Weyco (WEYS) Q4 2025 Earnings Call Transcript

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DATE

Wednesday, March 4, 2026 at 11 a.m. ET

CALL PARTICIPANTS

• Chairman and CEO — Thomas W. Florsheim
• Chief Financial Officer — Judy Anderson

TAKEAWAYS

• Consolidated fiscal Q4 net sales — $76.8 million, down 5% from $80.5 million, as both wholesale and retail segments declined. (Fiscal year ended Dec. 31, 2025.)
• Gross margin fiscal Q4 — 44.1%, a decrease from 47.9%, impacted by incremental tariffs that were only partially offset by price increases.
• Fiscal Q4 earnings from operations — $10.2 million, down 12% from $11.5 million, reflecting margin pressures and lower volumes.
• Fiscal Q4 net earnings — $8.7 million, a 13% decrease from $10 million.
• Diluted fiscal Q4 EPS — $0.91, compared to $1.04 in the prior year.
• North American wholesale fiscal Q4 net sales — $56.7 million, down 6% from $60.4 million, with shipping volumes lower and July 1, 2025 price increases providing partial mitigation.
• Wholesale gross earnings fiscal Q4 — 37.2% of segment sales versus 42.4%, with incremental tariffs cited as a factor.
• Wholesale SG&A fiscal Q4 — $12.7 million, 23% of segment sales, compared to $16.7 million, 28%, mainly due to lower employee costs.
• Wholesale operating earnings fiscal Q4 — $8.4 million, down 6% from $8.9 million, affected by sales and margin pressures.
• Incremental tariffs paid fiscal 2025 — Approximately $16 million, with gross margins compressed as the 10% price increase did not fully offset increased costs.
• Retail segment fiscal Q4 net sales — $13.3 million, a 5% decline, attributed to higher sales reserves in e-commerce.
• Retail gross earnings fiscal Q4 — 64.3% of segment sales, compared to 65% previously.
• Retail operating earnings fiscal Q4 — $1.9 million, down from $2.5 million, primarily due to sales reserve adjustments.
• Florsheim Australia fiscal Q4 net sales — $6.8 million, up 12%, driven by both wholesale and retail gains in local currency.
• Florsheim Australia fiscal Q4 operating loss — $100,000, reversing earnings of $100,000 in the prior year.
• Fiscal year 2025 consolidated net sales — $276 million, down 5% from $290 million in 2024.
• Fiscal year gross margin — 43.2%, down from 45.3%, with incremental tariffs again cited as the main factor.
• Fiscal year operating earnings — $29.2 million, a 20% decline from $36.6 million.
• Fiscal year net earnings — $23.1 million, a decrease of 24% from $30.3 million.
• Fiscal year diluted EPS — $2.41 compared to $3.16.
• Wholesale net sales fiscal 2025 — $217 million, down 5% from $228 million.
• Brand performance — Florsheim achieved a record $92 million in annual sales, while Nunn Bush, Stacy Adams, and BOGS all reported declines for fiscal 2025.
• Wholesale gross margin fiscal 2025 — 37.5% versus 40.2%, pressured by tariffs.
• Wholesale SG&A fiscal 2025 — $54.1 million (correcting apparent transcript error from “4,054,600,000”), or 25% of net sales, versus $60.1 million, 26%, with lower employee costs noted.
• Wholesale operating earnings fiscal 2025 — $26.6 million, falling 16% from $31.5 million.
• Retail segment full year net sales — $35.7 million, down 8% from $38.7 million, primarily from lower direct-to-consumer activity.
• Retail gross margin fiscal 2025 — 65.7% versus 65.9% last year.
• Retail segment operating earnings fiscal 2025 — $3.3 million, down from $5.3 million, driven by lower volume.
• Florsheim Australia full year net sales — $23.7 million (flat); up 2% in local currency; operating loss $700,000.
• Effective tax rate fiscal 2025 — 28% versus 23.9%, with the increase attributed to a valuation allowance on deferred tax assets in Australia.
• Year-end liquidity position — $101 million in cash and marketable securities; no outstanding debt on a $40 million line of credit.
• Fiscal 2025 cash from operations — $37.3 million, with $7.7 million paid in dividends, $5.3 million in stock repurchases, and $1.8 million for capital expenditures.
• Fiscal 2026 capex guidance — Expected annual capital expenditures of $1 million-$3 million.
• Recent dividends — $21.4 million in dividends paid January–February 2026; Q1 2026 cash dividend of $0.27 per share declared March 3, 2026.
• Inventory levels — $65.9 million at year-end, down from $74 million, described as “at a healthy level.”
• Legal/regulatory development — Supreme Court ruled IEEPA did not authorize recent tariffs; company seeking $16 million tariff refund through litigation as implementation/remedy is pending.
• Supply chain diversification — CEO Florsheim noted, “we have established a much better footprint in Cambodia and Vietnam than we had prior to 2025,” reducing dependence on China.
• Sourcing share — About “65% to 70% from China” in 2024, per CEO Florsheim.
• Wholesale partner dynamics — Nunn Bush faces intensified competition from private label programs at major retailers.
• Inventory management — Lower clearance-led conversions impacted DTC e-commerce sites as inventory is described as “extraordinarily clean.”

