Milwaukee, WI, Oct. 11, 2024 (GLOBE NEWSWIRE) -- WEYCO Group, Inc. (NASDAQ: WEYS), a global marketer of footwear, plans to announce third quarter 2024 financial results after the close on Tuesday, November 5, 2024. Additionally, Thomas W. Florsheim, Jr., Chairman and CEO, will host a conference call on Wednesday, November 6, 2024, at 11:00 a.m. Eastern Time to discuss the financial results in more detail. To participate in the call, you will first need to pre-register online. Pre-registration takes only a f ...

Group 1 - Weyco Group, Inc. has recently launched new hybrid and athleisure styles, contributing to significant online revenue growth [1] - The company has established connections with various retailers in the United States, enhancing its market presence [1] Group 2 - The analyst expresses a beneficial long position in Weyco Group shares, indicating confidence in the company's performance [2] - The article reflects the author's personal opinions and does not involve compensation from any company mentioned [2]

Weyco Group, Inc. (WEYS) reported its financial results for the second quarter ended Jun 30, 2024. Earnings per share (EPS) of 59 cents indicates an improvement from 50 cents in the prior-year quarter. Net sales of $63.9 million denoted a 5% decrease from $67 million in the second quarter of 2023 due to mixed performances across different segments and brands. The Wholesale segment showed resilience, and the Retail segment maintained steady sales but faced higher expenses. The cessation of operations in the ...

Financial Data and Key Metrics Changes - Overall net sales for Q2 2024 were $63.9 million, down 5% from $67 million in Q2 2023 [5] - Consolidated gross earnings increased to 43.9% of net sales compared to 43.3% in the previous year [5] - Net earnings reached a record of $5.6 million or $0.59 per diluted share, up 15% from $4.9 million or $0.50 per diluted share last year [5] Business Line Data and Key Metrics Changes - North American wholesale segment net sales were $50.2 million, down 2% from $51.5 million in Q2 2023, with gross earnings at 38.2% of net sales compared to 37% last year [6][7] - Retail segment net sales remained flat at $7.6 million, with retail gross earnings as a percentage of net sales increasing to 67.5% from 66.2% [8] - Florsheim Australia net sales were $6.1 million, down 23% from $7.9 million in Q2 2023, with operating earnings decreasing to $200,000 from $300,000 [11] Market Data and Key Metrics Changes - The BOGS brand experienced a 33% decline in sales for the quarter, attributed to inventory over-saturation and mild winters [19] - Retail sales were flat, with Nunn Bush and Stacy Adams experiencing slight declines, while BOGS and Florsheim had low single-digit increases [22] - Florsheim Australia's results were impacted by the loss of a significant wholesale customer and inflationary pressures affecting consumer spending [23] Company Strategy and Development Direction - The company aims to enhance its presence in the casual lifestyle segment, focusing on hybrid and athleisure styles to appeal to modern consumers [18] - There is a commitment to maximizing leadership in refined footwear while adapting to market trends [17] - The strategy includes improving the BOGS brand's presence in the workwear category and introducing durable, lighter insulated boots [21] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the fall selling season, noting conservative order bookings from retailers [15] - The company is focused on controlling costs and turning around its Australian retail and wholesale businesses [24] - Management acknowledged the impact of inflation on consumer demand and the need to adapt to changing market conditions [4][23] Other Important Information - Interest income totaled $1 million in Q2 2024, up from $200,000 in the previous year, due to higher cash balances [12] - The company declared a cash dividend of $0.26 per share, payable on September 30, 2024 [13] Q&A Session Summary Question: Congratulations on another great quarter - Management appreciated the acknowledgment of their efforts [28] Question: What is At once business? - At once business refers to orders that come in without prior commitments from retailers, allowing for more flexibility in inventory management [31][32] Question: Is trade still an issue regarding freight costs? - Freight costs have normalized since their peak in 2022, and the company is now working with lower-cost inventory [35][36] Question: How does the company analyze BOGS sales geographically? - The company looks at geographic sales patterns and aims to build products that are less dependent on weather conditions [39][40]

To participate in the call, you will first need to pre-register online. Pre-registration takes only a few minutes and you may pre-register at any time, including up to and after the call start time. To pre-register, please go to: https://register.vevent.com/register/BI0df6b3e05d40441fa61e8df12529d329. The pre-registration process will provide the conference call phone number and a passcode required to enter the call. A replay will be available for one year beginning about two hours after the completion of t ...

Financial Data and Key Metrics Changes - Net sales were $71.6 million, down 17% compared to record first quarter sales of $86.3 million in 2023 [4] - Consolidated gross earnings increased to 44.7% of net sales compared to 43.1% in the previous year [4] - Earnings from operations were $8.3 million, down 21% from $10.4 million in 2023 [4] - Net earnings were $6.7 million or $0.69 per diluted share compared to $7.4 million or $0.78 per diluted share last year [4] Business Line Data and Key Metrics Changes - North American wholesale segment net sales were $56.2 million, down 20% from $69.9 million in Q1 2023, primarily due to a 48% decline in BOGS sales [5] - North American retail segment achieved record sales of $9.8 million, up 10% from $8.9 million in Q1 2023 [7] - Florsheim Australia net sales were $5.5 million, down 26% from $7.5 million in Q1 2023 [8] Market Data and Key Metrics Changes - The overall inventory as of March 31, 2024, was $62 million, down from $74.2 million at December 31, 2023 [18] - Interest income totaled $900,000 in Q1 2024 compared to $100,000 in the previous year [9] - Interest expense was zero for the quarter compared to $400,000 last year [9] Company Strategy and Development Direction - The company is focused on evolving its brand to fit a more relaxed lifestyle and expanding offerings in casual and hybrid footwear [13] - There is a commitment to product innovation, particularly for the BOGS brand, with new product launches aimed at differentiating from competitors [15] - The company anticipates a conservative trend among retailers to continue through the second quarter but is optimistic about demand improving in the latter half of the year [12] Management's Comments on Operating Environment and Future Outlook - Management noted that the North American wholesale business faced challenges due to conservative inventory management by retailers [12] - The company is optimistic about the long-term trajectory of its legacy brands despite current market pressures [13] - Management acknowledged that the market is slowly normalizing as retailers work down their inventories [14] Other Important Information - The Board of Directors declared a cash dividend of $0.26 per share, representing a 4% increase from the previous quarterly dividend rate of $0.25 [10] - The company generated $14.3 million of cash from operations during the first three months of 2024 [10] Q&A Session Summary Question: Reason for minimal stock buyback in Q1 - Management indicated that stock buybacks were limited due to high demand for shares, making it difficult to acquire more at set price limits [21] Question: Projected free cash flow for the year - Management did not provide an exact number but indicated that inventory levels and payables would not significantly impact cash flow [23][24] Question: Return rate for online shoe sales - The average return rate for online sales is 12% to 13%, which is considered low compared to industry standards [31]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________________ to _____________________________ Commission File Number: 000-09068 WEYCO GROUP, INC. (Exact name of registrant as specified in its c ...

