Core Insights - Weyco Group, Inc. (WEYS) shares increased by 12.8% following the earnings report for Q3 2025, contrasting with a 1.8% decline in the S&P 500 index during the same period [1] - The company reported earnings per share of 69 cents, down from 84 cents in Q3 2024 [1] Financial Performance - Net sales for Q3 2025 were $73.1 million, a 2% decrease from $74.3 million in the same quarter last year, attributed to tariffs and lower sales volume [2] - Gross earnings as a percentage of net sales fell to 40.7% from 44.3% year-over-year, with operating earnings decreasing by 21% to $8.1 million [2] - Net earnings dropped 18% year-over-year to $6.6 million [2] North American Wholesale Performance - The North American wholesale segment recorded net sales of $60.2 million, a 2% decrease from $61.1 million in the prior year, with a 7% drop in sales volume [3] - Price increases implemented on July 1, 2025, partially offset the volume decline, which was primarily due to disruptions with a key wholesale customer [3] Brand-Level Performance - Florsheim sales increased by 8%, supported by pricing, while Nunn Bush saw a 1% sales increase [4] - Stacy Adams experienced a 5% sales decline, and BOGS sales fell sharply by 17% due to reduced shipments [4] - Wholesale gross margins declined to 35.7% from 40.1% due to tariffs, with operating earnings for the wholesale segment falling 20% to $7.5 million [4] Retail and International Operations - The North American retail segment reported net sales of $7 million, down 4% from $7.2 million, driven by weaker demand on e-commerce sites [5] - Retail gross earnings as a percentage of net sales slipped to 66.4% from 66.9%, with operating income declining to $0.6 million [5] - International operations generated net sales of $6 million, unchanged from the prior year, but local currency sales grew 2% [6] Management Commentary - CEO Thomas Florsheim Jr. highlighted that the sales decline was influenced by the wholesale customer issue and tariffs, particularly a 30% tariff on goods from China [7] - Management noted that price increases were insufficient to fully offset the tariff burden, leading to margin erosion [7] Strategic Initiatives - The company is diversifying its factory base beyond China and strengthening relationships with manufacturing partners to mitigate tariff exposure [8][9] - Management expressed confidence in adapting to the changing trade landscape, with potential signs of tariff relief from U.S.-China trade talks [11] Other Developments - Weyco decided to wind down its Forsake brand due to lack of growth and profitability, aiming to optimize its brand portfolio [12] - The Board of Directors declared a special cash dividend of $2.00 per share and a regular quarterly dividend of 27 cents per share, reflecting a strong liquidity position with $78.5 million in cash and no debt [13]

Sales Performance - Wholesale net sales decreased by 2% in dollars and 7% in volume for Q3 2025 compared to Q3 2024, with a 10% price increase implemented on July 1, 2025[52]. - Consolidated net sales for Q3 2025 were $73.1 million, down 2% from $74.3 million in Q3 2024, while year-to-date net sales totaled $199.4 million, a decrease of 5% from $209.8 million in 2024[61][62]. - The BOGS brand experienced a 17% sales decline in Q3 2025, attributed to an oversaturated outdoor footwear market and mild winters[57]. - Florsheim brand sales increased by 8% in Q3 2025, benefiting from its positioning in the traditional dress and dress-casual footwear market[55]. - Retail segment net sales declined by 4% in Q3 2025, driven by a decrease in e-commerce sales and increased price sensitivity among consumers[59]. - North American Wholesale segment net sales decreased by 2% to $60.151 million for Q3 2025, compared to $61.075 million in Q3 2024[74]. - Retail segment net sales totaled $6.953 million for Q3 2025, a decline of 4% from $7.225 million in Q3 2024[82]. - For the nine months ending September 30, 2025, total net sales decreased by 5% to $199.372 million compared to $209.819 million in the same period of 2024[74]. - Florsheim Australia's net sales remained flat at $6.0 million for Q3 2025, with a year-to-date decline of $0.7 million or 4% compared to the same period in 2024[87]. Earnings and Profitability - Consolidated gross earnings as a percentage of net sales fell to 40.7% in Q3 2025 from 44.3% in Q3 2024, primarily due to higher costs from incremental tariffs[67]. - Net earnings for Q3 2025 were $6.6 million, or $0.69 per diluted share, down 18% from $8.1 million, or $0.84 per diluted share, in Q3 2024[61]. - Consolidated earnings from operations decreased by 21% in Q3 2025, totaling $8.1 million compared to $10.2 million in Q3 2024[61]. - Earnings from operations for the North American Wholesale segment fell by 20% to $7.544 million in Q3 2025, down from $9.406 million in Q3 2024[74]. - Retail operating earnings declined by $1.4 million for the nine months ending September 30, 2025, compared to the same period in 2024[85]. - Gross earnings for the North American Wholesale segment were 35.7% of net sales in Q3 2025, down from 40.1% in Q3 2024[78]. Cash Flow and Liquidity - Cash and marketable securities totaled $78.5 million as of September 30, 2025, with no debt outstanding on the $40.0 million revolving line of credit[63]. - Net cash provided by operating activities totaled $13.2 million for the first nine months of 2025, down from $17.3 million in the same period last year[94]. - Cash dividends paid in the first nine months of 2025 totaled $7.7 million, compared to $9.6 million in the same period of 2024[97]. - Approximately $4.3 million of cash and cash equivalents was held by foreign subsidiaries as of September 30, 2025[103]. - The company believes that available cash, marketable securities, and cash provided by operations will support business cash needs for at least one year[103]. Tax and Financial Agreements - The effective tax rate for Q3 2025 was 26.3%, compared to 25.7% in Q3 2024[71]. - The effective tax rate for the nine months ending September 30, 2025, was 31.8%, compared to 25.8% in 2024, primarily due to a valuation allowance on deferred tax assets[92]. - The Amended Credit Agreement extended the maturity of the credit facility to September 25, 2026, with a maximum available borrowing limit of $40.0 million[100]. - The interest rate margin applicable to amounts outstanding was reduced by 15 basis points, now at SOFR plus 110 basis points[100]. - As of September 30, 2025, there were no outstanding borrowings on the line of credit, and the company was in compliance with all financial covenants[101]. Shareholder Returns - A total of $21.6 million in special cash dividends was prefunded in December 2024 and paid to shareholders in January 2025[102]. - The company continues to evaluate the best uses for available liquidity, including capital expenditures, stock repurchases, and acquisitions[103].