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RISKS

• CEO Florsheim stated, “For an extended period during the second quarter, we faced tariff rates that rendered trade with China, our largest sourcing country, commercially prohibitive,” creating delivery risk during the fall shipping window.
• Incremental tariffs increased product costs “by 19% to 50%,” resulting in gross margin compression; management confirmed price increases “did not cover a significant portion of how the tariffs impacted our business.”
• Management described U.S. trade policies as “fluid and unpredictable,” causing ongoing gross margin uncertainty into 2026.
• Florsheim Australia posted operating losses of $700,000 for the full year, signaling continued challenges in Australian wholesale.

SUMMARY

Weyco Group (WEYS +2.25%) reported declining sales and earnings across wholesale and retail segments amid significant tariff-related cost pressures and cautious consumer demand. The business incurred $16 million in incremental tariffs for fiscal 2025 and has launched litigation to seek full recovery following the Supreme Court’s ruling against the IEEPA tariff authority, while at the same time tariffs under a different statute have created ongoing cost uncertainty. Strategic sourcing diversification away from China progressed materially during the year, with a strengthened manufacturing presence established in Cambodia and Vietnam. Inventory positions improved, supportive of cleaner year-end balance sheets and lower clearance-related sales activity, but at the cost of diminished e-commerce conversion. The Florsheim brand achieved a record annual sales result, offset by notable declines in Nunn Bush, Stacy Adams, and BOGS performance. Management signaled ongoing vigilance regarding gross margin preservation in the face of dynamic U.S. trade policy, as well as continued operational discipline and capital return to shareholders.

• Management highlighted implementation of mitigation strategies to manage further tariff and supply chain headwinds as policy direction remains unsettled.
• The administration’s quick announcement of a new 10% across-the-board tariff post-IEEPA ruling, with rates possibly rising, reinforces near-term earnings unpredictability.
• Thomas W. Florsheim noted that retailers ended the season with exceptionally clean inventories, and indicated that strong bookings for fall 2026 in the BOGS category may signal improved future order trends despite current weakness.
• A $16 million tariff refund, if realized, may represent a significant positive one-time impact for future results, but management cautioned about potential litigation delays.
• Dividend payments and repurchases demonstrated ongoing commitment to shareholder returns, even as operating cash flows faced compression.

INDUSTRY GLOSSARY

• IEEPA (International Emergency Economic Powers Act): U.S. federal law authorizing the President to regulate commerce in response to national emergencies, central to recent tariff authority litigation.
• Sales reserve: Accounting provision for estimated sales returns, allowances, or discounts, impacting reported revenue in retail and e-commerce.
• SG&A: Selling, general, and administrative expenses—including labor, marketing, and support costs within each segment.

Full Conference Call Transcript

Overall net sales for 2025 were $76,800,000, down 5% compared to $80,500,000 in 2024. Consolidated gross earnings were 44.1% of net sales compared to 47.9% of net sales in 2024. Earnings from operations were $10,200,000 for the quarter, down 12% from $11,500,000 in 2024. Net earnings totaled $8,700,000 for the quarter, down 13% from $10,000,000 last year. Diluted earnings per share were $0.91 per share in 2025 compared to $1.04 per share in the prior year’s fourth quarter. Net sales in our North American wholesale segment totaled $56,700,000 for the quarter, down 6% from $60,400,000 last year. Sales were down due to lower shipping volumes, partially mitigated by our July 1, 2025 price increases.