[First Quarter 2024 Financial Highlights](index=1&type=section&id=first-quarter-2024-financial-highlights) Weyco Group's Q1 2024 saw decreased consolidated net sales and earnings, driven by wholesale challenges, while retail achieved record sales and interest income significantly increased [Consolidated Performance Overview](index=1&type=section&id=consolidated-performance-overview) Weyco Group, Inc. reported a decrease in consolidated net sales and earnings for Q1 2024 compared to a record Q1 2023, primarily driven by challenges in the wholesale segment | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | Change (%) | | :----------------------- | :------------------ | :------------------ | :--------- | | Consolidated Net Sales | $71.6 | $86.3 | -17% | | Consolidated Gross Earnings (% of Net Sales) | 44.7% | 43.1% | +1.6 pp | | Earnings from Operations | $8.3 | $10.4 | -21% | | Net Earnings | $6.7 | $7.4 | -9.6% | | Diluted EPS | $0.69 | $0.78 | -11.6% | [North American Wholesale Segment Performance](index=1&type=section&id=north-american-wholesale-segment-performance) The North American wholesale segment experienced a significant sales decline in Q1 2024, primarily due to retailers reducing orders amidst a product surplus and reduced demand | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net Sales | $56.2 | $69.9 | -20% | | Gross Earnings (% of Net Sales) | 39.6% | 38.2% | +1.4 pp | | Selling and Administrative Expenses | $14.9 | $17.9 | -16.8% | | Operating Earnings | $7.4 | $8.8 | -16% | - Sales of the BOGS brand decreased by **48%** due to retailers reducing orders amid a product surplus in the outdoor footwear market[3](index=3&type=chunk) - Florsheim, Stacy Adams, and Nunn Bush brands also saw declines of **11%**, **16%**, and **13%** respectively, attributed to reduced demand after record sales growth in early 2023[3](index=3&type=chunk) - Wholesale gross margins improved due to **lower inventory costs**, mainly inbound freight[4](index=4&type=chunk) - Selling and administrative expenses decreased primarily due to **lower employee costs**, including commission-based compensation[4](index=4&type=chunk) [North American Retail Segment Performance](index=1&type=section&id=north-american-retail-segment-performance) The North American retail segment achieved record net sales in Q1 2024, driven by strong website performance, though operating earnings remained flat due to increased expenses | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net Sales | $9.8 | $8.9 | +10% | | Gross Earnings (% of Net Sales) | 65.3% | 66.3% | -1.0 pp | | Operating Earnings | $1.3 | $1.3 | 0% | - The increase in retail net sales was primarily due to **higher sales on the BOGS and Florsheim websites**[5](index=5&type=chunk) - Retail operating earnings were flat as higher sales were offset by **increased selling and administrative expenses**, mainly web freight[6](index=6&type=chunk) [Other Operations Performance](index=1&type=section&id=other-operations-performance) Other operations, primarily Australia and South Africa, saw a significant decline in net sales and an operating loss in Q1 2024, mainly due to Asia operations closure and loss of a major Australian customer | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net Sales (Florsheim Australia) | $5.5 | $7.5 | -26% | | Gross Earnings (% of Net Sales) | 60.2% | 60.5% | -0.3 pp | | Operating Earnings (Losses) | ($0.4) | $0.3 | -233.3% | - The 'other' category's operating results primarily reflect Australia and South Africa, following the **cessation of Asia operations in 2023**[7](index=7&type=chunk) - The decline in net sales for Florsheim Australia was mainly due to **lower sales in Asia** from the closing of operations and the **mid-year 2023 loss of a sizeable wholesale customer in Australia**[8](index=8&type=chunk) - Retail sales in Australia also decreased due to a **challenging retail environment**[8](index=8&type=chunk) [Other Income / (Expense)](index=1&type=section&id=other-income-expense) Weyco Group saw a substantial increase in interest income and the elimination of interest expense in Q1 2024, primarily due to interest earned on cash balances and no outstanding debt | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | Change (Millions) | | :------------- | :------------------ | :------------------ | :---------------- | | Interest Income | $0.9 | $0.1 | +$0.8 | | Interest Expense | $0.0 | $0.4 | -$0.4 | - The increase in interest income was due to **interest earned on cash in the U.S. and Canada**, while the prior year included interest expense on outstanding debt balances[10](index=10&type=chunk) [Management Commentary and Outlook](index=2&type=section&id=management-commentary-and-outlook) Management addresses industry challenges, highlights strong retail performance, and declares an increased quarterly cash dividend [CEO Statement](index=2&type=section&id=ceo-statement) Chairman and CEO Thomas W. Florsheim, Jr. acknowledged industry headwinds impacting wholesale volumes but highlighted strong retail performance and expressed optimism for improved demand in H2 2024 - Wholesale volumes were down due to broader industry headwinds, with retailers reluctant to place orders after struggling with **high inventories last year**[11](index=11&type=chunk) - Despite challenges, sell-throughs at wholesale remain strong, and the retail segment posted another **record quarter**, demonstrating brand strength across North America[11](index=11&type=chunk) - Management expects sales to remain soft through the second quarter but is optimistic that demand will **improve in the back half of the year**[11](index=11&type=chunk) [Dividend Declaration](index=2&type=section&id=dividend-declaration) The Board of Directors declared an increased quarterly cash dividend for shareholders | Dividend Type | Current Rate (per share) | Previous Rate (per share) | Increase | | :-------------- | :----------------------- | :------------------------ | :------- | | Cash Dividend | $0.26 | $0.25 | 4% | - The dividend is payable on **June 28, 2024**, to shareholders of record on **May 17, 2024**[11](index=11&type=chunk) [Company Information](index=2&type=section&id=company-information) This section provides an overview of Weyco Group's business, outlines forward-looking statement disclaimers, and details the Q1 2024 conference call [About Weyco Group](index=2&type=section&id=about-weyco-group) Weyco Group, Inc. designs and markets quality and innovative footwear for men, women, and children under several recognized brand names, distributed globally through various retail channels - Weyco Group designs and markets quality and innovative footwear primarily for men, but also for women and children[14](index=14&type=chunk) - The company's portfolio includes well-recognized brand names such as **Florsheim, Nunn Bush, Stacy Adams, BOGS, Rafters, and Forsake**[14](index=14&type=chunk) - Products are sold in leading footwear, department, and specialty stores, e-commerce websites worldwide, and through company-operated Florsheim stores in the United States, Australia, and South Africa[14](index=14&type=chunk) [Forward-Looking Statements](index=2&type=section&id=forward-looking-statements) This section provides a standard disclosure regarding forward-looking statements, outlining various factors that could cause actual results to differ materially from projections - The press release contains forward-looking statements subject to risks and uncertainties under the **Private Securities Litigation Reform