Weyco (WEYS) 11 Mar 202019 Q4 Earnings call transcript

Good morning, and welcome to the fourth quarter and full year 2019 Earnings Release Conference Call. My name is Zanera, and I'll be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]

the to turn now will call Mr. over I Wittkowske, CFO. John begin. John, may you

are our you. welcome Florsheim, this call. today and morning our call Florsheim our me Thank everyone, conference President to and Good and and Chairman CEO; fourth COO. quarter with Tom John Jr., On

quarter a we brief Before the to year, the the discuss for begin disclaimer. I of results and will read

and results factors actual or of results expectations, Weyco with could SEC that projections. other predictions, call, may to make refer company's future filings We recent events forward-looking concerning or events regarding and course we wish cause from SEC, the materially this that differ its the and you statements. which identify of projections other During such performance current statements, risks, Group's the our differ future We just that the the important financial to may actual Form statements company. our are from materially you, these to most XX-K and caution

refer comparisons some measures. to Additionally, non-GAAP may

may SEC these why including measures, GAAP and information the use additional them, Our non-GAAP we reconciliations data. about to contain filings corresponding

million and million year. per $X.XX decrease XXXX this XXXX. quarter of fourth the the $XX.X Diluted a $X.X $X.XX million compared fourth XXXX down of fourth share to fourth XXXX. in for quarter million Net per sales were the million. in X% in net the were million, $XX.X last share fourth share quarter down $XX.X sales Net Operating from quarter, totaled to quarter earnings X% earnings Group earnings $XX.X year's quarter of X% were from XXXX, attributable of per of in Weyco of $X.X last

$XXX,XXX $XX.X wholesale segment, and last fourth sales million million X% the year. with compared quarter were North this the revenues quarter Licensing $XX.X $X.X million, down were In for American net sales of of compared last were in with the year. quarter sales net XX.X% fourth in year quarter. last -- earnings net in the fourth XXXX year's Wholesale gross last XX% of

sales, increased from $XX.X lower million wholesale this of the the administrative in Despite expenses. operating quarter and result to $XX.X million selling was X% fourth earnings This largely in increase XXXX. decrease quarter

retail Net the company's U.S. and to segment, the XX% were sales U.S. compared quarter, sales stores websites. include, North our retail sales American for million both due were our sales mainly which e-com e-commerce sales with Same-store last the quarter, on million for include which of $X.X the up X% up year. higher $X.X

million year. earnings e-commerce periods company's Retail company's operating $X.X last this advertising costs between lower results The businesses. operating was and and primarily decrease due brick-and-mortar were the quarter to from the $X.X million locations higher at

quarter, Australia also environment contributed the other Asia. net wholesale sales in currency in Florsheim of and include Australian for million to XX% XX% quarter. dollar dollar the decrease, and decline The Australia's a the the to Australia in net This wholesale Florsheim only businesses, both relative to weaker XXXX. Our which down and million retail operations, $XX.X in sales of Australia, Florsheim Europe, with sales $X at was Florsheim with compared decrease had businesses due in net down XX% sales to retail its the challenging down in and U.S. were due the as retail primarily local

year. losses Australia's to business. operating higher $XXX,XXX the period had Florsheim compared last quarter The Collectively, for in increase between in Florsheim years primarily was costs to lower losses $XXX,XXX same Europe operating operating Australia retail and the Florsheim totaling sales of to due operating and losses

quarter In exit XXXX, Australia's expenses to operating Florsheim of stores. the included fourth of $XXX,XXX costs approximately unprofitable

million $XX.X with an $XX increase $XX.X X% million last operations $XXX million up in of X% XXXX. $XXX XXXX. were up in to in sales were share X% Earnings XXXX, per Net in from net earnings up overall per million earnings share million. XXXX, Diluted $XX.X in $X.XX share XXXX, compared XXXX, Group per attributable year. from $X.XX from Our in from Weyco rose million were to

