Weyco (US:WEYS)2021-03-10 18:58Financial Data and Key Metrics Changes - Net sales for Q4 2020 were $62 million, down from $86.9 million in Q4 2019, representing a decrease of approximately 29% [7] - Operating earnings for Q4 2020 were $7.9 million compared to $11.5 million in Q4 2019, a decline of about 31% [7] - Net earnings totaled $5.1 million in Q4 2020, down from $8.8 million in the same quarter last year [8] - For the full year 2020, net sales were $195.4 million, down from $304 million in 2019, a decrease of approximately 36% [14] - The company reported a net loss of $8.5 million or $0.87 per diluted share in 2020, compared to net earnings of $20.9 million or $2.10 per diluted share in 2019 [15] Business Line Data and Key Metrics Changes - In the North American wholesale segment, Q4 2020 net sales were $46.2 million, down from $68.8 million in Q4 2019 [8] - The North American retail segment had net sales of $8.7 million in Q4 2020, slightly down from $9.1 million in Q4 2019, but retail operating earnings increased to $2.7 million from $1.5 million [10][11] - Other operations, including Florsheim Australia and Florsheim Europe, reported net sales of $7.1 million in Q4 2020, down from $9 million in 2019 [12] Market Data and Key Metrics Changes - E-commerce sales increased by 15% in Q4 2020 and 9% for the full year, driven by a shift to online shopping during the pandemic [11][29] - BOGS outdoor brand sales increased by 5% in Q4 2020, while sales volumes for men's legacy brands decreased due to the pandemic [9] Company Strategy and Development Direction - The company is focusing on e-commerce growth and has closed unprofitable retail stores, currently operating only four brick-and-mortar locations [29] - There is an emphasis on diversifying the product mix, particularly in the BOGS brand, which has seen strong demand for outdoor products [26] - The company plans to continue reducing inventory levels to align with sales and transition to more casual product offerings [33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for a potential recovery in the second half of 2021, contingent on vaccination rollouts and a return to normal activities [25][34] - The company is cautious about credit risks among customers but sees a strong backlog for the BOGS brand [44] - Supply chain issues remain, particularly with container shortages, but overall supply chain operations are back to normal [52] Other Important Information - The company generated $40 million in cash from operations in 2020, used for dividends, debt repayment, and stock repurchases [23] - The Board of Directors declared a quarterly cash dividend of $0.24 per share, payable on March 31, 2021 [23] Q&A Session Summary Question: What is the tone of your customer base regarding credit issues? - Management noted lingering credit issues but indicated they are better than during the height of the pandemic, with careful monitoring in place [43] Question: Is the expected improvement in the second half driven by firm orders or vaccine hopes? - The improvement is based on a strong backlog for BOGS and expectations of increased demand as vaccinations progress [44] Question: How is the supply chain performing currently? - The supply chain is largely back to normal, though there are container shortages affecting delivery times [52] Question: What percentage of imports comes from China? - Approximately 70% of imports are sourced from China, with ongoing efforts to diversify sourcing [58] Question: Are there any significant impacts from tariffs on Chinese imports? - Tariffs remain in place, reduced from 15% to 7.5% on leather products, but still present a cost challenge [60]