Act of 1995**[15](index=15&type=chunk) - Factors that could cause material differences include **inflation, economic slowdowns, competitive industry, changing consumer trends, timely product procurement, consumer acceptance, increased interest rates, and geopolitical impacts**[15](index=15&type=chunk) - The company undertakes **no obligation to update** any forward-looking statements[15](index=15&type=chunk) [Conference Call Details](index=2&type=section&id=conference-call-details) Weyco Group hosted a conference call to discuss Q1 2024 financial results, with details provided for pre-registration and replay access - A conference call was scheduled for **May 8, 2024, at 11:00 a.m. Eastern Time** to discuss Q1 2024 financial results[12](index=12&type=chunk) - Participants were required to **pre-register online** to receive the conference call phone number and passcode[12](index=12&type=chunk)[13](index=13&type=chunk) - A replay of the call is available for **one year** via a webcast link and in the investor relations section of Weyco Group's website[13](index=13&type=chunk) [Consolidated Financial Statements (Unaudited)](index=3&type=section&id=consolidated-financial-statements-unaudited) This section presents the unaudited consolidated financial statements, including statements of earnings, balance sheets, and cash flows for the specified periods [Consolidated Condensed Statements of Earnings and Comprehensive Income](index=3&type=section&id=consolidated-condensed-statements-of-earnings-and-comprehensive-income) The unaudited consolidated condensed statements of earnings and comprehensive income provide a detailed breakdown of the company's financial performance for the three months ended March 31, 2024, compared to the same period in 2023 | | Three Months Ended March 31, | | :---------------------------------- | :------------------ | :------------------ | | | 2024 (Millions) | 2023 (Millions) | | Net sales | $71.558 | $86.294 | | Cost of sales | $39.551 | $49.132 | | Gross earnings | $32.007 | $37.162 | | Selling and administrative expenses | $23.756 | $26.776 | | Earnings from operations | $8.251 | $10.386 | | Interest income | $0.905 | $0.139 | | Interest expense | $0.000 | ($0.385) | | Other expense, net | ($0.095) | ($0.130) | | Earnings before provision for income taxes | $9.061 | $10.010 | | Provision for income taxes | $2.411 | $2.565 | | Net earnings | $6.650 | $7.445 | | Weighted average shares outstanding | | | | Basic | 9,436 | 9,483 | | Diluted | 9,580 | 9,545 | | Earnings per share | | | | Basic | $0.70 | $0.79 | | Diluted | $0.69 | $0.78 | | Cash dividends declared (per share) | $0.25 | $0.24 | | Comprehensive income | $5.631 | $7.238 | [Consolidated Condensed Balance Sheets](index=4&type=section&id=consolidated-condensed-balance-sheets) The unaudited consolidated condensed balance sheets present the company's financial position as of March 31, 2024, compared to December 31, 2023, detailing assets, liabilities, and equity | | March 31, 2024 (Millions) | December 31, 2023 (Millions) | | :-------------------------------- | :-------------------------- | :--------------------------- | | ASSETS: | | | | Cash and cash equivalents | $78.348 | $69.312 | | Marketable securities, at amortized cost | $0.000 | $0.215 | | Accounts receivable, net | $42.098 | $39.275 | | Income tax receivable | $0.000 | $0.245 | | Inventories | $61.960 | $74.890 | | Prepaid expenses and other current assets | $3.641 | $6.172 | | Total current assets | $186.047 | $190.109 | | Marketable securities, at amortized cost | $6.360 | $6.354 | | Deferred income tax benefits | $1.052 | $1.096 | | Property, plant and equipment, net | $28.970 | $29.504 | | Operating lease right-of-use assets | $11.153 | $12.520 | | Goodwill | $12.317 | $12.317 | | Trademarks | $33.168 | $33.168 | | Other assets | $24.204 | $24.274 | | Total assets | $303.271 | $309.342 | | LIABILITIES AND EQUITY: | | | | Accounts payable | $5.789 | $8.845 | | Dividend payable | $0.000 | $2.352 | | Operating lease liabilities | $3.671 | $3.979 | | Accrued liabilities | $9.718 | $14.446 | | Accrued income tax payable | $1.950 | $0.000 | | Total current liabilities | $21.128 | $29.622 | | Deferred income tax liabilities | $11.765 | $11.819 | | Long-term pension liability | $13.447 | $13.412 | | Operating lease liabilities | $8.412 | $9.531 | | Other long-term liabilities | $0.411 | $0.465 | | Total liabilities | $55.163 | $64.849 | | Common stock | $9.508 | $9.497 | | Capital in excess of par value | $72.016 | $71.661 | | Reinvested earnings | $184.914 | $180.646 | | Accumulated other comprehensive loss | ($18.330) | ($17.311) | | Total equity | $248.108 | $244.493 | | Total liabilities and equity | $303.271 | $309.342 | [Consolidated Condensed Statements of Cash Flows](index=5&type=section&id=consolidated-condensed-statements-of-cash-flows) The unaudited consolidated condensed statements of cash flows provide an overview of cash generated from operating, investing, and financing activities for the three months ended March 31, 2024, compared to the same period in 2023 | | Three Months Ended March 31, | | :-------------------------------------------------- | :------------------ | :------------------ | | | 2024 (Millions) | 2023 (Millions) | | CASH FLOWS FROM OPERATING ACTIVITIES: | | | | Net earnings | $6.650 | $7.445 | | Adjustments to reconcile net earnings to net cash provided by operating activities | | | | Depreciation | $0.584 | $0.643 | | Amortization | $0.066 | $0.069 | | Bad debt expense (recovery) | $0.044 | ($0.013) | | Deferred income taxes | ($0.035) | ($0.023) | | Net foreign currency transaction gains | ($0.009) | ($0.048) | | Share-based compensation expense | $0.367 | $0.338 | | Pension expense | $0.220 | $0.347 | | Loss on disposal of fixed assets | $0.018 | $0.000 | | Increase in cash surrender value of life insurance | ($0.105) | ($0.105) | | Changes in operating assets and liabilities - | | | | Accounts receivable | ($2.865) | $0.520 | | Inventories | $12.928 | $21.297 | | Prepaid expenses and other assets | $2.633 | $1.943 | | Accounts payable | ($3.053) | ($8.411) | | Accrued liabilities and other | ($5.301) | ($3.208) | | Accrued income taxes | $2.194 | $2.192 | | Net cash provided by operating activities | $14.336 | $22.986 | | CASH FLOWS FROM INVESTING ACTIVITIES: | | | | Proceeds from maturities of marketable securities | $0.215 | $0.510 | | Purchases of property, plant and equipment | ($0.170) | ($0.659) | | Net cash provided by (used for) investing activities | $0.045 | ($0.149) | | CASH FLOWS FROM FINANCING ACTIVITIES: | | | | Cash dividends paid | ($4.664) | ($4.561) | | Shares purchased and retired | ($0.005) | ($1.540) | | Net proceeds from stock options exercised | $0.000 | $0.016 | | Payment of contingent consideration | $0.000 | ($0.500) | | Proceeds from bank borrowings | $0.000 | $29.018 | | Repayments of bank borrowings | $0.000 | ($39.514) | | Net cash used for financing activities | ($4.669) | ($17.081) | | Effect of exchange rate changes on cash and cash equivalents | ($0.676) | ($0.067) | | Net increase in cash and cash equivalents | $9.036 | $5.689 | | CASH AND CASH EQUIVALENTS at beginning of year | $69.312 | $16.876 | | CASH AND CASH EQUIVALENTS at end of year | $78.348 | $22.565 | | SUPPLEMENTAL CASH FLOW INFORMATION: | | | | Income taxes paid, net of refunds | $0.207 | $0.205 | | Interest paid | $0.000 | $0.423 |

[CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION](index=5&type=section&id=CAUTIONARY%20STATEMENTS%20REGARDING%20FORWARD-LOOKING%20INFORMATION) This section highlights that the report contains forward-looking statements subject to risks and uncertainties, which may cause actual results to differ materially - This report contains forward-looking statements, identifiable by words such as "anticipates," "believes," and "expects," which are subject to risks and uncertainties[11](index=11&type=chunk) - Actual results may differ materially from these forward-looking statements due to various factors, including those detailed in Item 1A, "Risk Factors"[11](index=11&type=chunk) [PART I.](index=6&type=section&id=PART%20I.) This part provides an overview of the company's business, risk factors, cybersecurity measures, property, legal proceedings, and executive officer information [ITEM 1. BUSINESS](index=6&type=section&id=ITEM%201.%20BUSINESS) Weyco Group, Inc. designs, markets, and distributes quality footwear under recognized brands, sourcing globally and operating through North American wholesale and retail segments, plus other international businesses - Weyco Group, Inc. designs, markets, and distributes quality and innovative footwear under brands including Florsheim, Nunn Bush, Stacy Adams, BOGS, Rafters, and Forsake[13](index=13&type=chunk) - Products primarily consist of mid-priced leather dress shoes, casual footwear, and outdoor boots, available in a broad range of sizes and widths[13](index=13&type=chunk) - Finished shoes are purchased from independent foreign manufacturers, primarily in China and India, with recent expansion to Cambodia, Vietnam, and the Dominican Republic[14](index=14&type=chunk) - The business is separated into two reportable segments: North American wholesale (**79% of 2023 net sales**) and North American retail (**12% of 2023 net sales**)[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk) - Other international businesses (Florsheim Australia) constituted **9% of total net sales in 2023**, but Asia Pacific operations ceased in 2023[15](index=15&type=chunk)[18](index=18&type=chunk) - The Retail segment focuses on investing in and growing its e-commerce businesses, with a limited number of brick-and-mortar stores[17](index=17&type=chunk) - As of December 31, 2023, the company employed **608 persons worldwide**, including **397 full-time employees**[19](index=19&type=chunk) [ITEM 1A. RISK FACTORS](index=8&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section outlines various material risks that could adversely affect Weyco Group's business, operations, and financial condition - Reliance on independent foreign manufacturers (primarily China and India) and the availability of raw materials (leather, rubber) poses risks of increased costs, supply disruptions, and manufacturing capacity issues[24](index=24&type=chunk)[27](index=27&type=chunk) - Long production and delivery lead times from foreign sourcing mean inaccurate demand forecasts can lead to lost sales or reduced margins from excess inventory[25](index=25&type=chunk) - Disruptions in the supply chain, including port congestion, labor issues, and trade protection measures, can delay product importation, increase costs, and negatively impact profitability[26](index=26&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - The unexpected loss of top executives or an inability to effectively manage leadership transitions could adversely impact company performance and strategy[31](index=31&type=chunk) - A material weakness in internal control over financial reporting was identified in 2023, which could adversely affect investor confidence and stock price[32](index=32&type=chunk)[33](index=33&type=chunk) - The company may not be able to successfully integrate new brands and businesses, potentially leading to unsuccessful acquisition efforts or failure to achieve expected results[34](index=34&type=chunk) - Decreases in disposable income, general market volatility, and shifts in consumer spending patterns (e.g., towards experiences over footwear) can adversely affect sales volume and overall performance[35](index=35&type=chunk)[87](index=87&type=chunk) - The highly competitive footwear market, rapid changes in fashion trends, and the increasing popularity of online shopping pose risks to pricing, profits, and sales volume[38](index=38&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - Global business operations expose the company to foreign currency fluctuations (primarily AUD and CAD), political/economic instability, and changes in trade regulations and tax laws[42](index=42&type=chunk)[43](index=43&type=chunk) - Dependence on information and communication systems for business and e-commerce sales makes the company vulnerable to significant interruptions, data loss, and security breaches[45](index=45&type=chunk)[46](index=46&type=chunk) - Failure to meet ESG commitments or evolving ESG standards could negatively impact brands, financial condition, and market perception[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - Future public health emergencies could have long-duration and significant impacts on operations, supply chain, distribution, and demand for products[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk) - Volatility in credit markets, potential cash flow problems for customers, and interest rate fluctuations (SOFR benchmark) could increase financing costs and bad debt expense[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - Deterioration of the municipal bond market could materially and adversely affect the company's investment portfolio, financial condition, and liquidity[58](index=58&type=chunk) - The limited public float and trading volume for the company's stock, with significant ownership by the Florsheim family and insiders, may adversely impact stock price or make liquidation difficult[59](index=59&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=15&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[60](index=60&type=chunk) [ITEM 1C. CYBERSECURITY](index=15&type=section&id=ITEM%201C.%20CYBERSECURITY) Weyco Group has a comprehensive cybersecurity strategy, policy, and program integrated into its overall risk management - The company has implemented processes and systems to identify, assess, and manage cybersecurity risks and threats, integrated into its overall risk management process[60](index=60&type=chunk) - A comprehensive cybersecurity strategy, policy, and program aligns with business objectives and risk appetite, and is regularly reviewed and updated[60](index=60&type=chunk) - The company complies with various laws, regulations, standards, and guidance related to cybersecurity, including Sarbanes-Oxley, PCI DSS, and the NIST Cybersecurity Framework[62](index=62&type=chunk) - No cybersecurity incidents materially impacted the company's business strategy, results of operations, or financial condition during the fiscal year ended December 31, 2023[63](index=63&type=chunk) - The IT security department, led by the Vice President of Information Systems and Distribution and overseen by the Director of IS, holds primary responsibility for assessing and managing cybersecurity threats[64](index=64&type=chunk) - Cybersecurity governance includes regular updates to the Audit Committee from management on cybersecurity developments, threats, risks, and processes[66](index=66&type=chunk) - Measures include continuous program development with the NIST Cybersecurity Framework, engaging third-party IT security vendors for assessments and monitoring, and conducting regular cybersecurity awareness training for employees[70](index=70&type=chunk) [ITEM 2. PROPERTIES](index=17&type=section&id=ITEM%202.