sales for from revenues segment, were $XXX $XXX last In net percent million sales million, segment margins. year to net from and earnings year. up last in XXXX. to the were the XXXX, year, $X.X this Licensing up X% last year. gross million in up XX.X% from earnings sales million due were wholesale year, $XX.X for $X $XX.X XX% and Operating year Wholesale this of primarily as XX.X% the a increased wholesale million higher million gross

compared the sales. up from year, the Earnings XXXX. $X.X X% operations million XXXX, higher net up segment retail segment, mainly due sales $X.X XX% the mainly In to sales $XX.X retail in to were were company's websites. up Same-store million, from e-commerce for $XX.X our were increased on in due million with for million, XX% sales

had to lower net operations decrease $XX.X Australia. at sales of XX% primarily was due other sales Our net down compared The million. $XX.X Florsheim million, to

sales lower for XX% were net the Australia's year U.S. sales were Australia's sales Asia. year. retail only dollar contributed as also in relative to due in down the environment and retail Australia weaker the net down the to The decrease with and to wholesale its in local dollar challenging Florsheim Florsheim currency the X% both again for businesses, Australian

decrease selling sales losses losses and XXXX. higher $XXX,XXX totaling Australia. XXXX with expenses compared Florsheim $X.X and Florsheim due gross primarily of Collectively, and and operating operating administrative Florsheim million to at margins Europe Australia was This in had in lower

$XXX,XXX XXXX, Australia's operating costs expenses to included stores. In unprofitable exit Florsheim of

stores government sourced footwear Bush brands leather footwear would those in additional on The XXXX. February of Adams Stacy an XXXX, Nunn $XXX,XXX on and Additionally, was subsequently effect Xst to tariff XX% China. the XX X.X% tariff Florsheim, Florsheim September U.S. impacts primarily on it from Australia's losses which operating impose reduced on took and generated XXXX. In announced the

as The the expected commenced primarily never U.S. the impacts to non-leather indefinitely. which take brand XX, suspended and rubber other December on it government tariff on but BOGS effect footwear, was

on leather was company's the the sold took quarter fourth the a material tariff the For did have not inventory on before year of most because of impact effect. received operations and footwear full results in XXXX, tariff the XXXX

effort an to Chinese in wholesale its its impact of company many overall has cost tariff of the customers with from increases, the price and price many XXXX the of increases negotiated suppliers. For reductions mitigate

XX, XXXX, million and cash December our of At and $X line credit. $XX revolving securities marketable million on our outstanding had totaled $XX.X million we

million During repurchased and XXXX, in million $X.X million We paid we of operations drew credit. stock generated million our of from line cash our $X.X of company's $X.X $X.X and dividends. on

expected in April This the primarily We also on XXXX. be to due expansion our project space office to spent completed is $X.X expenditures, within capital of corporate million headquarters.

quarterly expenditures payable On We dividend per XX. million capital March be $X XXXX, Board on Directors million all will the $X expect between to share and shareholders declared $X.XX XXXX annual record March a in of XX, of and on XX, of cash XXXX. March company's

call like Jr., I the over Tom turn Chairman would to our to and CEO. now Florsheim,

Thank and John you, good morning, everyone.

Our Overall markets for we the North X% as mixed It X% year. but wholesale and we the in business where American picked our somewhat positive was quarter was performed fourth we the down a share for compete. wholesale business. well, up for up quarter

the part in well level, as we enter business results a opportunities we XXXX. as wide both in that had brand the strengths our our reflected of range At as

this wholesale XX% the an is and Florsheim believe is that We the for that outstanding the Florsheim this especially year. Our in on sales brand growth was division quarter considering top up result, the registered XX% X% increase fourth in of XXXX.