Financial Data and Key Metrics Changes - Overall net sales for Q3 2025 were $73.1 million, down 2% from $74.3 million in Q3 2024 [4] - Consolidated gross earnings were 40.7% of net sales compared to 44.3% in the previous year [4] - Earnings from operations were $8.1 million, down 21% from $10.2 million in Q3 2024 [4] - Net earnings totaled $6.6 million, down 18% from $8.1 million last year [4] - Diluted earnings per share were $0.69, compared to $0.84 in Q3 2024 [5] Business Line Data and Key Metrics Changes - North American wholesale segment net sales were $60.2 million, down 2% from $61.1 million last year [5] - Sales volumes in the wholesale segment were down 7%, but a price increase of 10% helped mitigate the impact [5] - Retail segment net sales were $7 million, down 4% from $7.2 million in 2024, primarily due to softer demand [8] - Florsheim Australia net sales remained flat at $6 million, but were up 2% in local currency [9] Market Data and Key Metrics Changes - The overall inventory as of September 30, 2025, was $67.2 million, down from $74 million at December 31, 2024 [17] - The incremental tariff on goods sourced from China remained at 30% throughout Q3 2025, impacting gross margins [7] Company Strategy and Development Direction - The company is diversifying its factory base to reduce manufacturing concentration in China while maintaining quality [11] - A strategic decision was made to wind down operations of the Forsake brand due to lack of growth and profitability [16] - The company is focused on expanding casual offerings for the Stacy Adams brand to regain growth [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the unsettled tariff environment and weak consumer sentiment continue to create midterm challenges [11] - The company remains confident in the strength of its brands and the resilience of its business model despite current challenges [12] - Future strategies include shifting supply chains and assessing the need for additional price increases based on tariff developments [18] Other Important Information - The Board of Directors declared a quarterly cash dividend of $0.27 per share and a special cash dividend of $2 per share [10] - The company generated $13.2 million in cash from operations during the first nine months of 2025 [9] Q&A Session Summary Question: Margin deterioration attributable to tariffs - Management indicated that the margin erosion is primarily due to tariffs, with a 10% price increase not fully covering the 30% incremental duties from China [24] Question: Consumer behavior across demographics - Management observed that higher-income customers are performing well, while lower middle-income customers are facing challenges [26]

Financial Performance - Third quarter 2025 net sales were $73.1 million, down 2% from $74.3 million in Q3 2024[8] - Gross earnings as a percentage of net sales decreased to 40.7% in Q3 2025 from 44.3% in Q3 2024[8] - Earnings from operations for the quarter totaled $8.1 million, down 21% compared to $10.2 million in Q3 2024[8] - Net earnings were $6.6 million, an 18% decrease from $8.1 million in Q3 2024[8] - Diluted earnings per share decreased to $0.69 from $0.84 in Q3 2024[8] - Net earnings for the nine months ended September 30, 2025, were $14,385,000, a decrease of 29.5% compared to $20,320,000 in 2024[21] Sales Performance - Wholesale net sales in North America were $60.2 million, down 2% from $61.1 million in Q3 2024[3] - Florsheim brand sales increased by 8% for the quarter, while BOGS sales decreased by 17%[4] Dividends and Shareholder Returns - The company declared a special cash dividend of $2.00 per share, alongside a regular quarterly cash dividend of $0.27 per share[12][13] - Cash dividends paid amounted to $7,731,000, down 19.5% from $9,614,000 in the previous year[21] - The company repurchased and retired shares worth $4,065,000, significantly higher than $567,000 in 2024[21] Operational Changes - The company decided to wind down operations of the Forsake brand due to lack of growth and profitability[7] Cash Flow and Financial Position - Net cash provided by operating activities decreased to $13,247,000 from $17,294,000, reflecting a decline of 23.6%[21] - The cash and cash equivalents at the end of the period were $72,915,000, compared to $75,455,000 at the end of the same period in 2024[21] - The effect of exchange rate changes on cash and cash equivalents resulted in an increase of $865,000, contrasting with a decrease of $281,000 in 2024[21] Accounts and Inventory Management - Accounts receivable increased by $9,113,000, compared to an increase of $7,534,000 in the previous year[21] - Inventories rose to $6,803,000, significantly higher than $2,728,000 in 2024[21] - The company reported a bad debt expense of $167,000, a notable increase from $19,000 in the previous year[21] Cost and Tariff Impact - Incremental tariffs on goods sourced from China remained at 30%, contributing to margin compression[6] Interest Expense - Interest paid was minimal at $1,000, down from $15,000 in 2024[21]

Core Insights - Weyco Group, Inc. reported financial results for the third quarter of 2025, showing a decline in both wholesale and retail segments, primarily due to reduced sales volumes and increased costs from tariffs [1][2][12]. North American Wholesale Segment - Wholesale net sales were $60.2 million, down 2% from $61.1 million in Q3 2024, with sales volumes decreasing by 7% [3]. - Florsheim brand saw an 8% sales increase, while BOGS and Stacy Adams experienced declines of 17% and 5%, respectively [4]. - Wholesale gross earnings as a percentage of net sales decreased to 35.7% from 40.1% year-over-year, impacted by incremental tariffs [5]. - Operating earnings fell by 20% to $7.5 million due to lower sales volumes and margin erosion [5]. Incremental Tariffs - The U.S. government maintained a 30% tariff on goods sourced from China, with ongoing trade talks potentially affecting future tariff rates [6]. - The tariff environment remains unpredictable, creating uncertainty regarding its impact on gross margins [6]. North American Retail Segment - Retail segment net sales totaled $73.1 million, down 2% from $74.3 million in Q3 2024, with gross earnings at 40.7% of net sales [8][10]. - Net earnings decreased by 18% to $6.6 million, with diluted earnings per share dropping to $0.69 from $0.84 [8][22]. Other Operations - Florsheim Australia reported flat net sales of $6.0 million, with gross earnings as a percentage of net sales increasing to 61.0% [11]. Strategic Decisions - The company decided to wind down operations of the Forsake brand due to lack of growth and profitability, with no material impact expected on consolidated financial statements [7]. Dividend Declarations - The Board of Directors declared a regular quarterly cash dividend of $0.27 per share and a special cash dividend of $2.00 per share, reflecting a return of capital to shareholders [13][14].

Core Viewpoint - WEYCO Group, Inc. is set to announce its third quarter 2025 financial results on November 4, 2025, followed by a conference call on November 5, 2025, to discuss the results in detail [1]. Company Overview - WEYCO Group, Inc. designs and markets quality and innovative footwear primarily for men, but also for women and children, under well-recognized brand names such as Florsheim, Nunn Bush, Stacy Adams, and BOGS [4]. - The company's products are available in leading footwear, department, and specialty stores, as well as on e-commerce platforms globally [4]. - WEYCO Group operates Florsheim concept stores in the United States, Australia, and various international markets [4].

Group 1 - The investment strategy focuses on long-only investment, evaluating companies from an operational and buy-and-hold perspective [1] - The approach does not prioritize market-driven dynamics or future price action, instead emphasizing long-term earnings power and competitive dynamics [1] - Most recommendations will be holds, indicating a cautious approach to market conditions, with only a small fraction of companies deemed suitable for purchase at any given time [1] Group 2 - The articles aim to provide valuable information for future investors and introduce skepticism in a generally bullish market [1] - There is a clear distinction made between the author's opinions and professional investment advice, emphasizing the need for readers to conduct their own due diligence [2][3]

Core Viewpoint - Weyco Group, Inc. has faced significant challenges in its recent earnings report, with declines in both sales and earnings attributed to economic uncertainty and increased tariffs [1][5]. Financial Performance - The company reported a second-quarter 2025 EPS of 24 cents, down from 59 cents in the prior-year quarter [1]. - Net sales decreased by 9% to $58.2 million from $63.9 million year-over-year [2]. - Net earnings fell 60% to $2.3 million compared to $5.6 million in the same quarter last year [2]. - Gross earnings as a percentage of net sales declined to 43.3% from 43.9% [2]. Segment Performance - In the North American Wholesale segment, sales dropped 9% to $45.6 million, with major brands like Nunn Bush, Stacy Adams, Florsheim, and BOGS experiencing declines of 11%, 10%, 5%, and 14% respectively [3]. - Retail sales fell 11% to $6.8 million, driven by weaker demand on Florsheim and Stacy Adams websites [3]. - The "Other" category, which includes operations in Australia and South Africa, saw a 4% sales decline to $5.8 million, resulting in an operating loss of $0.2 million [3]. Management Commentary - The CEO described the quarter as facing "headwinds" from tariffs and reduced consumer spending, with expectations of continued economic uncertainty [4]. - Management highlighted the company's strong financial position, which they believe will support long-term growth despite current challenges [4]. - Efforts to diversify sourcing away from China to countries like Vietnam, Cambodia, and India were emphasized [4]. Influencing Factors - The earnings decline was primarily due to reduced consumer spending and higher import costs from tariffs, with the China-specific tariff peaking at 145% in April 2025 [5]. - Weyco has taken measures to mitigate cost pressures, including pre-purchasing inventory and negotiating supplier cost reductions [5]. Guidance - Management anticipates ongoing top-line pressure in the coming months due to tariffs and weak consumer sentiment, with potential seasonal softness in casual and dress footwear [6]. Other Developments - On August 5, 2025, the board declared a quarterly cash dividend of 27 cents per share, payable on September 30, 2025 [7]. - The company allocated $3.1 million for share repurchases and approximately $0.7 million for capital expenditures in the first half of 2025 [7].