Wholesale gross earnings as a percent of net sales were 37.2% and 42.4% in 2025 and 2024, respectively. Gross margins for the quarter were negatively impacted by incremental tariffs. Although selling price increases helped mitigate the effects of these tariffs, they did not fully offset the resulting costs, leading to margin erosion for the period. Wholesale selling and administrative expenses totaled $12,700,000, or 23% of net sales for the quarter, versus $16,700,000, or 28% of net sales, last year, down largely due to lower employee costs this year. Wholesale operating earnings totaled $8,400,000 for the quarter, down 6% from $8,900,000 in 2024 due to lower sales volumes and gross margin.

In early 2025, the U.S. imposed retaliatory tariffs on imported goods. Throughout 2025, these incremental tariffs increased the cost of our products by 19% to 50%, resulting in gross margin compression. On February 20, 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act, also known as IEEPA, does not authorize the President to impose tariffs, invalidating the statutory basis for incremental tariffs enacted since February 2025. The matter has been remanded to the Court of International Trade for further proceedings, including issues related to implementation and potential refunds. We paid approximately $16,000,000 of incremental tariffs in 2025.

In December 2025, we filed a lawsuit seeking a refund for amounts paid in connection with incremental tariffs imposed pursuant to IEEPA. The President responded to the court ruling by announcing the implementation of a 10% across-the-board tariff under a separate statutory authority. The administration has indicated that rates may be increased further subject to statutory limits. Certain other tariffs imposed under authorities independent of IEEPA remain in effect. U.S. trade policies remain fluid and unpredictable, creating near-term gross margin uncertainty. We have mitigation strategies in place and will continue to adjust as needed in response to future policy development. Net sales in our retail segment totaled $13,300,000 for the quarter, down 5% from $14,100,000 in 2024.

Fourth quarter 2025 sales were negatively impacted by an increase in sales reserves related to our e-commerce businesses. Retail gross earnings as a percent of net sales were 64.3% and 65% in 2025 and 2024, respectively. Retail operating earnings totaled $1,900,000 for the quarter and $2,500,000 in last year’s fourth quarter. The decrease was primarily due to the sales reserve adjustment described earlier. Our other operations consist of our retail and wholesale businesses in Australia and South Africa, which are collectively referred to as Florsheim Australia. Net sales of Florsheim Australia were $6,800,000 in 2025, up 12% from $6,000,000 in 2024.

In local currency, Florsheim Australia’s net sales were up 11% for the quarter, driven by growth in both its wholesale and retail businesses. Florsheim Australia’s gross earnings as a percent of net sales were 61.5% and 62.5% in the fourth quarters of 2025 and 2024, respectively. Its quarterly operating losses totaled $100,000 in 2025 versus operating earnings of $100,000 in the prior year. We will now discuss our full year 2025 results. Consolidated net sales for the full year were $276,000,000, down 5% compared to sales of $290,000,000 in 2024. Consolidated gross earnings were 43.2% of net sales compared to 45.3% of net sales in 2024. Full year 2025 operating earnings were $29,200,000, down 20% from $36,600,000 in 2024.

Net earnings totaled $23,100,000, down 24% from $30,300,000 last year. Diluted earnings per share were $2.41 per share in 2025 and $3.16 per share in 2024. North American wholesale net sales were $217,000,000 in 2025, down 5% compared to $228,000,000 in 2024. We are pleased to announce that despite the challenges of 2025, our Florsheim brand achieved record wholesale sales. Sales of our Nunn Bush, Stacy Adams, and BOGS brands decreased in 2025. Wholesale gross earnings as a percent of net sales were 37.5% in 2025 and 40.2% in 2024. Gross margins for the year were negatively impacted by incremental tariffs.

Wholesale selling and administrative expenses totaled $4,054,600,000 for the year, and $60,100,000 last year, down largely due to lower employee costs. As a percent of net sales, wholesale selling and administrative expenses were 25% and 26% in 2025 and 2024, respectively. Wholesale operating earnings totaled $26,600,000 in 2025, down 16% from $31,500,000 in 2024 due to lower sales volumes and gross margins. In our North American retail segment, net sales were $35,700,000 in 2025, down 8% from a record $38,700,000 in 2024. The decrease was primarily due to lower direct-to-consumer sales of Florsheim, BOGS, and Stacy Adams footwear. BOGS website sales were also impacted by fewer promotional activities in 2025.