to developing X% higher-priced a terms as according extremely that value growth that of resonates this it is primarily address in for brand, product dress category some shrank competitors. new it casual Moreover, brand The with a market in and over to recognized relative has consumers performed Florsheim achieved statistics. the offers well

to is in move its of order address to the on its take diversify down need doubling forward, to of assortment Florsheim brand align with expansion the lifestyles. momentum we fast-changing As advantage assortment and casual

less sales in pleased we footwear to and strong up progress work year. the more fourth with casual United Canada single-digit the sales a in precipitation and decline, large becoming the as with lifestyle-oriented quarter parts finish increase continue that in States as We in future X% fourth believe resulted BOGS of we slower down across and BOGS temperatures X% year. from for the Apart towards lower the quarter category. in warmer weather-dependent footwear were our the to well make are XXXX the and

upside the brand see to the having based pushing BOGS significant continue we're products to new on success We [ph]. in

Adams Stacy Adams year. business was excuse the down XX% Stacy XX% was our X% quarter X% for business As the and year our and the the I'm quarter – for for me down sorry, for

segment. Adams good shoe decrease channel to footwear. large Adams in chain Stacy in shipments particularly in has the Stacy been the product dress into And very by their performance shoe in majority while falls driven trade a of primarily decline store part the assortment channel. chain our sales range The vast was narrowing retailers, are dress the

a fresh As aesthetic is as mix its challenging dress. Adams new of a unless long-term Stacy casual the Similar strategy Florsheim's, to result, number within how orientation. to its increasing has casual placing mirror, have consumers part is it in styles of footwear a the fashion changes

is progress of success early but Adams time. in Stacy We process. of the casual view, towards being to the that end this we're believe We point the this we the unique making more brand maintaining believe to as key over are transition innings

year. the for business decreased Bush and for X% the Nunn Our X% quarter

previous segment. discussed Bush's in result mid-tier calls, challenges of store conference Nunn direct As the the is loss department facing

Bush to growth XXXX. that belief will business Nunn the Our return in is mode

retail in made brand in is performing trade e-commerce The progress great and channel. also well has the

Bush's brand renewed about facing still we Nunn some momentum While and this key there the are headwinds are retail of optimistic partners, has year.

fourth our for X% which our The quarter sales. increase XX% e-commerce entirely driven by North American segment, in the U.S. sales was were sales in includes up e-commerce year. and retail the Same-store

our well build growth. are to such consumer as sales Internet we as Australia and With capabilities, to American continue to in e-commerce's improving markets and our drive other well and programs e-commerce we We North acquisition solid in as foundation positioned believe Europe. invest business tools

decreased for The loss our and year that been overhaul in the our a an of transition Net market. for sales business sales in for XXXX overseas in fourth has quarter XX% Australia business the year. reflected Florsheim as XX% in of

a significant SKUs. and have women's in footwear both a reset manageable amount through level inventory worked obsolete have of with men's We our of stores more and

stores, which we more with network. well a opportunities Florsheim better unprofitable on reflects store prune comfort, of of concise this to favorable as steps taken as In also essence brand. focused women's more our February believe the for line look leases we have within relaunched We year, the

the proportion has our as tremendous amount a new curated a leadership assortment have made of shift to of period in product, a in Pacific being Australia highlight XXXX. performance more All towards anticipate our casual environment. we of global retail business men's, are in sales also improved Asia difficult footwear. as In we a progress short all, well in time our by Within international impacted and

This versus Overall, gross XXXX compared by year. North XX.X% in were which margins, XXXX. increase XX.X% margins XXXX were increase in an driven in was American XX.X% in XX.X% wholesale to last

China on in cost of additional We factories negotiations have to their been offset price some focused with tariff. the of

the long of along the tariff While we term. quarters we impact affected will an with materially and customers, XXXX, see first together with be tariff over from believe to not the X.X%, the two working of reduction XX% that with our will suppliers margins in the

to Our inventories year ago. million compared $XX were XXXX, XX, a million at December $XX

boots into inventory higher in our went before and as Our Doing brought we much core last inventories us than year, shoes tariffs the as this because helped maintain margins. effect. possible on are

it delays the is any that regarding make It short-term makes interruptions believe unknown well production the year. are turned will being are caused it supply out, to in long impossible last, we impact predictions to positioned the by our chain. with full we of virus this coronavirus, sustain how as And that which

