WEYCO GROUP INC Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Overall net sales were flat in Q4 2024 at $80.5 million (vs. $80.6 million in 2023) and down 9% for the full year to $290 million (vs. $318 million in 2023).
• Wholesale business faced challenges due to economic uncertainty limiting discretionary spending on nonessential goods. BOGS sales declined 17% in Q4 2024 due to mild winter weather, but product innovation like the new seamless construction and BOGA launch was mentioned.
• Florsheim grew 22% in Q4 2024, Stacy Adams faced dress footwear challenges but has potential in hybrid styles, and Nunn Bush grew 4% with a collaboration with Adam Pollock.
• Retail segment saw 1% Q4 and 2% full year growth, with focus on direct-to-consumer business.
• Florsheim Australia's net sales declined, with focus on wholesale growth in 2025.
• Tariffs on goods sourced from China were discussed, with efforts to negotiate price reductions with suppliers and plans to raise prices due to cost increases.

Segment Performance

• North American Wholesale: Fourth quarter 2024 net sales were $60.4 million, up 1% from $59.6 million in 2023. Full year 2024 net sales were $228 million, down 9% from $250 million in 2023. Wholesale gross earnings were 42.4% of net sales in Q4 2024 and 40.2% of net sales in 2024.
• North American Retail: Fourth quarter 2024 net sales were $14.1 million, up 1% from $13.9 million in 2023. Full year 2024 net sales were $38.7 million, up 2% from $38 million in 2023. Retail gross earnings were 65% of net sales in Q4 2024 and 65.9% of net sales in 2024.
• Other Operations (Florsheim Australia): Fourth quarter 2024 net sales were $6 million, down 15% from $7.2 million in 2023. Full year 2024 net sales were $23.6 million, down 20% from $29.6 million in 2023.

Guidance

• Estimate 2025 annual capital expenditures will be between $1 million and $3 million.
• On January 2, 2025, a total dividend payment of $21.6 million was made (regular $0.26 per share and special $2 per share). On March 4, 2025, a regular cash dividend of $0.26 per share was declared.
• Planning to raise prices in the near future to account for tariff-related cost increases.

Risks

• Tariffs on goods sourced from China, which increase the cost of goods.
• Economic uncertainty impacting consumer spending on nonessential goods, affecting the wholesale business.
• Actual results may differ materially from projections due to various risk factors discussed in the company's annual summary.

Question and Answer

Q: How do the tariffs work for Weyco Group, including mechanics of paying and declaration?

A: Tom Florsheim and Judy Anderson explained that a bond is posted, tariffs are paid to US Customs based on declared shipment values, and it's done wirelessly/paperless with CTPAT approval.

Q: What are the tariffs on different countries of origin and sourcing mix, and vendor responses?

A: Tom Florsheim and Judy Anderson discussed that about 75% of purchases are from China, with tariffs increasing, vendors are receptive to sharing costs to some extent, and there's uncertainty around reciprocal tariffs in April.