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%2E%20FINANCIAL%20INFORMATION) Overview of the company's financial statements, management's analysis, market risks, and internal controls [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements%2E) Presents unaudited condensed consolidated financial statements and accompanying notes for the specified periods [Condensed Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS%20%28UNAUDITED%29) Provides a snapshot of the company's financial position, including assets, liabilities, and equity Condensed Consolidated Balance Sheets (Unaudited) | Metric | June 30, 2025 (thousands) | December 31, 2024 (thousands) | | :-------------------------------- | :-------------------------- | :---------------------------- | | **ASSETS:** | | | | Cash and cash equivalents | $77,430 | $70,963 | | Marketable securities, at amortized cost (current) | $1,109 | $852 | | Accounts receivable, net | $32,022 | $37,464 | | Inventories | $71,258 | $74,012 | | Total current assets | $186,019 | $209,391 | | Total assets | $300,936 | $324,086 | | **LIABILITIES AND EQUITY:** | | | | Accounts payable | $7,058 | $8,378 | | Dividend payable | — | $21,579 | | Total current liabilities | $20,886 | $47,263 | | Total liabilities | $52,874 | $78,501 | | Total equity | $248,062 | $245,585 | | Total liabilities and equity | $300,936 | $324,086 | [Condensed Consolidated Statements of Earnings (Unaudited)](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20EARNINGS%20%28UNAUDITED%29) Details the company's revenues, expenses, and net earnings over specific reporting periods Condensed Consolidated Statements of Earnings (Unaudited) | Metric | Three Months Ended June 30, 2025 (thousands) | Three Months Ended June 30, 2024 (thousands) | Six Months Ended June 30, 2025 (thousands) | Six Months Ended June 30, 2024 (thousands) | | :--------------------------------- | :----------------------------------------- | :----------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net sales | $58,221 | $63,932 | $126,251 | $135,490 | | Gross earnings | $25,223 | $28,092 | $55,598 | $60,099 | | Earnings from operations | $3,893 | $6,661 | $10,924 | $14,912 | | Net earnings | $2,256 | $5,607 | $7,799 | $12,257 | | Basic Earnings per share | $0.24 | $0.60 | $0.82 | $1.30 | | Diluted Earnings per share | $0.24 | $0.59 | $0.81 | $1.28 | | Cash dividends declared (per share) | $0.27 | $0.26 | $0.53 | $0.51 | [Condensed Consolidated Statements of Comprehensive Income (Unaudited)](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20%28UNAUDITED%29) Presents net earnings and other comprehensive income components, reflecting total non-owner changes in equity Condensed Consolidated Statements of Comprehensive Income (Unaudited) | Metric | Three Months Ended June 30, 2025 (thousands) | Three Months Ended June 30, 2024 (thousands) | Six Months Ended June 30, 2025 (thousands) | Six Months Ended June 30, 2024 (thousands) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net earnings | $2,256 | $5,607 | $7,799 | $12,257 | | Other comprehensive income (loss) | $1,865 | $134 | $2,098 | $(885) | | Comprehensive income | $4,121 | $5,741 | $9,897 | $11,372 | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20%28UNAUDITED%29) Summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Unaudited) | Metric | Six Months Ended June 30, 2025 (thousands) | Six Months Ended June 30, 2024 (thousands) | | :------------------------------------ | :--------------------------------------- | :--------------------------------------- | | Net cash provided by operating activities | $14,357 | $17,668 | | Net cash used for investing activities | $(672) | $(129) | | Net cash used for financing activities | $(8,174) | $(7,676) | | Net increase in cash and cash equivalents | $6,467 | $9,095 | | Cash and cash equivalents at end of period | $77,430 | $78,407 | | Income taxes paid, net of refunds | $4,208 | $4,337 | | Interest paid | $1 | $— | | Settlement of dividend payable with prefunded dividend (non-cash) | $21,579 | $— | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=NOTES:) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Financial Statements](index=7&type=section&id=1.%20Financial%20Statements) Explains the basis of presentation and significant accounting policies for the financial statements - Management believes the unaudited condensed consolidated financial statements contain all necessary adjustments for fair presentation, which are of a normal recurring nature, but results for the three and six months ended June 30, 2025, may not be indicative of the full year[13](index=13&type=chunk) - The preparation of financial statements requires management to make estimates and assumptions, and actual results could differ from those estimates[14](index=14&type=chunk) [Note 2. New Accounting Pronouncements](index=7&type=section&id=2.%20New%20Accounting%20Pronouncements) Discusses recently issued accounting standards and their potential impact on the company's financial reporting - FASB issued ASU 2023-09 (Income Taxes) effective for fiscal years beginning after December 15, 2024, requiring additional income tax rate reconciliation and disaggregation of income taxes paid, with the company evaluating its potential impact[15](index=15&type=chunk) - FASB issued ASU No. 2024-03 (Income Statement – Expense Disaggregation) effective for fiscal years beginning after December 15, 2026, requiring disaggregated income statement expense information, with the company evaluating its potential impact[16](index=16&type=chunk) [Note 3. Earnings Per Share](index=7&type=section&id=3.%20Earnings%20Per%20Share) Provides details on the calculation of basic and diluted earnings per share, including share counts Earnings Per Share (Three and Six Months Ended June 30) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net earnings (thousands) | $2,256 | $5,607 | $7,799 | $12,257 | | Basic EPS | $0.24 | $0.60 | $0.82 | $1.30 | | Diluted EPS | $0.24 | $0.59 | $0.81 | $1.28 | | Basic weighted average shares outstanding (thousands) | 9,475 | 9,429 | 9,511 | 9,433 | | Diluted weighted average shares outstanding (thousands) | 9,561 | 9,548 | 9,612 | 9,564 | - Anti-dilutive stock options were excluded from diluted weighted average shares outstanding: **168,000 shares for Q2 2025** (avg. exercise price **$31.92**), **115,000 shares for YTD 2025** (avg. exercise price **$34.56**), **393,000 shares for Q2 2024** (avg. exercise price **$30.15**), and **394,000 shares for YTD 2024** (avg. exercise price **$30.15**)[17](index=17&type=chunk) [Note 4. Investments](index=9&type=section&id=4.%20Investments) Details the company's marketable securities, their classification, amortized cost, and market values - All marketable securities are classified as held-to-maturity debt securities and reported at amortized cost[18](index=18&type=chunk) Marketable Securities (Amortized Cost and Market Value) | Category | June 30, 2025 Amortized Cost (thousands) | June 30, 2025 Market Value (thousands) | Dec 31, 2024 Amortized Cost (thousands) | Dec 31, 2024 Market Value (thousands) | | :--------------- | :--------------------------------------- | :------------------------------------- | :-------------------------------------- | :------------------------------------ | | Current | $1,109 | $1,105 | $852 | $848 | | Due from one through five years | $3,043 | $3,044 | $2,692 | $2,677 | | Due from six through ten years | $2,238 | $2,155 | $2,837 | $2,749 | | Total | $6,390 | $6,304 | $6,381 | $6,274 | Unrealized Gains and Losses on Marketable Securities | Metric | June 30, 2025 Unrealized Gains (thousands) | June 30, 2025 Unrealized Losses (thousands) | Dec 31, 2024 Unrealized Gains (thousands) | Dec 31, 2024 Unrealized Losses (thousands) | | :------------------ | :--------------------------------------- | :--------------------------------------- | :-------------------------------------- | :--------------------------------------- | | Marketable securities | $9 | $(95) | $5 | $(112) | [Note 5. Intangible Assets](index=9&type=section&id=5.