%20PROPERTIES) As of December 31, 2023, Weyco Group operated owned and leased facilities, including a large office and distribution center in Glendale, Wisconsin - The company owns a **50% interest** in the Montreal, Canada property[68](index=68&type=chunk) - All facilities, including additional leased offices, distribution facilities, and retail shoe stores, are suitable and adequate for current operations[69](index=69&type=chunk) Property Overview | Location | Character | Owned/Leased | Square Footage | % Utilized | | :-------------------------- | :----------------------------------- | :----------- | :------------- | :--------- | | Glendale, Wisconsin | Two story office and distribution center | Owned | 1,100,000 | 90 % | | Montreal, Canada | Multistory office and distribution center | (3) Owned | 92,800 | 90 % | | Surrey Hills, Victoria, Australia | Multistory office | Leased | 9,800 | 100 % | | Tottenham Victoria, Australia | Single story distribution center | Leased | 47,500 | 100 % | [ITEM 3. LEGAL PROCEEDINGS](index=19&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company reported no material legal proceedings - There are no legal proceedings[72](index=72&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=19&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to Weyco Group, Inc - Mine Safety Disclosures are not applicable[72](index=72&type=chunk) [INFORMATION ABOUT EXECUTIVE OFFICERS](index=19&type=section&id=INFORMATION%20ABOUT%20EXECUTIVE%20OFFICERS) This section lists the executive officers of Weyco Group, Inc. as of December 31, 2023, including their positions and ages - Thomas W. Florsheim, Jr. and John W. Florsheim are brothers and have served as Chairman and CEO, and President, COO, and Assistant Secretary, respectively, since 2002[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) Executive Officers | Name | Position | Age | | :---------------------- | :------------------------------------------------- | :-- | | Thomas W. Florsheim, Jr. | Chairman and Chief Executive Officer | 65 | | John W. Florsheim | President, Chief Operating Officer, and Assistant Secretary | 60 | | Judy Anderson | Vice President, Chief Financial Officer and Secretary | 56 | | Kate Destinon | Vice President, and President of Nunn Bush Brand | 48 | | Jeff Douglass | Vice President, Marketing | 42 | | Dustin Combs | Vice President, and President of BOGS and Rafters Brands | 41 | | Brian Flannery | Vice President, and President of Stacy Adams Brand | 62 | | Kevin Schiff | Vice President, and President of Florsheim Brand | 55 | | George Sotiros | Vice President, Information Technology and Distribution | 57 | | Damian Walton | Vice President, President of Florsheim Australia | 50 | | Joshua Wisenthal | Vice President, and President of Weyco Canada | 41 | | Allison Woss | Vice President, Supply Chain | 51 | [PART II.](index=21&type=section&id=PART%20II.) This part covers market information for common equity, management's discussion and analysis, financial statements, and controls and procedures [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=21&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Weyco Group's common stock trades on Nasdaq under "WEYS," with an ongoing stock repurchase program - Shares of the company's common stock are traded on the Nasdaq Stock Market under the symbol "WEYS," with **91 holders of record** as of March 1, 2024[82](index=82&type=chunk) - As of December 31, 2023, there were **868,757 authorized shares** remaining under the stock repurchase program[84](index=84&type=chunk) Issuer Purchases of Equity Securities | 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 | | :---------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------ | :------------------------------------------------------------------ | | 10/01/2023 - 10/31/2023 | 13,723 | $ 25.88 | 13,723 | 889,943 | | 11/01/2023 - 11/30/2023 | 21,186 | $ 25.68 | 21,186 | 868,757 | | 12/01/2023 - 12/31/2023 | — | $ — | — | 868,757 | | Total | 34,909 | $ 25.76 | 34,909 | | [ITEM 6. RESERVED](index=21&type=section&id=ITEM%206.%20RESERVED) This item is reserved and contains no information - Item 6 is reserved[85](index=85&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=21&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial performance and condition for the two-year period ended December 31, 2023 - This discussion summarizes the significant factors affecting the consolidated operating results, financial position, and liquidity for the two-year period ended December 31, 2023[86](index=86&type=chunk) - The majority of operations are in the United States, and results are primarily affected by the economic conditions and the retail environment in the United States[85](index=85&type=chunk) [GENERAL](index=21&type=section&id=GENERAL) The company designs, markets, and distributes footwear under various brands, with operations segmented into North American wholesale, retail, and other international businesses - The company designs, markets, and distributes footwear under brands like Florsheim, Nunn Bush, Stacy Adams, BOGS, Rafters, and Forsake, with inventory purchased from third-party overseas manufacturers[85](index=85&type=chunk) - Operations include North American wholesale and retail segments, and "other" operations (Florsheim Australia), with Asia Pacific operations ceased in 2023[85](index=85&type=chunk) - Licensing revenues are included in the Wholesale segment, generated from branded apparel, accessories, and specialty footwear sales by third parties[85](index=85&type=chunk) [KNOWN TRENDS IMPACTING OUR BUSINESS](index=21&type=section&id=KNOWN%20TRENDS%20IMPACTING%20OUR%20BUSINESS) Macroeconomic pressures and shifting consumer spending patterns are impacting wholesale orders and overall demand for footwear and apparel - Macroeconomic pressures and a tepid retail environment are leading to cautious inventory levels among retailers, reducing wholesale customer orders[87](index=87&type=chunk) - Consumers are currently spending more discretionary income on experiences and services, and less on footwear and apparel[87](index=87&type=chunk) - Supply chain disruptions from 2021 and early 2022 have subsided, allowing inventory levels to normalize in 2023 after being at peak levels in late 2022[88](index=88&type=chunk) - The company expects continued headwinds in the first half of 2024 but is optimistic for improved demand in the back half of the year[87](index=87&type=chunk) [EXECUTIVE OVERVIEW](index=23&type=section&id=EXECUTIVE%20OVERVIEW) Despite a sales slowdown in 2023, the company achieved record operating and net earnings through disciplined expense management and pricing integrity - The company experienced a slowdown in sales in 2023 due to lower wholesale shipments but achieved record operating and net earnings by maintaining pricing integrity and disciplined expense management[89](index=89&type=chunk)[94](index=94&type=chunk) - BOGS brand net sales were down **31% in 2023** due to mild weather and an inventory glut in the outdoor market; product innovation and diversification are planned[90](index=90&type=chunk) - Legacy businesses (Florsheim, Nunn Bush, Stacy Adams) collectively saw a **5% sales decline**, reflecting a general slowdown in the dress and dress casual footwear market[91](index=91&type=chunk) - Retail segment sales increased **4% in 2023**, driven by e-commerce growth, leading to record retail operating