In This Article:
Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Weyco Group Inc (NASDAQ:WEYS) maintained a strong cash position with $77.9 million in cash and marketable securities and no debt on their $40 million revolving line of credit.
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The Florsheim brand saw a 7% increase in sales, indicating strong performance and market share gains in a challenging environment.
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Retail gross earnings improved to 66.6% of net sales from 65.3% in the previous year, showing better profitability in the retail segment.
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Weyco Group Inc (NASDAQ:WEYS) is actively diversifying its supply chain to reduce reliance on China, with plans to source from countries like Cambodia, Vietnam, and India.
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The company declared a 4% increase in its quarterly dividend, reflecting confidence in its financial stability and commitment to returning value to shareholders.
Negative Points
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Overall net sales for the first quarter of 2025 were down 5% compared to the same period last year, indicating a decline in revenue.
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Operating earnings decreased by 15% from the previous year, reflecting challenges in maintaining profitability.
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The North American retail segment experienced a 12% decline in net sales, primarily due to reduced promotional activities and lower sales on the Bogs website.
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Incremental tariffs on goods sourced from China have increased to 161%, posing a significant risk to future cost of goods sold.
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The company faces geopolitical and macroeconomic uncertainties, including evolving US trade policies and recession concerns, impacting consumer and retailer confidence.
Q & A Highlights
Q: How long can Weyco Group pause imports from China before it impacts inventory and customer delivery? A: Tom Floorscheim Jr., Chairman and CEO, explained that Weyco Group is covered through part of the third quarter but will face inventory issues afterward. They continue manufacturing in China and are shipping to a distribution center in Montreal. This allows them to quickly bring inventory to their main distribution center in Milwaukee once tariffs are resolved. They are also diversifying their supply chain to reduce reliance on China.
Q: What is the strategy behind shipping inventory to Montreal? A: Tom Floorscheim Jr. clarified that when footwear is brought into Montreal, Canadian duty is paid. If tariffs between China and the US decrease, goods staged in Montreal can be brought into Milwaukee, paying the prevailing US tariff. The Canadian duty can be reclaimed through a duty drawback mechanism. This strategy is a bet on tariffs decreasing in the short term.