%20Intangible%20Assets) Outlines the company's indefinite-lived and amortizable intangible assets, including their carrying amounts and amortization - Indefinite-lived intangible assets (goodwill and trademarks) are primarily in the North American Wholesale segment, with no changes in carrying value during the six months ended June 30, 2025[20](index=20&type=chunk) Amortizable Intangible Assets | Asset Type | Weighted Average Life (Years) | Gross Carrying Amount (June 30, 2025) (thousands) | Accumulated Amortization (June 30, 2025) (thousands) | Net (June 30, 2025) (thousands) | Gross Carrying Amount (Dec 31, 2024) (thousands) | Accumulated Amortization (Dec 31, 2024) (thousands) | Net (Dec 31, 2024) (thousands) | | :----------------------- | :---------------------------- | :------------------------------------------------ | :--------------------------------------------------- | :------------------------------ | :----------------------------------------------- | :-------------------------------------------------- | :----------------------------- | | Customer relationships | 15 | $3,500 | $(3,344) | $156 | $3,500 | $(3,227) | $273 | | Total amortizable intangible assets | | $3,500 | $(3,344) | $156 | $3,500 | $(3,227) | $273 | - Amortization expense for intangible assets was **$58,000** in both Q2 2025 and Q2 2024, and **$116,000** for both YTD 2025 and YTD 2024[20](index=20&type=chunk) [Note 6. Segment Information](index=10&type=section&id=6.%20Segment%20Information) Presents financial data disaggregated by the company's reportable operating segments: Wholesale and Retail - The company has two reportable segments: North American wholesale operations (Wholesale) and North American retail operations (Retail), with corporate expenses included in the Wholesale segment[21](index=21&type=chunk) Net Sales and Earnings from Operations by Segment (Three Months Ended June 30) | Metric | Wholesale 2025 (thousands) | Retail 2025 (thousands) | Total 2025 (thousands) | Wholesale 2024 (thousands) | Retail 2024 (thousands) | Total 2024 (thousands) | | :--------------------------------------- | :------------------------- | :---------------------- | :--------------------- | :------------------------- | :---------------------- | :--------------------- | | Product sales | $45,473 | $6,773 | $52,246 | $49,741 | $7,603 | $57,344 | | Licensing revenues | $157 | — | $157 | $507 | — | $507 | | Net sales - reportable segments | $45,630 | $6,773 | $52,403 | $50,248 | $7,603 | $57,851 | | Earnings from operations - reportable segments | $4,063 | $65 | $4,128 | $5,784 | $695 | $6,479 | Net Sales and Earnings from Operations by Segment (Six Months Ended June 30) | Metric | Wholesale 2025 (thousands) | Retail 2025 (thousands) | Total 2025 (thousands) | Wholesale 2024 (thousands) | Retail 2024 (thousands) | Total 2024 (thousands) | | :--------------------------------------- | :------------------------- | :---------------------- | :--------------------- | :------------------------- | :---------------------- | :--------------------- | | Product sales | $99,252 | $15,439 | $114,691 | $105,464 | $17,422 | $122,886 | | Licensing revenues | $651 | — | $651 | $1,034 | — | $1,034 | | Net sales - reportable segments | $99,903 | $15,439 | $115,342 | $106,498 | $17,422 | $123,920 | | Earnings from operations - reportable segments | $10,699 | $687 | $11,386 | $13,175 | $1,992 | $15,167 | - Other net sales and losses from operations are derived from Florsheim Australia (Australia and South Africa), which ceased Asia Pacific operations in 2023 and completed wind down in 2024[23](index=23&type=chunk) Depreciation and Amortization by Segment | Segment | 3 Months Ended June 30, 2025 (thousands) | 3 Months Ended June 30, 2024 (thousands) | 6 Months Ended June 30, 2025 (thousands) | 6 Months Ended June 30, 2024 (thousands) | | :-------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Wholesale | $531 | $514 | $953 | $1,001 | | Retail | $2 | $2 | $4 | $4 | | Other | $204 | $171 | $377 | $332 | | Total depreciation and amortization | $737 | $687 | $1,334 | $1,337 | [Note 7. Employee Retirement Plans](index=12&type=section&id=7.%20Employee%20Retirement%20Plans) Details the components of pension expense and their classification within the financial statements Components of Pension Expense | Component | 3 Months Ended June 30, 2025 (thousands) | 3 Months Ended June 30, 2024 (thousands) | 6 Months Ended June 30, 2025 (thousands) | 6 Months Ended June 30, 2024 (thousands) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Service cost | $59 | $97 | $117 | $193 | | Interest cost | $634 | $637 | $1,269 | $1,274 | | Expected return on plan assets | $(628) | $(612) | $(1,256) | $(1,224) | | Net amortization and deferral | $55 | $99 | $110 | $198 | | Pension expense | $120 | $221 | $240 | $441 | - Components of pension expense other than service cost are included in 'other expense, net' in the Condensed Consolidated Statements of Earnings[28](index=28&type=chunk) [Note 8. Leases](index=12&type=section&id=8.%20Leases) Provides information on operating lease arrangements, including costs, maturities, and cash flow impacts - The company leases retail stores, office, and distribution facilities with original lease periods expiring between 2025 and 2031, with renewal options not assumed unless reasonably assured[29](index=29&type=chunk) Operating Lease Costs | Metric | 3 Months Ended June 30, 2025 (thousands) | 3 Months Ended June 30, 2024 (thousands) | 6 Months Ended June 30, 2025 (thousands) | 6 Months Ended June 30, 2024 (thousands) | | :------------------ | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Operating lease costs | $1,186 | $1,116 | $2,267 | $2,222 | | Variable lease costs | — | — | — | — | | Total lease costs | $1,186 | $1,116 | $2,267 | $2,222 | Maturities of Operating Lease Liabilities (as of June 30, 2025) | Year | Operating Leases (thousands) | | :--- | :--------------------------- | | 2025, excluding the six months ended June 30, 2025 | $2,624 | | 2026 | $4,555 | | 2027 | $2,834 | | 2028 | $1,841 | | 2029 | $1,275 | | Thereafter | $424 | | Total lease payments | $13,553 | | Less: imputed interest | $(866) | | Present value of operating lease liabilities | $12,687 | Operating Lease Liabilities Classification | Classification | June 30, 2025 (thousands) | December 31, 2024 (thousands) | | :------------- | :------------------------ | :---------------------------- | | Operating lease liabilities - current | $4,751 | $4,033 | | Operating lease liabilities - non-current | $7,936 | $7,034 | | Total | $12,687 | $11,067 | - As of June 30, 2025, the weighted-average discount rate for lease liabilities was **4.89%**, and the weighted-average remaining lease term was **3.2 years**[32](index=32&type=chunk) Supplemental Cash Flow Information for Operating Leases | Metric | 3 Months Ended June 30, 2025 (thousands) | 3 Months Ended June 30, 2024 (thousands) | 6 Months Ended June 30, 2025 (thousands) | 6 Months Ended June 30, 2024 (thousands) | | :------------------------------------------------------ | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Cash paid for amounts included in the measurement of lease liabilities | $1,311 | $1,181 | $2,524 | $2,322 | | Right-of-use assets obtained in exchange for new lease liabilities (noncash) | $1,575 | $259 | $3,358 | $259 | [Note 9. Income Taxes](index=13&type=section&id=9.%20Income%20Taxes) Explains the company's effective income tax rates and the factors influencing their changes Effective Income Tax Rates | Period | 2025 Effective Tax Rate | 2024 Effective Tax Rate | | :---------------------- | :---------------------- | :---------------------- | | 3 Months Ended June 30 | 51.1% | 25.1% | | 6 Months Ended June 30 | 35.8% | 25.9% | - The higher effective tax rates in 2025 were primarily due to U.S. state taxes and the establishment of a **$1.1 million** valuation allowance on deferred tax assets at Florsheim Australia, as realization was deemed unlikely[34](index=34&type=chunk) [Note 10. Share-Based Compensation Plans](index=13&type=section&id=10.