earnings[92](index=92&type=chunk) - Florsheim Australia's net sales in local currency were down **3%** due to the loss of a significant wholesale account and soft consumer demand; Asia Pacific operations ceased in 2023[93](index=93&type=chunk)[104](index=104&type=chunk) - Cash and marketable securities totaled **$75.9 million** at December 31, 2023, with no debt outstanding on the revolving line of credit[95](index=95&type=chunk) - The company generated **$98.6 million of cash from operations in 2023**, mainly due to net earnings and reductions in inventory levels[95](index=95&type=chunk) Key Financial Metrics | Metric | 2023 (Millions) | 2022 (Millions) | % Change | | :-------------------------- | :-------------- | :-------------- | :--------- | | Net Sales | $318.0 | $351.7 | (10)% | | Gross Earnings (% of Net Sales) | 44.9% | 41.1% | +3.8 pp | | Operating Earnings | $41.0 | $40.4 | +2% | | Net Earnings | $30.2 | $29.5 | +2% | | Diluted EPS | $3.17 | $3.07 | +3.3% | [SEGMENT ANALYSIS](index=25&type=section&id=SEGMENT%20ANALYSIS) This section provides a detailed breakdown of financial performance across the North American Wholesale, North American Retail, and Other (Florsheim Australia) segments Segment Performance | Segment | Net Sales 2023 (Thousands) | Net Sales 2022 (Thousands) | Net Sales % Change | Earnings from Operations 2023 (Thousands) | Earnings from Operations 2022 (Thousands) | Earnings from Operations % Change | | :---------------------- | :------------------------- | :------------------------- | :----------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | North American Wholesale | $250,400 | $283,235 | (12)% | $33,288 | $32,641 | 2 % | | North American Retail | $38,012 | $36,694 | 4 % | $6,752 | $6,058 | 11 % | | Other | $29,636 | $31,808 | (7)% | $984 | $1,666 | (41)% | | Total | $318,048 | $351,737 | (10)% | $41,024 | $40,365 | 2 % | [North American Wholesale Segment](index=25&type=section&id=North%20American%20Wholesale%20Segment) Wholesale net sales decreased 12% in 2023, primarily due to lower demand, but operating earnings increased 2% due to improved gross margins and reduced expenses - Wholesale gross earnings as a percent of net sales improved to **39.7% in 2023** from **35.6% in 2022**, driven by increased selling prices and lower inbound freight costs[98](index=98&type=chunk) - Wholesale selling and administrative expenses decreased to **$66.0 million in 2023** from **$68.2 million in 2022**, primarily due to lower employee costs (commission-based compensation)[98](index=98&type=chunk) - Wholesale operating earnings reached a record **$33.3 million in 2023**, up **2%** over **$32.6 million in 2022**[98](index=98&type=chunk) North American Wholesale Net Sales by Brand | Brand | 2023 (Thousands) | 2022 (Thousands) | % Change | | :---------------------- | :--------------- | :--------------- | :--------- | | Stacy Adams | $56,027 | $62,284 | (10)% | | Nunn Bush | $53,851 | $54,882 | (2)% | | Florsheim | $87,731 | $91,682 | (4)% | | BOGS/Rafters | $48,969 | $70,572 | (31)% | | Forsake | $1,318 | $1,718 | (23)% | | Total North American Wholesale | $247,896 | $281,138 | (12)% | | Licensing | $2,504 | $2,097 | 19 % | | Total North American Wholesale Segment | $250,400 | $283,235 | (12)% | [North American Retail Segment](index=27&type=section&id=North%20American%20Retail%20Segment) Retail net sales reached a record $38.0 million in 2023, a 4% increase, driven by e-commerce growth, leading to record operating earnings - Retail net sales were a record **$38.0 million in 2023**, up **4%** over **$36.7 million in 2022**, primarily due to higher sales on legacy brands' websites[102](index=102&type=chunk) - Sales at the four domestic brick and mortar stores were down **4%** for the year[102](index=102&type=chunk) - Retail gross earnings as a percent of net sales were **65.9% in 2023**, compared to **65.7% in 2022**[103](index=103&type=chunk) - The Retail segment achieved record operating earnings of **$6.8 million in 2023**, up **11%** over **$6.1 million in 2022**, due mainly to the increase in web sales[103](index=103&type=chunk) [Other](index=27&type=section&id=Other) "Other" operations, primarily Florsheim Australia, reported a 7% decrease in net sales to $29.6 million in 2023, with operating earnings down 41% - Other net sales (Florsheim Australia) totaled **$29.6 million in 2023**, down **7%** from **$31.8 million in 2022**[105](index=105&type=chunk) - In local currency, Florsheim Australia's net sales were down **3%** due to the mid-year loss of a sizeable wholesale customer and soft consumer demand, partially offset by higher retail sales[105](index=105&type=chunk) - Other operating earnings totaled **$1.0 million in 2023**, a **41% decrease** from **$1.7 million in 2022**, mainly as a result of lower sales in Australia[105](index=105&type=chunk) - The company ceased operations in the Asia Pacific region in 2023, which did not have a material impact on full year 2023 consolidated results[104](index=104&type=chunk) [OTHER INCOME AND EXPENSE AND TAXES](index=27&type=section&id=OTHER%20INCOME%20AND%20EXPENSE%20AND%20TAXES) This section details changes in interest and dividend income, interest expense, other net expenses, and the effective tax rate for 2023 compared to 2022 - The increase in interest and dividend income in 2023 was due to more earnings on higher cash balances[106](index=106&type=chunk) - Interest expense decreased in 2023 due to less interest incurred as the company paid off its debt during the year[106](index=106&type=chunk) - Other expense, net, was up in 2023 due largely to an increase in non-service cost components of pension expense, primarily interest cost, as a result of higher interest rates[106](index=106&type=chunk) - The effective tax rate was **26.1% in 2023** versus **25.7% in 2022**, differing from the U.S. federal statutory rate of **21%** mainly due to state income taxes[107](index=107&type=chunk) Other Income and Expense | Item | 2023 (Thousands) | 2022 (Thousands) | Change | | :-------------------------- | :--------------- | :--------------- | :------- | | Interest and dividend income | $1,107 | $361 | +$746 | | Interest expense | $(529) | $(710) | +$181 | | Other expense, net | $(738) | $(277) | $(461) | [LIQUIDITY AND CAPITAL RESOURCES](index=27&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company generated significant cash from operations in 2023, primarily from net earnings and inventory reductions, and maintains adequate liquidity with no outstanding debt - The company generated **$98.6 million of cash from operations in 2023**, mainly due to net earnings and significant reductions in inventory levels[108](index=108&type=chunk) - Capital expenditures in 2023 included costs related to equipment installed in the Glendale warehouse to automate packing and labeling, aiming for faster service and labor savings[109](index=109&type=chunk) - The revolving line of credit was amended on September 28, 2023, extending maturity to September 28, 2024, with a maximum available borrowing limit of **$40.0 million** and interest at one-month SOFR plus **125 basis points**[114](index=114&type=chunk) - The company believes that available cash, marketable securities, cash provided by operations, and available borrowing facilities will provide adequate support for business needs for at least one year[116](index=116&type=chunk) Liquidity and Capital Resources Summary | Item | 2023 (Thousands) | 2022 (Thousands) | Change | | :------------------------------------ | :--------------- | :--------------- | :------- | | Cash and marketable securities | $69,500 | $18,400 | +$51,100 | | Cash from operations | $98,600 | $(29,900) | +$128,500 | | Inventory balance (Dec 31) | $74,900 | $128,000 | $(53,100) | | Capital expenditures | $3,300 | $2,300 | +$1,000 | | Dividends paid | $9,300 | $7,000 | +$2,300 | | Stock repurchases | $4,300 | $4,200 | +$100 | | Outstanding borrowings on line of credit (Dec 31) | $0 | $31,100 | $(31,100) | [Off-Balance Sheet Arrangements](index=29&type=section&id=Off-Balance%20Sheet%20Arrangements) The company does not utilize any special purpose entities or other off-balance sheet arrangements - The company does not utilize any special purpose entities or other off-balance sheet arrangements[117](index=117&type=chunk) [Critical Accounting Estimates](index=29&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates involve sales returns, allowances, doubtful accounts, and pension plan accounting, requiring management's judgment and assumptions about future events - Critical accounting estimates include sales returns, sales allowances, doubtful accounts, and pension plan accounting, which require management to make estimates and assumptions about future events[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - Reserves for sales returns, allowances, and doubtful accounts are based on factors such as specific customer situations, historical experience, and current/expected economic conditions[119](index=119&type=chunk) - Pension expense and corresponding obligations are determined on an actuarial basis, with the discount rate and expected rate of return on plan assets being the two most critical assumptions, evaluated annually[120](index=120&type=chunk) - A **0.5% decrease** in the discount rate would have a nominal impact on annual pension expense but would increase the projected benefit obligation by approximately **$2.7 million**[122](index=122&type=chunk) - A **0.5% decrease** in the expected return on plan assets would increase annual pension expense by approximately **$182,000**[123](index=123&type=chunk) - The unfunded benefit obligation was **$14.0 million** at December 31, 2023, down from **$16.1 million** at December 31, 2022[124](index=124&type=chunk) [Recent Accounting Pronouncements](index=31&type=section&id=Recent%20Accounting%20Pronouncements) The company adopted ASU 2016-13 in 2023 with no material impact and is evaluating ASU 2023-07 and ASU 2023-09 for future periods - The company adopted ASU 2016-13, Financial Instruments – Credit Losses, in the first quarter of 2023, which did not have a material impact on its consolidated financial statements[182](index=182&type=chunk) - The company is currently evaluating the impact of ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes), effective for annual periods beginning after December 15, 2023, and 2024, respectively[183](index=183&type=chunk)[184](index=184&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=31&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This item is not applicable to Weyco Group, Inc - Quantitative and Qualitative Disclosures About Market Risk are not applicable[126](index=126&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=32&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the audited consolidated financial statements of Weyco Group, Inc. for the years ended December 31, 2023 and 2022 - This section includes the audited consolidated financial statements of Weyco Group, Inc. for the years ended December 31, 2023 and 2022[129](index=129&type=chunk) - The independent registered public accounting firm issued an opinion that the consolidated financial statements present fairly, but noted a material weakness in internal control over financial reporting as of December 31, 2023[130](index=130&type=chunk) [Report of Independent Registered Public Accounting Firm](index=33&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Baker Tilly US, LLP issued an unqualified opinion on the financial statements but an adverse opinion on internal controls due to a material weakness in IT general controls - Baker Tilly US, LLP issued an unqualified opinion on the consolidated financial statements for 2023 and 2022[130](index=130&type=chunk) - An adverse opinion was issued on the effectiveness of the company's internal control over financial reporting as of December 31, 2023, due to a material weakness[130](index=130&type=chunk) - The material weakness identified was in the design and maintenance of information technology general controls (ITGCs) in user access and change management, including segregation of duties[130](index=130&type=chunk) - No critical audit matters were identified during the audit[139](index=139&type=chunk) [Consolidated Statements of Earnings](index=36&type=section&id=Consolidated%20Statements%20of%20Earnings) This statement presents the company's net sales, cost of sales, gross earnings, operating expenses, and net earnings for 2023 and 2022 Consolidated Statements of Earnings | Item | 2023 (Thousands) | 2022 (Thousands) | | :------------------------------------ | :--------------- | :--------------- | | Net sales | $318,048 | $351,737 | | Cost of sales | $175,165 | $207,344 | | Gross earnings | $142,883 | $144,393 | | Selling and administrative expenses | $101,859 | $104,028 | | Earnings from operations | $41,024 | $40,365 | | Interest and dividend income | $1,107 | $361 | | Interest expense | $(529) | $(710) | | Other expense, net | $(738) | $(277) | | Earnings before provision for income taxes | $40,864 | $39,739 | | Provision for income taxes | $10,676 | $10,199 | | Net earnings | $30,188 | $29,540 | | Basic earnings per share | $3.19 | $3.09 | | Diluted earnings per share | $3.17 | $3.07 | [Consolidated Statements of Comprehensive Income](index=37&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This statement details net earnings and other comprehensive income components, including foreign currency translation and pension liability adjustments Consolidated Statements of Comprehensive Income | Item | 2023 (Thousands) | 2022 (Thousands) | | :------------------------------------ | :--------------- | :--------------- | | Net earnings | $30,188 | $29,540 | | Other comprehensive income, net of tax: | | | | Foreign currency translation adjustments | $642 | $(1,813) | | Pension liability adjustments | $2,240 | $6,414 | | Other comprehensive income | $2,882 | $4,601 | | Comprehensive income | $33,070 | $34,141 | [Consolidated Balance Sheets](index=38&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity as of December 31, 2023 and 2022 Consolidated Balance Sheets | Item | 2023 (Thousands) | 2022 (Thousands) | | :------------------------------------ | :--------------- | :--------------- | | Cash and cash equivalents | $69,312 | $16,876 | | Investments, at fair value | $107 | $1,385 | | Marketable securities, at amortized cost | $215 | $7,123 | | Accounts receivable, less allowances | $39,275 | $53,298 | | Inventories | $74,890 | $127,976 | | Total current assets | $190,109 | $206,457 | | Property, plant and equipment, net | $29,504 | $28,812 | | Total assets | $326,620 | $309,342 | | Short-term borrowings | $0 | $31,136 | | Accounts payable | $14,946 | $8,845 | | Total current liabilities | $29,622 | $67,535 | | Total liabilities | $64,849 | $102,715 | | Total equity | $244,493 | $223,905 | [Consolidated Statements of Equity](index=39&type=section&id=Consolidated%20Statements%20of%20Equity) This statement details changes in common stock, capital in excess of par