Retail gross earnings as a percent of net sales were 65.7% and 65.9% in 2025 and 2024, respectively. Retail operating earnings totaled $3,300,000 for 2025 and $5,300,000 last year. The decrease was primarily due to lower sales volumes. Net sales of Florsheim Australia remained relatively flat at $23,700,000 and $23,600,000 in 2025 and 2024, respectively. In local currency, Florsheim Australia’s net sales were up 2% for the year, driven by growth in its retail businesses. Florsheim Australia’s gross earnings as a percent of net sales were 61.5% in 2025 and 61% in 2024. Florsheim Australia generated an operating loss of $700,000 for 2025 and $200,000 in 2024. Our effective tax rates for 2025 and 2024 were 28% and 23.9%, respectively.

Our 2025 income tax provision included a charge to establish a valuation allowance on Florsheim Australia’s deferred tax assets. Our 2024 tax provision was reduced by deductions related to share-based compensation. At December 31, 2025, our cash and marketable securities totaled $101,000,000, and we had no debt outstanding on our $40,000,000 revolving line of credit. During 2025, we generated $37,300,000 in cash from operations and used funds to pay $7,700,000 in dividends. We also repurchased $5,300,000 of company stock and had $1,800,000 of capital expenditures. We estimate that 2026 annual capital expenditures will be between $1,000,000 and $3,000,000. During January 2026, we paid our February and special cash dividends totaling $21,400,000 to shareholders.

On March 3, 2026, our Board of Directors declared our first quarter cash dividend of $0.27 per share to all shareholders of record on March 13, 2026, payable March 31, 2026. I will now turn the call over to Thomas W. Florsheim, our Chairman and CEO.

Thomas W. Florsheim: Thanks, Judy, and good morning, everyone. Our overall company sales were down 5% in the fourth quarter and 5% for the full year. While we are never content with the decline, given the challenges we faced related to tariffs and dampened consumer sentiment, we are proud of the work done by our production and sales teams to navigate these economic headwinds. For an extended period during the second quarter, we faced tariff rates that rendered trade with China, our largest sourcing country, commercially prohibitive. Because the second quarter is a primary manufacturing period for our key fall shipping window, this created a strong likelihood of disrupted deliveries to both our wholesale partners and our direct-to-consumer business.

By strategically keeping production running on key programs and holding finished goods overseas, we positioned ourselves to deliver nearly 100% of our fall shipments on time once tariffs were reduced to commercially viable levels. Throughout 2025, new tariffs increased the cost of our products by 19% to 50%, resulting in gross margin compression despite a 10% price increase that took effect in July. Over the past year, we have made significant progress in diversifying our manufacturing base to be less China-centric. Sales of our combined legacy business declined 7% in the fourth quarter and 4% for the year.

Given the uncertain economic environment, particularly in soft goods, our accounts continue to take a conservative approach to inventory management, which negatively impacted fourth quarter shipments. The Florsheim division reported a 1% decrease for the quarter and a 2% increase for the year. The brand achieved $92,000,000 in sales in 2025, an all-time record, making it one of the few men’s brands outside of the athletic category to sustain this level of post-pandemic growth. While the nonathletic brown shoe category has been in secular decline, Florsheim has bucked the trend and gained market share. Sell-throughs of traditional dress and refined casual footwear have been strong, and the brand continues to make progress in the hybrid and dress sneaker categories.

Our Nunn Bush business declined 13% for the quarter and 10% for the year. The mid-tier trade channels, which account for the majority of Nunn Bush’s volume, remain under pressure, negatively impacting sales. As an opening price point brand with major retailers, Nunn Bush also faces increased competition from private label programs as stores seek to improve margins. We believe we are taking the necessary steps to return Nunn Bush to growth, including value-engineering product to meet key price points while delivering attributes and benefits not typically found in private label offerings. Retail sell-through of Nunn Bush remains solid.

Stacy Adams sales declined 13% for the quarter and 9% for the year, reflecting continued challenges in the fashion dress shoe market. While the Stacy Adams brand remains a leader in this category, retailers are devoting less inventory and shelf space to dress shoes. Our focus with Stacy Adams continues to be on expanding categories beyond its core elevated dress offerings. The BOGS business remains difficult with sales down 6% for the quarter and 11% for the year. While early winter cold and snowfall resulted in strong sell-through of BOGS product, fall selling declined year over year as retailers maintained a conservative, chase-based inventory strategy for seasonal product.

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