Group. your Weyco concludes our call would open to like the now I you up remarks. to for formal This Thank questions. interest your in

you. Absolutely. Thank

Instructions] open. ahead, question-and-answer is We will begin von now go your line Hammersmark the [Operator Please question first Chris Our session. [ph]. comes from

are doing? guys How Yes. you

Chris. Hi,

So I two questions. have

off? Like, that? factories one, around first coronavirus. have any factories or down? about other the actually the there China has chain Is like The cut there supply Where Wuhan specific that any are that are been in shut been mentioned you details

And stock the then the question buyback. second is

you. looking to ago mentioned, think, like, tell two I next the Can stock going you your to many you program a back? You buyback us, six were Thank guys quarters shares months over what's buy like year? how

and sure. over going take Sure, Sure. I'm to question the This Tom. I'm second then going to first Wittkowske, is to our turn John CFO. question the

different do We have Hubei in province. regarding around So provinces around any several factories, -- the factories we have China. in factories don't

I think down it's a shut month. that factories New important the Year for for everybody during the Chinese to typically know period,

for planned And so we that.

was so, year January Chinese XX. And New this Year

people down, no around home at factories And from back virus, so factories Year. XX what, they of come February January because kind basically regardless go the of the workers most shut in matter for China then of come and New other Chinese the and any provinces XX,

they basically. So a take month's vacations

with they very have people They put the communicating is extended and single Year provinces, have this that the -- put part the the almost back factories with by workers just basically, workers. of to getting say. start So, come And XX% year, day. getting should so restrictions, February. weeks government vacation a the the of China they've coronavirus, China, when back them I kind the two the open that of in again. every for day every they almost because or quarantine is a their New And China Chinese been shoes weeks, end couple reports -- we to every I've factory challenging in day -- talking in of XX% can't one in we've our been of work but from make next And so workers the all back

And so, we're shipments making shoes again. getting We're again.

long China, we're sooner to than back so question? in answer And things as we that your got as or does first actually work I control and seeing progress. thought good some -- So, stand

yes. Yes,

Okay.

the So stock you John, want do to answer buyback?

Is currently? you'd what to like what your general is know? are doing And on stock we that the buyback, Sure. question

like said share that changes know, in had a call, had you place. mentioned has ago, you you any place. in a quarters in you the dollar -- I'd what have two that? amount. share amount there to been conference amount And you in Because an said also, And

in in is the update and our And there's quarter, XX-K buyback are share attractive that. Every disclosed the always changed how the market The given shares in one be to gets market will program. are There's amount program, changes that stock buyback repurchased on not on in plan price stock and have there many amounts feel in update an no in increase, quarter. XX-K very in of we our tomorrow. an are we the XX-Q been be will we amounts There's to global in that market. on of from XX-K. buyback. been and the active that authorized the so repurchased, are active that available the no the the we every and an right have in the be filed actively the There's And we decrease the have nor global under now amount we

limitations our by are the set based we and much SEC how buyback there buying on that's Now, volume can those. on we're trading

Thank you.

from comes John Please Our go next ahead. question Deysher.

open. is line Your

everyone. morning Good

Good morning.

On million the that? many share $X.X to clarify, buyback, said you shares is just you repurchased worth. How

if get I see, number. Let me can that

me XX-K. can one top give -- see, me that Where's I I second. right Let the off if have here. the

John. Here

XX-K. the Here's

Give I'll you tell that second. me number. a

[Indiscernible].

see. right here. Let's It's

XXXX. shares bought back Okay. XXX,XXX in We

the question. we That what that? the Do price? was average was have And

asked how $XX. many average math to get price He price. average is the the Yes. No. Do The about shares.

fine. disclosed the of tomorrow? that the be will Okay, in And buyback status XX-K

Yes. have been again of summary It -- will a have XXX,XXX well shares repurchased.

So giving of number. it's -- you kind that's the

are that additional authorized. that the there shares You'll number buyback total and of will see are -- show what it

buyback I our March us XXX,XXX is buyback had as of that authorized of which gives number. shares Through -- room. X, program, -- under which I we're mean, plenty to still

Right.

