Weyco Group’s Earnings Call: Record Profits Amid Challenges

Weyco Group ((WEYS)) has held its Q4 earnings call. Read on for the main highlights of the call.

Weyco Group’s recent earnings call presented a mixed sentiment, reflecting both achievements and challenges. The company reported record net earnings and growth in specific segments, such as Florsheim and the North American retail sector. However, these positive outcomes were tempered by significant hurdles, including a decline in overall net sales, the impact of new tariffs, and underperformance in the BOGS brand and Florsheim Australia.

Record Net Earnings

Weyco Group achieved record net earnings of $30.3 million, or $3.16 per diluted share, in 2024. This marks a slight increase from $30.2 million, or $3.17 per diluted share, in 2023, showcasing the company’s ability to maintain profitability despite market challenges.

Increase in Gross Earnings

The company reported an increase in consolidated gross earnings, which rose to 45.3% of net sales in 2024, compared to 44.9% in the previous year. This improvement highlights Weyco Group’s effective cost management strategies.

North American Retail Segment Growth

The North American retail segment experienced a record net sales of $38.7 million in 2024, representing a 2% increase over the previous record of $38 million in 2023. This growth underscores the segment’s resilience and potential for future expansion.

Strong Performance of Florsheim Brand

Florsheim led the company’s legacy business growth with a remarkable 22% increase in the fourth quarter and a 2% increase for the year. This strong performance highlights the brand’s enduring appeal and market strength.

Improved Wholesale Operating Earnings

Wholesale operating earnings increased by 14% to $8.9 million for the quarter, up from $7.9 million. This improvement was driven by higher sales and lower expenses, indicating effective operational efficiencies.

Overall Net Sales Decline

Despite positive earnings, consolidated net sales for the full year were $290 million, down 9% compared to $318 million in 2023. This decline reflects broader market challenges impacting the company’s sales.

BOGS Sales Decline

BOGS sales saw a significant decline of 17% in the fourth quarter and 27% for the year. The decrease was attributed to mild winter weather and reduced demand for insulated footwear, impacting the brand’s performance.

Challenges in Florsheim Australia

Florsheim Australia’s net sales declined by 15% for the quarter and 20% for the year, primarily due to the closure of Asia Pacific operations. This highlights the geographic challenges faced by the brand.

Impact of New Tariffs

The imposition of additional tariffs by the US government on goods sourced from China increased costs across all brands. This necessitated price negotiations and potential price increases to mitigate the impact.

Decrease in Retail Operating Earnings

Retail operating earnings totaled $5.3 million in 2024, down 21% compared to $6.8 million in 2023. The decrease was due to higher retail selling and administrative expenses, affecting the segment’s profitability.

Forward-Looking Guidance

Looking ahead, Weyco Group expects flat net sales for the fourth quarter at $80.5 million and a 9% decline in full-year sales to $290 million compared to 2023. Despite a decrease in consolidated gross earnings for the fourth quarter, net earnings increased to $10 million, or $1.04 per diluted share. The company is addressing challenges such as new tariffs and is negotiating price reductions with Chinese suppliers to counteract these costs. Additionally, Weyco Group announced a regular cash dividend of $0.26 per share, payable on March 31, 2025.

In conclusion, Weyco Group’s earnings call highlighted a mixed sentiment, with record net earnings and growth in certain segments offset by challenges such as declining overall net sales and the impact of new tariffs. The company’s strategic focus on managing costs and negotiating supplier terms will be crucial in navigating these challenges and maintaining profitability in the future.