%20Share-Based%20Compensation%20Plans) Details share-based compensation expense and activity for stock options and restricted stock awards Share-Based Compensation Expense | Period | 2025 Compensation Expense (thousands) | 2024 Compensation Expense (thousands) | | :---------------------- | :------------------------------------ | :------------------------------------ | | 3 Months Ended June 30 | $375 | $331 | | 6 Months Ended June 30 | $802 | $698 | - Compensation expense is associated with stock option and restricted stock awards granted in prior years[35](index=35&type=chunk) Stock Option Activity (Six Months Ended June 30, 2025) | Metric | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (thousands) | | :-------------------------- | :----- | :------------------------------ | :-------------------------------------------------- | :------------------------------------ | | Outstanding at January 1, 2025 | 563,760 | $25.98 | | | | Exercised | (3,020) | $24.84 | | | | Forfeited or expired | (1,370) | $25.34 | | | | Outstanding at June 30, 2025 | 559,370 | $25.99 | 6.0 | $4,261 | | Exercisable at June 30, 2025 | 285,329 | $26.50 | 4.9 | $2,151 | Restricted Stock Award Activity (Six Months Ended June 30, 2025) | Metric | Shares of Restricted Stock | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (thousands) | | :-------------------------- | :------------------------- | :------------------------------------- | :-------------------------------------------------- | :------------------------------------ | | Non-vested January 1, 2025 | 92,965 | $31.12 | | | | Vested | (3,050) | $30.64 | | | | Forfeited | (150) | $34.65 | | | | Non-vested - June 30, 2025 | 89,765 | $31.13 | 3.0 | $2,977 | [Note 11. Short-Term Borrowings](index=15&type=section&id=11.%20Short-Term%20Borrowings) Describes the company's revolving line of credit and its compliance with financial covenants - As of June 30, 2025, the company had a **$40.0 million** revolving line of credit expiring September 26, 2025, secured by general business assets, with no outstanding borrowings and compliance with all financial covenants[38](index=38&type=chunk) [Note 12. Comprehensive Income](index=15&type=section&id=12.%20Comprehensive%20Income) Presents the components of accumulated other comprehensive loss and changes during the reporting periods Components of Accumulated Other Comprehensive Loss | Component | June 30, 2025 (thousands) | December 31, 2024 (thousands) | | :-------------------------------- | :------------------------ | :---------------------------- | | Foreign currency translation adjustments | $(9,655) | $(11,671) | | Pension liability, net of tax | $(6,181) | $(6,263) | | Total accumulated other comprehensive loss | $(15,836) | $(17,934) | Changes in Accumulated Other Comprehensive Loss (Six Months Ended June 30, 2025) | Metric | Foreign Currency Translation Adjustments (thousands) | Defined Benefit Pension Items (thousands) | Total (thousands) | | :-------------------------- | :------------------------------------------------- | :---------------------------------------- | :---------------- | | Balance, January 1, 2025 | $(11,671) | $(6,263) | $(17,934) | | Net current period other comprehensive income | $2,016 | $82 | $2,098 | | Balance, June 30, 2025 | $(9,655) | $(6,181) | $(15,836) | Changes in Accumulated Other Comprehensive Loss (Six Months Ended June 30, 2024) | Metric | Foreign Currency Translation Adjustments (thousands) | Defined Benefit Pension Items (thousands) | Total (thousands) | | :------------------------------------------ | :------------------------------------------------- | :---------------------------------------- | :---------------- | | Balance, January 1, 2024 | $(7,954) | $(9,357) | $(17,311) | | Net current period other comprehensive (loss) income | $(1,031) | $146 | $(885) | | Balance, June 30, 2024 | $(8,985) | $(9,211) | $(18,196) | Reclassification Adjustments from Accumulated Other Comprehensive Loss (Six Months Ended June 30) | Item | 2025 (thousands) | 2024 (thousands) | Affected line item in the statement where net earnings is presented | | :------------------------------------------ | :--------------- | :--------------- | :---------------------------------------------------------------- | | Amortization of defined benefit pension items: Prior service cost | $10 | $10 | Other expense, net | | Amortization of defined benefit pension items: Actuarial losses | $100 | $188 | Other expense, net | | Total before tax | $110 | $198 | | | Tax benefit | $(28) | $(52) | Provision for income taxes | | Net of tax | $82 | $146 | | [Note 13. Equity](index=17&type=section&id=13.%20Equity) Reconciles changes in common stock, capital in excess of par value, reinvested earnings, and comprehensive loss Equity Reconciliation (Six Months Ended June 30, 2025) | Metric | Common Stock (thousands) | Capital in Excess of Par Value (thousands) | Reinvested Earnings (thousands) | Accumulated Other Comprehensive Loss (thousands) | | :---------------------------------------- | :----------------------- | :----------------------------------------- | :------------------------------ | :----------------------------------------------- | | Balance, January 1, 2025 | $9,643 | $72,577 | $181,299 | $(17,934) | | Net earnings | — | — | $7,799 | — | | Foreign currency translation adjustments | — | — | — | $2,016 | | Pension liability adjustment, net of tax | — | — | — | $82 | | Cash dividends declared | — | — | $(5,087) | — | | Stock options exercised, net | $1 | $(1) | — | — | | Share-based compensation expense | — | $802 | — | — | | Shares purchased and retired | $(105) | — | $(3,030) | — | | Balance, June 30, 2025 | $9,539 | $73,378 | $180,981 | $(15,836) | Equity Reconciliation (Six Months Ended June 30, 2024) | Metric | Common Stock (thousands) | Capital in Excess of Par Value (thousands) | Reinvested Earnings (thousands) | Accumulated Other Comprehensive Loss (thousands) | | :---------------------------------------- | :----------------------- | :----------------------------------------- | :------------------------------ | :----------------------------------------------- | | Balance, January 1, 2024 | $9,497 | $71,661 | $180,646 | $(17,311) | | Net earnings | — | — | $12,257 | — | | Foreign currency translation adjustments | — | — | — | $(1,031) | | Pension liability adjustment, net of tax | — | — | — | $146 | | Cash dividends declared | — | — | $(4,844) | — | | Stock options exercised, net | $12 | $(13) | — | — | | Share-based compensation expense | — | $698 | — | — | | Shares purchased and retired | $(18) | — | $(496) | — | | Balance, June 30, 2024 | $9,491 | $72,346 | $187,563 | $(18,196) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%2E) Analyzes the company's financial condition, operational results, key business trends, and liquidity [Forward-Looking Statements](index=18&type=section&id=FORWARD-LOOKING%20STATEMENTS) Cautions that the report contains forward-looking statements subject to risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially, as described in the Annual Report on Form 10-K and this Form 10-Q, and the company undertakes no obligation to update these statements[43](index=43&type=chunk) [General Business Overview and Segments](index=18&type=section&id=GENERAL) Describes the company's footwear business, brand portfolio, and reportable operating segments - Weyco Group, Inc. designs, markets, and distributes quality footwear principally for men, but also for women and children, under a portfolio of well-recognized brand names including: Florsheim, Nunn Bush, Stacy Adams, BOGS, and Forsake, with inventory purchased from third-party overseas manufacturers, almost all denominated in U.S. dollars[44](index=44&type=chunk) - The company has two reportable segments: North American wholesale operations (Wholesale) and North American retail operations (Retail), with 'Other' operations including Florsheim Australia (Australia and South Africa), whose Asia Pacific operations ceased in 2023 and wound down in 2024[45](index=45&type=chunk) - The majority of operations are in the United States, making results primarily affected by U.S. economic conditions and the retail environment[45](index=45&type=chunk) [Current Business Trends - Tariffs](index=18&type=section&id=Current%20Business%20Trends%20-%20Tariffs) Discusses