WEYCO GROUP INC Q1 FY2026 earnings call

Overall company sales flat for the quarter, wholesale segment sales down 1%. Florsheim division up 5% driven by strong traditional dress category sales. Legacy business flat. Nunbush flat, well positioned as value option. Stacey Adams down 9%, focused on diversifying product assortment. Boggs down 11%, anticipates strong second half with new spring footwear and marketing reset. Retail segment net sales up 2% led by e-commerce. Florsheim Australia net sales up 10% but flat local currency. Overall gross margins 44.2% for the quarter, down ~50 basis points from 2025. Inventory down from Dec 31, 2025 to March 31, 2026, expected to get back to $60 - $70 million range. Board declared 28 cents per share cash dividend, 4% increase from previous rate

Overall net sales for the first quarter of 2026 were $68 million, flat compared to the first quarter of 2025. Consolidated gross earnings were 44.2% of net sales compared to 44.6% last year. Earnings from operations were $7.5 million, up 7% from $7 million in 2025. Net earnings totaled $6.1 million, up 10% from $5.5 million last year. Diluted earnings per share were 64 cents per share in 2026, up from 57 cents per share in 2025. North American wholesale segment: net sales $53.6 million, down 1% from 2025; wholesale gross earnings as % of net sales 38.7% in 2026 vs 39.4% in 2025; operating earnings $7 million, up 5% from 2025. Retail segment: net sales $8.8 million, up 2% from 2025; retail operating earnings $800,000, up from $600,000 in 2025. Florsheim Australia: net sales $5.6 million, up 10% from 2025 (but flat in local currency); gross earnings as % of net sales 62.9% in 2026 vs 62.7% in 2025; quarterly operating losses $200,000 in both periods

Estimate annual capital expenditures in 2026 will be between $2 - $3 million. Following Supreme Court ruling, President announced implementation of new across-the-board tariff at 10% (scope and rate subject to change). Uncertainty around U.S. trade policies and its impact on gross margins. Anticipate adjusting mitigation strategies in response to future policy developments

Uncertain impact of U.S. trade and tariff policies, which are dynamic and unpredictable. Impact of inflation on costs and consumer demand. Increased interest rates and other macroeconomic factors that may cause slowdown or contraction in US or Australian economies. Timing and amount of IEPA tariff refunds uncertain and subject to CBP execution. New tariff implementation under separate statutory authority creates near-term gross margin uncertainty

Q: If you receive tariff refunds, what is the tax treatment?

A: We will be taxed on them. It was part of our cost of sales last year and we'll get a refund this year, it'll be a credit in our cost of sales and we have to pay taxes on it.

Q: Can you give any sense of what kind of the annualized run rate tariff burden is at the current 10%?

A: At 10%, if it was 10% all year, it would be about an extra $10 million over and above what we normally pay in tariffs. The administration has intent to get tariffs back up to where they were under IEPA, doing 301 investigations to be complete by end of July.

Q: You took a million out of SG&A year over year. That's a lot, Tom. You highlighted lower employee costs. Was that staff reduction or less compensation? How was that accomplished?

A: Lower employee costs was a combination. It was lower employee benefit costs, including less FICA expense due to not giving out annual bonuses last year, lower health insurance costs, etc.