be profitable,

John Deysher

quarter. fourth the In

John Florsheim

fourth the In quarter.

John Deysher

color. good right. Thanks All Good. Okay very That’s and much good luck

Operator

further conference now would [Operator turn I Instructions] There no closing questions remarks. moment. back Anderson Judy are to for at like the to the

Judy Anderson

today want to to participating you in for everybody, you our great and call hope really thank just a have day. I say I

Operator

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

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Weyco (WEYS) 5 Nov 222022 Q3 Earnings call transcript