the impact of recent and evolving U.S. tariffs on imported goods and the company's mitigation strategies - In early 2025, the U.S. government enacted incremental tariffs on imported goods, with the tariff on goods from China reaching **145%** in April, then temporarily reduced to **30%** from May 12 to August 12, 2025[46](index=46&type=chunk) - Tariffs on goods from other countries (excluding China) were **10%** throughout Q2 2025, but increased for Cambodia (**19%**), Vietnam (**20%**), and India (**50%**) as of August 7, 2025, with effective dates over the next several months[46](index=46&type=chunk) - U.S. trade and tariff policies currently remain fluid and unpredictable, and the company is committed to adapting and implementing mitigation strategies[46](index=46&type=chunk) [Executive Overview](index=18&type=section&id=EXECUTIVE%20OVERVIEW) Summarizes the company's performance, highlighting challenges from tariffs and consumer spending slowdowns - The tariff environment and consumer affordability issues created headwinds in Q2 2025, leading to consumers pulling back on discretionary footwear purchases and wholesale customers being cautious with inventory buys[47](index=47&type=chunk) - Combined legacy business sales were down **8%** for the quarter (Nunn Bush **-11%**, Stacy Adams **-10%**, Florsheim **-5%**), reflecting softness in men's dress, dress-casual, and basic-casual markets, with this challenging environment expected to persist through H2 2025[48](index=48&type=chunk) - BOGS brand sales were down **14%** in Q2 due to sluggish outdoor category demand, with the company introducing new Fall products, expanding Seamless construction, diversifying manufacturing away from China, and broadening the product line to reduce cold-weather dependency, with cautious optimism for H2 traction[49](index=49&type=chunk)[50](index=50&type=chunk) - Retail segment net sales declined **11%** for the quarter, driven by a tepid consumer environment and decreased sales conversion rates despite increased e-commerce site traffic, as consumers are value-conscious, leading to comparison shopping, while the company aims to maintain pricing integrity[51](index=51&type=chunk) - Florsheim Australia (including Asia and South Africa) experienced a **4%** decline in net sales (**2%** in local currency) for the quarter, primarily due to lower wholesale shipments, with the focus on wholesale growth and efficiency improvements[52](index=52&type=chunk) [Second Quarter Highlights](index=20&type=section&id=Second%20Quarter%20Highlights) Presents key consolidated financial performance metrics for the second quarter ended June 30 Consolidated Financial Highlights (Three Months Ended June 30) | Metric | 2025 (millions) | 2024 (millions) | % Change | | :------------------------ | :-------------- | :-------------- | :------- | | Net sales | $58.2 | $63.9 | (9)% | | Gross earnings | $25.2 | $28.1 | (10)% | | Gross earnings as % of net sales | 43.3% | 43.9% | (0.6) pp | | Earnings from operations | $3.9 | $6.7 | (42)% | | Net earnings | $2.3 | $5.6 | (60)% | | Diluted EPS | $0.24 | $0.59 | (59.3)% | [Year-To-Date Highlights](index=20&type=section&id=Year-To-Date%20Highlights) Summarizes consolidated financial performance metrics for the six months ended June 30 Consolidated Financial Highlights (Six Months Ended June 30) | Metric | 2025 (millions) | 2024 (millions) | % Change | | :------------------------ | :-------------- | :-------------- | :------- | | Net sales | $126.3 | $135.5 | (7)% | | Gross earnings | $55.6 | $60.1 | (7)% | | Gross earnings as % of net sales | 44.0% | 44.4% | (0.4) pp | | Earnings from operations | $10.9 | $14.9 | (27)% | | Net earnings | $7.8 | $12.3 | (36)% | | Diluted EPS | $0.81 | $1.28 | (36.7)% | [Financial Position Highlights](index=20&type=section&id=Financial%20Position%20Highlights) Outlines the company's cash, marketable securities, debt, and cash flow utilization - As of June 30, 2025, cash and marketable securities totaled **$83.8 million**, with no outstanding debt on the **$40.0 million** revolving line of credit[55](index=55&type=chunk) - During the first six months of 2025, the company generated **$14.4 million** in cash from operations, with funds used to pay **$5.0 million** in dividends, repurchase **$3.1 million** of common stock, and pay **$0.7 million** of capital expenditures[55](index=55&type=chunk) - A prefunded dividend of **$21.6 million** was paid to shareholders in January 2025[55](index=55&type=chunk) [Consolidated Results of Operations](index=20&type=section&id=CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) Analyzes consolidated net sales, gross earnings, operating expenses, and net earnings performance - Consolidated net sales for Q2 2025 and YTD 2025 were down **9%** and **7%**, respectively, compared to the same periods of 2024, mainly due to lower sales in the Wholesale and Retail segments[58](index=58&type=chunk) - Consolidated gross earnings as a percentage of net sales decreased to **43.3%** in Q2 2025 (from **43.9%** in Q2 2024) and to **44.0%** YTD 2025 (from **44.4%** in YTD 2024), primarily due to incremental tariffs incurred in Q2[59](index=59&type=chunk) Consolidated Distribution Costs | Period | 2025 (millions) | 2024 (millions) | | :----- | :-------------- | :-------------- | | Q2 | $4.3 | $4.5 | | YTD | $9.3 | $9.7 | - Consolidated selling and administrative expenses as a percentage of net sales increased to **37%** in Q2 2025 (from **34%** in Q2 2024) and to **35%** YTD 2025 (from **33%** in YTD 2024), as many operating costs are fixed[62](index=62&type=chunk) - Consolidated earnings from operations for Q2 2025 and YTD 2025 were down **42%** and **27%**, respectively, mainly due to lower sales in the Wholesale and Retail segments[63](index=63&type=chunk) - Net earnings for Q2 2025 totaled **$2.3 million** (down **60%**) and for YTD 2025 totaled **$7.8 million** (down **36%**), mainly impacted by lower operating earnings in Wholesale and Retail segments, and a **$1.1 million** income tax provision adjustment related to a valuation allowance on deferred tax assets at Florsheim Australia[67](index=67&type=chunk)[66](index=66&type=chunk) [Segment Analysis](index=22&type=section&id=SEGMENT%20ANALYSIS) Provides a detailed breakdown of financial performance across the company's operating segments Segment Net Sales and Earnings from Operations (Three and Six Months Ended June 30) | Segment | Q2 2025 Net Sales (thousands) | Q2 2024 Net Sales (thousands) | Q2 % Change | YTD 2025 Net Sales (thousands) | YTD 2024 Net Sales (thousands) | YTD % Change | | :----------------------- | :---------------------------- | :---------------------------- | :---------- | :----------------------------- | :----------------------------- | :----------- | | North American Wholesale | $45,630 | $50,248 | (9)% | $99,903 | $106,498 | (6)% | | North American Retail | $6,773 | $7,603 | (11)% | $15,439 | $17,422 | (11)% | | Other | $5,818 | $6,081 | (4)% | $10,909 | $11,570 | (6)% | | Total | $58,221 | $63,932 | (9)% | $126,251 | $135,490 | (7)% | | | | | | | | | | Segment | Q2 2025 Op. Earnings (thousands) | Q2 2024 Op. Earnings (thousands) | Q2 % Change | YTD 2025 Op. Earnings (thousands) | YTD 2024 Op. Earnings (thousands) | YTD % Change | | :----------------------- | :----------------------------- | :----------------------------- | :---------- | :------------------------------ | :------------------------------ | :----------- | | North American Wholesale | $4,063 | $5,784 | (30)% | $10,699 | $13,175 | (19)% | | North American Retail | $65 | $695 | (91)% | $687 | $1,992 | (66)% | | Other | $(235) | $182 | NM | $(462) | $(255) | NM | [North American Wholesale Segment](index=23&type=section&id=North%20American%20Wholesale%20Segment) Reviews net sales, gross margins, and operating earnings for the North American wholesale operations North American Wholesale Net Sales by Brand | Brand | Q2 2025 Net Sales (thousands) | Q2 2024 Net Sales (thousands) | Q2 % Change | YTD 2025 Net Sales (thousands) | YTD 2024 Net Sales (thousands) | YTD % Change | | :---------- | :---------------------------- | :---------------------------- | :---------- | :----------------------------- | :----------------------------- | :----------- | | Stacy Adams | $10,586 | $11,779 | (10)% | $23,357 | $25,537 | (9)% | | Nunn Bush | $11,280 | $12,683 | (11)% | $21,891 | $25,373 | (14)% | | Florsheim | $20,953 | $22,068 | (5)% | $44,871 | $44,463 | 1% | | BOGS | $2,553 | $2,969 | (14)% | $8,855 | $9,628 | (8)% | | Forsake | $101 | $242 | (58)% | $278 | $463 | (40)% | | Licensing | $157 | $507 | (69)% | $651 | $1,034 | (37)% | | Total Wholesale Segment | $45,630 | $50,248 | (9)% | $99,903 | $106,498 | (6)% | - Wholesale net sales decreased **9%** in Q2 2025 and **6%** YTD 2025, with sales down across most brands due to a slowdown in consumer spending and cautious retailer inventory management, though Florsheim sales were slightly up YTD due to new product launches[69](index=69&type=chunk) - Wholesale gross earnings as a percentage of net sales decreased to **37.6%** in Q2 2025 (from **38.2%** in Q2 2024) and to **38.6%** YTD 2025 (from **39.0%** in YTD 2024), negatively impacted by incremental tariffs[70](index=70&type=chunk) - Mitigation strategies for tariffs include proactive inventory acquisition, negotiating factory cost reductions, diversifying sourcing away from China, and raising U.S. selling prices effective July 1, 2025[71](index=71&type=chunk) - Wholesale operating earnings decreased **30%** for Q2 2025 and **19%** for YTD 2025, driven by lower sales and gross margins[73](index=73&type=chunk) [North American Retail Segment](index=23&type=section&id=North%20American%20Retail%20Segment) Examines net sales, gross margins, and operating expenses for the North American retail operations - Retail net sales decreased **11%** to **$6.8 million** for Q2 2025 and to **$15.4 million** YTD 2025, primarily due to lower consumer demand on Florsheim and Stacy Adams websites, and less promotional activity on BOGS website[74](index=74&type=chunk) - Retail gross earnings as a percentage of net sales were **66.6%** for Q2 2025 (vs. **67.5%** in Q2 2024) and **66.6%** YTD 2025 (vs. **66.2%** in YTD 2024)[75](index=75&type=chunk) - Retail selling and administrative expenses remained flat at **$4.4 million** for Q2 and **$9.6 million** YTD, but as a percentage of net sales, they increased to **66%** in Q2 2025 (from **58%** in Q2 2024) and to **62%** YTD 2025 (from **55%** in YTD 2024) due to fixed costs[76](index=76&type=chunk) - Retail operating earnings declined **$0.6 million** for Q2 2025 and **$1.3 million** YTD 2025, mainly due to lower sales and gross margins[77](index=77&type=chunk) [Other (Florsheim Australia)](index=25&type=section&id=Other%20%28Florsheim%20Australia%29) Reports on the financial performance of Florsheim Australia, focusing on sales and operating losses - The 'other' category now reflects only Australia and South Africa operations, as Asia Pacific operations ceased in 2023 and wound down in 2024[78](index=78&type=chunk) - Florsheim Australia's net sales decreased **4%** to **$5.8 million** for Q2 2025 (**2%** in local currency) and **6%** YTD 2025 (**2%** in local currency), primarily due to lower wholesale shipments and the weaker Australian dollar, with the YTD local currency decrease partially offset by higher sales in South Africa and Australia[79](index=79&type=chunk) - Florsheim Australia reported operating losses of **$0.2 million** for Q2 2025 (vs. earnings of **$0.2 million** in Q2 2024) and widened to **$0.5 million** YTD 2025 (from **$0.3 million** YTD 2024), mainly due to lower sales[80](index=80&type=chunk) [Other Income and Expense](index=25&type=section&id=Other%20income%20and%20expense) Discusses interest income, other net expenses, and the effective income tax rate - Interest income decreased due to lower interest rates in 2025, while other expense, net, remained relatively flat, comprising non-service pension costs and foreign currency transaction gains/losses[81](index=81&type=chunk)[82](index=82&type=chunk) - The effective income tax rate increased to **51.1%** for Q2 2025 (from **25.1%** in Q2 2024) and to **35.8%** YTD 2025 (from **25.9%** in YTD 2024), primarily due to a **$1.1 million** valuation allowance on deferred tax assets at Florsheim Australia[83](index=83&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Assesses the company's cash flow generation, debt capacity, and overall financial flexibility [Operating Activities](index=25&type=section&id=Operating%20Activities) Analyzes cash flows generated from the company's primary business operations - Net cash provided by operating activities decreased by **$3.3 million** to **$14.4 million** in the first six months of 2025, primarily due to lower net earnings and changes in operating assets and liabilities, especially inventory[85](index=85&type=chunk) - Cash flows from inventory changes decreased **$4.2 million**, as inventory levels were higher than normal due to proactive expediting ahead of incremental tariffs, with the company aiming to normalize inventory pairs, but dollar value may increase due to tariffs[86](index=86&type=chunk) [Investing Activities](index=27&type=section&id=Investing%20Activities) Details cash flows related to the acquisition and disposal of long-term assets and investments - Net cash used for investing activities increased to **$0.7 million** in the first six months of 2025 (from **$0.1 million** in 2024) due to higher capital expenditures and less proceeds from marketable securities maturities[87](index=87&type=chunk) - Capital expenditures totaled **$0.7 million** for the period, with estimated total capital expenditures for 2025 projected between **$1.0 million** and **$2.0 million**[87](index=87&type=chunk) [Financing Activities](index=27&type=section&id=Financing%20Activities) Reports cash flows from debt, equity transactions, dividends, and share repurchases - Net cash used for financing activities increased to **$8.2 million** in the first six months of 2025 (from **$7.7 million** in 2024), driven by a **$2.6 million** increase in shares repurchased, partially offset by a **$2.1 million** decrease in cash dividends paid[88](index=88&type=chunk) - Cash dividends paid in H1 2025 totaled **$5.0 million** (two payments), while H1 2024 totaled **$7.2 million** (three payments, including one declared in Q4 2023)[89](index=89&type=chunk) - On August 5, 2025, a cash dividend of **$0.27 per share** was declared, payable September 30, 2025[90](index=90&type=chunk) - The company repurchased **104,092 shares** for approximately **$3.1 million** in H1 2025, with **744,824 authorized shares** remaining available under the repurchase program as of June 30, 2025[91](index=91&type=chunk) - The **$40.0 million** revolving line of credit had no outstanding borrowings as of June 30, 2025, and the company was in compliance with all financial covenants[92](index=92&type=chunk) [Financing Activities – Non-cash](index=27&type=section&id=Financing%20Activities%20%E2%80%93%20Non-cash) Describes significant non-cash financing transactions, such as prefunded dividend payments - A **$21.6 million** prefunded dividend from Q4 2024 was paid to shareholders in January 2025, recorded as a non-cash financing activity[93](index=93&type=chunk) [Other (Liquidity Outlook)](index=27&type=section&id=Other%20%28Liquidity%20Outlook%29) Provides management's assessment of future liquidity and capital resource adequacy - As of June 30, 2025, approximately **$4.8 million** of cash and cash equivalents was held by foreign subsidiaries[94](index=94&type=chunk) - The company believes available cash, marketable securities, and cash from operations will provide adequate liquidity for at least one year, with continued evaluation for capital expenditures, stock repurchases, and acquisitions[94](index=94&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk%2E) States that there are no applicable quantitative and qualitative disclosures about market risk for the company - Not applicable[95](index=95&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures%2E) Confirms the effectiveness of the company's disclosure controls and procedures and reports no significant changes in internal control over financial reporting during the quarter ended June 30, 2025 - The CEO and CFO evaluated disclosure controls and procedures as of June 30, 2025, and concluded they are effective in ensuring timely and accurate reporting of material information[96](index=96&type=chunk)[97](index=97&type=chunk) - No significant changes in internal control over financial reporting occurred during the three months ended June 30, 2025, that materially affected or are reasonably likely to materially affect it[98](index=98&type=chunk) [PART II. OTHER INFORMATION](index=29&type=section&id=PART%20II.