Weyco (US:WEYS)2022-08-07 02:59Financial Data and Key Metrics Changes - Overall net sales reached a record $74.4 million, up 29% from $57.6 million in Q2 2021 [5] - Consolidated gross earnings were 40% of net sales, an increase from 39.4% in the previous year [5] - Earnings from operations rose 25% to $5.7 million from $4.5 million in Q2 2021 [5] - Quarterly net earnings increased to a record $4.5 million or $0.47 per diluted share, compared to $3.8 million or $0.39 per diluted share in 2021 [5] Business Line Data and Key Metrics Changes - North American wholesale segment net sales were a record $59 million, up 41% from $41.9 million in 2021 [6] - Wholesale gross earnings improved to 33.7% of net sales, up from 32.4% in 2021 [6] - North American retail segment net sales reached a record $7.4 million, up 20% from $6.2 million in Q2 2021 [7] - Retail gross earnings as a percentage of net sales were 67.4%, up from 65.6% in the previous year [8] - Other operations, primarily Florsheim Australia, reported net sales of $8 million, down 16% from $9.5 million in Q2 2021 [10] Market Data and Key Metrics Changes - Florsheim Australia experienced a 4% decline in net sales, but local currency sales were up 4% [21] - The overall inventory level was $95.5 million as of June 30, 2022, compared to $39.4 million at the end of June 2021 [22] - Approximately 40% of the inventory was in transit, with 60% on hand in the distribution center [23] Company Strategy and Development Direction - The company is focused on building inventory levels to meet increased demand for products [24] - A price increase was instituted in July to return gross margins to historical levels [24] - The company is retooling the Forsake brand and diversifying its factory base to improve product availability [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the wholesale business, with a 41% sales increase compared to last year [15] - There is optimism regarding holiday sales and the second half of the year despite mixed feedback from retailers about back-to-school sales [30] - Supply chain issues are still present but have improved, with expectations for better product availability in the future [32] Other Important Information - The company declared a cash dividend of $0.24 per share, payable on September 30, 2022 [13] - The company repurchased $2.5 million of its stock during the quarter, totaling 29,600 shares [36] Q&A Session Summary Question: Feedback from retailers regarding the shoe category amid high inflation - Management noted mixed feedback from retailers about the back-to-school season, attributing it to various factors including weather and online shopping convenience [29] Question: Insights on holiday sales - Retailers remain optimistic about holiday sales and the second half of the year [30] Question: Issues with Forsake brand - Management explained that supply chain issues and the need to diversify manufacturing have delayed product availability, with a relaunch planned for fall 2023 [31] Question: Status of supply chain issues - Progress has been made, but supply chain issues are not completely resolved [32] Question: Details on stock buyback - The buyback during the quarter amounted to 29,600 shares for $2.5 million [36]