Weyco (US:WEYS)2024-05-11 12:03Financial Data and Key Metrics Changes - Net sales were $71.6 million, down 17% compared to record first quarter sales of $86.3 million in 2023 [4] - Consolidated gross earnings increased to 44.7% of net sales compared to 43.1% in the previous year [4] - Earnings from operations were $8.3 million, down 21% from $10.4 million in 2023 [4] - Net earnings were $6.7 million or $0.69 per diluted share compared to $7.4 million or $0.78 per diluted share last year [4] Business Line Data and Key Metrics Changes - North American wholesale segment net sales were $56.2 million, down 20% from $69.9 million in Q1 2023, primarily due to a 48% decline in BOGS sales [5] - North American retail segment achieved record sales of $9.8 million, up 10% from $8.9 million in Q1 2023 [7] - Florsheim Australia net sales were $5.5 million, down 26% from $7.5 million in Q1 2023 [8] Market Data and Key Metrics Changes - The overall inventory as of March 31, 2024, was $62 million, down from $74.2 million at December 31, 2023 [18] - Interest income totaled $900,000 in Q1 2024 compared to $100,000 in the previous year [9] - Interest expense was zero for the quarter compared to $400,000 last year [9] Company Strategy and Development Direction - The company is focused on evolving its brand to fit a more relaxed lifestyle and expanding offerings in casual and hybrid footwear [13] - There is a commitment to product innovation, particularly for the BOGS brand, with new product launches aimed at differentiating from competitors [15] - The company anticipates a conservative trend among retailers to continue through the second quarter but is optimistic about demand improving in the latter half of the year [12] Management's Comments on Operating Environment and Future Outlook - Management noted that the North American wholesale business faced challenges due to conservative inventory management by retailers [12] - The company is optimistic about the long-term trajectory of its legacy brands despite current market pressures [13] - Management acknowledged that the market is slowly normalizing as retailers work down their inventories [14] Other Important Information - The Board of Directors declared a cash dividend of $0.26 per share, representing a 4% increase from the previous quarterly dividend rate of $0.25 [10] - The company generated $14.3 million of cash from operations during the first three months of 2024 [10] Q&A Session Summary Question: Reason for minimal stock buyback in Q1 - Management indicated that stock buybacks were limited due to high demand for shares, making it difficult to acquire more at set price limits [21] Question: Projected free cash flow for the year - Management did not provide an exact number but indicated that inventory levels and payables would not significantly impact cash flow [23][24] Question: Return rate for online shoe sales - The average return rate for online sales is 12% to 13%, which is considered low compared to industry standards [31]