%20OTHER%20INFORMATION) Covers legal proceedings, risk factors, equity security sales, other disclosures, and exhibits [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings%2E) The company is not currently party to any legal proceedings that are expected to have a material adverse effect on its business, financial condition, operating results, or cash flows - The company is not presently involved in any legal proceedings the resolution of which is believed to have a material adverse effect on its business, financial condition, operating results, or cash flows[100](index=100&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) Highlights the material risk factor related to additional tariffs and retaliatory trade actions, which could significantly increase costs, reduce margins, and decrease consumer demand for the company's products - Additional tariffs on products imported into the U.S., retaliatory trade actions by other countries, and resulting trade wars may have a material adverse impact on the company's business[102](index=102&type=chunk) - The recent incremental tariffs, especially on goods from China, India, and other Asian countries, could materially increase costs and reduce margins, potentially leading to higher product pricing and reduced consumer demand[102](index=102&type=chunk)[103](index=103&type=chunk) - The company is analyzing strategies to mitigate tariff effects, including evaluating country of origin for sourcing, negotiating with suppliers, and adjusting pricing, but there's no assurance these measures will be successful or offset negative impacts[103](index=103&type=chunk) - The specific impact of current and potential tariffs and trade actions on business, results of operations, cash flows, and financial condition is uncertain but could be material[104](index=104&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%2E) Details the company's common stock repurchase activity during the second quarter of 2025 under its established share repurchase program - The company has a share repurchase program, with **8.5 million shares** authorized for repurchase since its inception in 1998[106](index=106&type=chunk) Common Stock Repurchases (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of the Publicly Announced Program | Maximum Number of Shares that May Yet Be Purchased Under the Program | | :------------------------ | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------- | :------------------------------------------------------------------- | | 04/01/2025 - 04/30/2025 | 43,012 | $28.95 | 43,012 | 781,651 | | 05/01/2025 - 05/31/2025 | 30,679 | $31.36 | 30,679 | 750,972 | | 06/01/2025 - 06/30/2025 | 6,148 | $31.83 | 6,148 | 744,824 | | Total | 79,839 | $30.10 | 79,839 | | [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) Confirms that no director or Section 16 officer adopted or terminated a Rule 10b5-1 trading agreement or non-Rule 10b5-1 trading arrangement during the second quarter of 2025 - No director or Section 16 officer adopted or terminated a 'Rule 10b5-1 trading agreement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[108](index=108&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits%2E) Lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO, and financial information formatted in iXBRL Exhibits Filed | Exhibit | Description | | :------ | :---------- | | 31.1 | Certification of Chief Executive Officer | | 31.2 | Certification of Chief Financial Officer | | 32 | Section 906 Certification of Chief Executive Officer and Chief Financial Officer | | 101 | iXBRL formatted financial information (Condensed Consolidated Balance Sheets, Statements of Earnings, Comprehensive Income, Cash Flows, and Notes) | | 104 | iXBRL formatted cover page | [Signatures](index=31&type=section&id=SIGNATURES) Contains the duly authorized signature for the report on behalf of Weyco Group, Inc - The report was signed on August 7, 2025, by Judy Anderson, Vice President, Chief Financial Officer, and Secretary, as a duly authorized officer and Principal Financial Officer[113](index=113&type=chunk)

Financial Data and Key Metrics Changes - Overall net sales for Q2 2025 were $58.2 million, down 9% from $63.9 million in Q2 2024 [5] - Consolidated gross earnings were 43.3% of net sales compared to 43.9% in the previous year [5] - Earnings from operations were $3.9 million, down 42% from $6.7 million in Q2 2024 [6] - Net earnings totaled $2.3 million, down 60% from $5.6 million last year [6] - Diluted earnings per share were $0.24 in Q2 2025, compared to $0.59 in Q2 2024 [6] Business Line Data and Key Metrics Changes - North American wholesale segment net sales were $45.6 million, down 9% from $50.3 million last year [6] - Retail segment net sales were $6.8 million, down 11% from $7.6 million in 2024 [12] - Florsheim Australia net sales were $5.8 million, down 4% from $6.1 million in 2024 [14] - Retail gross earnings as a percentage of net sales were 66.6% in 2025 compared to 67.5% in 2024 [12] Market Data and Key Metrics Changes - The overall men's dress, dress casual, and basic casual markets are under pressure, with the traditional men's business being one of the first categories impacted in a slowing footwear market [20] - BOGS brand sales were down 14% compared to 2024 due to sluggish consumer demand in the outdoor category [21] - Retailer inventories for outdoor footwear are now very clean, indicating cautious inventory management [22] Company Strategy and Development Direction - The company is actively working to diversify its supply chain away from reliance on China, which previously accounted for 75% of its factory base [18] - The focus is on maintaining quality and value across all brands while adapting to the evolving tariff environment [19] - The company aims to grow its wholesale business in Australia and South Africa while managing retail operations carefully [54][58] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer sentiment is cautious due to affordability issues and uncertainty around tariffs, leading to reduced discretionary spending [17] - The expectation is that the challenging environment will persist through the second half of the year [21] - The company is optimistic about new product introductions and expanding its product line to be less dependent on cold weather demand [21] Other Important Information - The consolidated effective tax rate was 51.1% for the quarter, up from 25.1% in the previous year due to a valuation allowance on deferred tax assets [15] - Cash and marketable securities totaled $83.8 million with no debt outstanding on the revolving line of credit [15] - The Board of Directors declared a cash dividend of $0.27 per share, payable on September 30, 2025 [16] Q&A Session Summary Question: Can you quantify the change in inventory due to pre-purchasing? - Management indicated that inventory levels are returning to normal, expected to be in the $70 to $75 million range, but the dollar value may increase due to tariffs [31][32] Question: What is the approach if warning flags arise regarding wholesale customers' creditworthiness? - Management stated they monitor the situation closely and aim to work with retailers while being realistic about market changes [50] Question: What is the strategic importance of Florsheim Australia? - Management emphasized the long-standing presence in Australia, the dominance in the market, and the potential for profitability through careful management of retail and wholesale operations [52][54]