Okay, good. helpful. That's

tariffs come how the China? away wholesale was Regarding I knows I be around it you what shipments could And if China? not. or do think been with the previously year? to percentage came doing had anticipate from And of back Because just China, you're last who get this curious what it from migration XX%. year to

will mean, going I that to for Yeah. lot. a to of although a that percentage we anticipate move years number it's number down, that us really go take

the maybe XX%. down it go see So you XXs, may maybe low to middle

like We've Our our factories we're and the continuing We've Vietnam for in in competitors move opened We've been have while that been relationships it's They situation to a have moving there. That recipe seeing for our with because production long-term production and production facility other a to started we very with there. we're in their overnight this production countries. quickly And honestly but best countries. in tariffs new very good whole move partners opinion is Republic, we're in very other and we up anymore be in interest position just already on long-term had best disaster. through in production slowly, and production India to really saying this increasing there. up very a is our many Dominican of that are the other in we and factories picking relationships ramped Cambodia. quickly, China some it our China. don't in We a believe very want we've

have We the China. resourcing in years over developed great

good Some And of thing are the we last health issues. feel our shoes for quality is long-term in have made to there. is -- is brands a our best

first so that we sure we're to foremost, able and standards. maintain are our And making quality

With raw seeing China. is manufacturers to that these other materials We're their a countries kind still Bangladesh China because moved -- but to to down maybe Vietnam, of production all a interruption from strategy their indication is XX% to this things components lot production sure quality pan bit that of moved of that of But get they're or that our you're now, that of and lot healthier. people or just having are now how less our in the that be interconnected come like guess our number China. is said, would one long-term be would right a where dependency the going little not is to places

happen from that China going of insulating the is necessarily things so to having be yourself production out answer And not in there. to

that best be about methodical we just diversify feel to is to it. we're very While it the going long-term, over

makes total sense. That

last next So you several years. XX% same, that that down to year the XX% Do was over to China. going perhaps about still And see I came out the of have… XX%

in Yeah, -- here are lowest XXXX, the -- -- more And trying and with now right in things there slow the XXs has then start from many in New production tariff. to -- say the yeah. beat would China play Year XXXX production I'm -- XXs Chinese brought obviously in -- a guessing so lot would our like gotten because also of we the low after I low a I

So this I will movement would in then XX%. into year guess XX%, be this And we're other it going countries. to XXXX, continue

it XX% be would And the years XX%. to range. get several lower. is the or to start it'd plan would guess XX% that down breaking be so -- over into little bit I a We'd And around

little Okay, Australia million. second, the magnitude $X.X for good. at surprised of That sense. a I makes the about Talking was of operating a loss

that Europe. my that know just where came point? going are we is curious, be is I us? we for includes be Now Or guess this want of to from at Australia in I'm Australia. But XXXX to transition And year most another

John do you anything... want to add

over impact joint in ownership. Australia, Previously on with – obviously. joint is Hong the we I it which mean, but took also – in XXXX, now I us XXX% make XXX% in was good venture. also we're coronavirus, and an a Kong, affecting Rim Pacific deal we forecast the because XXXX. it's And with to It's going had which Australia, the had think to Yes. progress

that took a mentioned inventory once in calls And ended amount been a the part think over. to obsolete a And we was fair that of of degree. worked conference we've up well. significant through lot script. that expect seeing things go. ways of We've we a in didn't to we was conference mentioned that XXXX in call And still as got it's I And previous

there will So be in residual some XXXX. impact

We place President hired we've He's Florsheim, right really path. hired have happy people. on Walton. Australia, We're with is, we're just Damian the news the good in team in The new management. we a of feel new new

want to what we it not So be be be significantly in the but than to where XXXX XXXX. might not better was it's going exactly it performance – in

you'll How stores That's in of Australia in at Okay. do end you the Australia? many encouraging. how end up you many did with year-end? at have think And XXXX

exact that have you number? Do

And unprofitable we're network. didn't gaps we're Low out XXs. have the seeing where in enough can that of perspective, And a store stores. business And we're make like the we've network, then from gotten we're we've And we leases store money feel some have done we analyzing – Yes. the unless store. in What geographic instance. standpoint, outlet reviewing a is we from of entering for opportunity. stores into not where model we there's most

there's And more our approach. around discipline so how total think I

we that wholesale One Australia. of customer thing end the in the ran significant into is at of XXXX loss a

