Weyco Group’s Earnings Call: Mixed Sentiments and Strategic Moves

Weyco Group ((WEYS)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for Weyco Group presented a mixed sentiment, reflecting both achievements and challenges. While there were notable successes such as the strong performance of the Florsheim brand, improvements in retail gross earnings, and a solid cash position, these were overshadowed by significant declines in net sales across wholesale and retail segments, and the challenges posed by increased tariffs. The company is actively navigating these hurdles through strategic actions like diversifying its supply chain, although the uncertain impact of tariffs on future costs remains a concern.

Florsheim Brand Performance

Florsheim emerged as a standout performer for Weyco Group, with the brand achieving a 7% increase in a challenging market environment. This growth allowed Florsheim to gain market share across various categories, highlighting its resilience and appeal even amid broader market difficulties.

Retail Gross Earnings Improvement

Weyco Group reported an improvement in retail gross earnings, which rose to 66.6% of net sales from 65.3% in the first quarter of 2024. This increase reflects the company’s effective strategies in enhancing profitability within its retail operations.

Strong Cash Position

The company maintained a robust cash position, with cash and marketable securities totaling $77.9 million. Notably, Weyco Group has no debt outstanding on its $40 million revolving line of credit, providing financial flexibility to navigate current challenges.

Dividend Increase

In a positive move for shareholders, Weyco Group declared a cash dividend of $0.27 per share, marking a 4% increase over the previous rate of $0.26. This decision underscores the company’s commitment to returning value to its investors despite the challenging economic environment.

Florsheim Australia’s Retail Growth

Florsheim Australia demonstrated resilience with an 11% increase in same-store retail sales, defying economic headwinds. This growth highlights the brand’s strong market presence and effective strategies in the region.

Decrease in Net Sales

Weyco Group faced a 5% decline in overall net sales for the first quarter of 2025, totaling $68 million. This decrease reflects the broader economic challenges impacting the company’s performance.

Wholesale and Retail Segment Declines

The North American wholesale segment experienced a 4% decline in net sales, while retail segment sales were down 12%. These declines indicate ongoing challenges in both segments, necessitating strategic adjustments to improve performance.

Operating Earnings Decline

Operating earnings for Weyco Group totaled $7 million, down 15% from the first quarter of 2024. This decline underscores the impact of current economic conditions on the company’s profitability.

Tariff Impact on Costs

The effective total tariff rate on goods sourced from China increased significantly to 161% from 16% in 2024. This sharp rise in tariffs poses a potential increase in future costs, prompting the company to explore strategies to mitigate this impact.

Decline in Legacy Brands

Stacy Adams and Nunn Bush brands saw declines of 7% and 16% respectively, reflecting softness in the non-athletic footwear segment. This trend highlights the need for strategic initiatives to revitalize these legacy brands.

Inventory Challenges

Higher-than-normal inventory levels, resulting from expedited shipments before tariff increases, present operational challenges for Weyco Group. Managing these inventory levels will be crucial in maintaining operational efficiency.

Forward-Looking Guidance

Looking ahead, Weyco Group is navigating a challenging economic environment, with a 5% decline in net sales to $68 million for the first quarter of 2025. The company is implementing strategies to mitigate the impact of increased tariffs, including diversifying its supply chain and adjusting product pricing. Despite these hurdles, the Board of Directors declared a cash dividend of $0.27 per share, reflecting a 4% increase from the prior rate. Weyco Group’s strong cash position, with $77.9 million in cash and marketable securities and no debt, provides a solid foundation for future strategic initiatives.

In conclusion, the earnings call for Weyco Group highlighted a mixed outlook, with both positive achievements and significant challenges. The strong performance of the Florsheim brand and improvements in retail gross earnings were notable bright spots, while declines in net sales and the impact of increased tariffs pose ongoing challenges. The company’s strategic actions to diversify its supply chain and adjust pricing will be critical in navigating these hurdles and driving future growth.