And rekindling overall expanding so will also Australian we're the relationship on that business, wholesale and with very which help operation. our focused total

had we XXXX in where area good is one channel. success And in trade e-commerce the

Yes.

We've seeing significantly XXXX. that continue grown and own really growth we're into our website

And there. to so overall that contribute is going profitability to help down

e-commerce. in the there's tools growth, significant in Australia. think with growth market upside I feel in had of moved back-to-back of use to Florsheim's we years lot U.S. we the over a down Some we position given those We of XX%. And that U.S., the where Australia, had the we've

And then John. ahead, ahead. Good. go Go finally Okay. –

in mention stores there, Australia, last mentioned number exact the stores. I of to e-commerce number you. going XX side, the XX% the asked we've was seen that And I the year. significant We you for on growth mentioned XX as e-commerce in had

So we're that. by encouraged

And was on Okay. wholesale that go? Where that did customer wholesale the selection? the on loss on customer price,

It on of business. it the was say, the was I'd terms – well,

favorable both. hoped it had be not we to so continues. terms we it did go that profitable. to And as but the that a tried And was conversation business wasn't And negotiate basically would

the as biggest years. word for that were And And very think I of We many we well brands many, we there. used one can, so, John that performed rekindle it's an long-term, rekindle, we're relationship. account their the that hopeful

it disciplines But in the how just we're ever business applied that Australia for case. applying literally so the basically in that the was to same we've U.S. And see we'll --

businesses. And the able business which we've our so run to with wholesale our business, is profitable of majority here, always been

And so same those down applying there. we're standards

And the profitable so that we a be that U.S. model model will Australia. have going little of that And time, in take it's profitable is over feel that a bit to us but we in time

then makes And total many sense. That And side, year closing finally stores the in be stores retail on end Okay. XXXX? U.S. how you will you with? the any did

ended lease close. We the I eight XXXX, think there's I then up more question. answers And think coming in And one with basically year -- stores. mean and will that that store I the yeah,

where to retail the is Seven side? want on you be

No.

the I mall very think in been doing come leasing as or that's that we're much on side evaluate leasing just lease we're the the going Australia these In past, to has to the arrangement in it -- the leases terms the continue up. the like space. person in of power the

given are we entered And leases traffic at to mall favorable that the continues when in decline. look just and so we especially it in some back like Australia, U.S. cases into that not us in to

in has out negotiate If shifted cases many decision to as business. before And malls up make going those to business because allow because us are lease make terms. those we're the not then So having close. a in location to terms they're the of lot leaving. leaving up, retailers each as location then retailers allow better to open. of power trying discussions If though And that we're lesser going leases that do are in the and we'll the make keep terms with come a money us comes money to

been a power. And so in shift -- the shift there's

So have of very power. believe but retail -- a amount a small have we'll see In to so U.S. marketing we're that some we there's tremendous Florsheim presence, a don't only we we're stores -- having But to they if -- very particular, money. how can small benefit marketing goes. make we in going a the that

to we're measure. if going if profitable look the going a close we doesn't to So like it's be -- it stores

makes… That Great.

Hello?

Hello?

your comment. for Thanks Yeah.

Okay. Thank you.

showing And further call Instructions] like not any I'm this you. to Thank host. questions to at turn [Operator I'd back the time. over the

your you. Thank the will Thank questions. for everyone quarter. day. we great with a after Have first you, you talk And

you conference. Thank you, concludes today's ladies gentlemen. for participating. Thank and This

disconnect. now may You