value, reinvested earnings, and accumulated other comprehensive loss Consolidated Statements of Equity | Item | Balance, Dec 31, 2022 (Thousands) | Net Earnings (Thousands) | Cash Dividends Declared (Thousands) | Shares Purchased and Retired (Thousands) | Foreign Currency Translation Adjustments (Thousands) | Pension Liability Adjustment (Thousands) | Balance, Dec 31, 2023 (Thousands) | | :------------------------------------ | :-------------------------------- | :----------------------- | :---------------------------------- | :--------------------------------------- | :------------------------------------------- | :--------------------------------------- | :-------------------------------- | | Common Stock | $9,584 | — | — | $(170) | — | — | $9,497 | | Capital in Excess of Par Value | $70,475 | — | — | — | — | — | $71,661 | | Reinvested Earnings | $164,039 | $30,188 | $(9,413) | $(4,168) | — | — | $180,646 | | Accumulated Other Comprehensive Loss | $(20,193) | — | — | — | $642 | $2,240 | $(17,311) | | Total Equity | $223,905 | $30,188 | $(9,413) | $(4,168) | $642 | $2,240 | $244,493 | [Consolidated Statements of Cash Flows](index=40&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement presents the cash flows from operating, investing, and financing activities for 2023 and 2022 - Net cash provided by operating activities significantly increased in 2023, primarily due to a **$53.0 million reduction in inventories**[148](index=148&type=chunk) - Financing activities in 2023 included **$101.2 million in repayments of bank borrowings**, **$9.3 million in cash dividends paid**, and **$4.3 million in share repurchases**[148](index=148&type=chunk) Consolidated Statements of Cash Flows | Item | 2023 (Thousands) | 2022 (Thousands) | | :------------------------------------ | :--------------- | :--------------- | | Net cash provided by (used for) operating activities | $98,631 | $(29,904) | | Net cash (used for) provided by investing activities | $(1,242) | $7,426 | | Net cash (used for) provided by financing activities | $(45,343) | $20,271 | | Effect of exchange rate changes on cash and cash equivalents | $390 | $(628) | | Net increase (decrease) in cash and cash equivalents | $52,436 | $(2,835) | | CASH AND CASH EQUIVALENTS at beginning of year | $16,876 | $19,711 | | CASH AND CASH EQUIVALENTS at end of year | $69,312 | $16,876 | [Notes to Consolidated Financial Statements](index=41&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed information on the company's nature of operations, significant accounting policies, and various financial statement line items - The Notes to Consolidated Financial Statements provide detailed information on the company's nature of operations, significant accounting policies, and various financial statement line items[149](index=149&type=chunk) [1. NATURE OF OPERATIONS](index=41&type=section&id=1.%20NATURE%20OF%20OPERATIONS) Weyco Group designs, markets, and distributes footwear globally, with primary operations in North American wholesale and retail segments - Weyco Group designs, markets, and distributes quality and innovative footwear under brands including Florsheim, Nunn Bush, Stacy Adams, BOGS, Rafters, and Forsake[150](index=150&type=chunk) - The company has two reportable segments (North American wholesale and retail) and "other" operations (Florsheim Australia), with Asia Pacific operations ceased in 2023[150](index=150&type=chunk) - The majority of operations are in the United States, and results are primarily affected by the economic conditions and retail environment in the United States[150](index=150&type=chunk) [2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=41&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines Weyco Group's significant accounting policies, including consolidation, estimates, cash, investments, receivables, inventories, property, leases, goodwill, and revenue recognition - Financial statements are prepared in conformity with GAAP, requiring management to make estimates and assumptions, particularly for inventory reserves, deferred tax assets, goodwill, and trademarks[151](index=151&type=chunk)[152](index=152&type=chunk) - Cash equivalents include highly liquid investments with maturities of **three months or less**[153](index=153&type=chunk) - Marketable securities are classified as held-to-maturity and reported at amortized cost[154](index=154&type=chunk) - The majority of inventories (**91% in 2023**) are determined on a last-in, first-out (LIFO) basis and valued at the lower of cost or market[156](index=156&type=chunk)[189](index=189&type=chunk) - Property, plant and equipment are depreciated using the straight-line method; no impairment losses were recorded on long-lived assets in 2023 or 2022[157](index=157&type=chunk)[159](index=159&type=chunk) - All leases are classified as operating leases, with right-of-use (ROU) assets and lease liabilities recognized based on the present value of future minimum lease payments[160](index=160&type=chunk)[161](index=161&type=chunk) - Goodwill is not amortized but reviewed annually for impairment; no impairment was noted in 2023 or 2022[164](index=164&type=chunk)[198](index=198&type=chunk) - Trademarks are not amortized but reviewed for impairment; a **$0.5 million impairment charge** was recorded for the Forsake trademark in 2023 (and **$1.2 million in 2022**) due to decreased sales projections[165](index=165&type=chunk)[199](index=199&type=chunk) - Revenue is recorded at the time control of the product is transferred to customers, net of estimated allowances for returns and discounts[168](index=168&type=chunk)[169](index=169&type=chunk) - Share-based compensation expense is recognized for stock options and restricted stock awards based on fair market value and amortized over the vesting period[180](index=180&type=chunk) - One individual customer's accounts receivable balance represented approximately **18% of gross accounts receivable** at December 31, 2023; no single customer accounted for **10% or more of total sales** in 2023 or 2022[181](index=181&type=chunk) [3. FAIR VALUE OF FINANCIAL INSTRUMENTS](index=47&type=section&id=3.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) The company categorizes fair value measurements into a three-level hierarchy, with marketable securities and foreign exchange contracts classified as Level 2 - Fair value measurements are categorized into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (quoted prices for similar assets/liabilities or observable inputs), and Level 3 (unobservable inputs)[185](index=185&type=chunk) - Marketable securities are carried at amortized cost, with their fair value disclosures classified as Level 2 valuations[185](index=185&type=chunk) - Foreign exchange contracts are carried at fair value, based on observable market transactions of spot and forward rates, representing Level 2 valuations[185](index=185&type=chunk) [4. INVESTMENTS](index=48&type=section&id=4.%20INVESTMENTS) Marketable securities, primarily tax-exempt municipal bonds, are classified as held-to-maturity at amortized cost, with no other-than-temporary impairment noted - The company reviewed its investment portfolio and determined that no other-than-temporary market value impairment existed as of December 31, 2023 and 2022[187](index=187&type=chunk) Marketable Securities by Maturity | Item | 2023 Amortized Cost (Thousands) | 2023 Market Value (Thousands) | 2022 Amortized Cost (Thousands) | 2022 Market Value (Thousands) | | :------------------------------------ | :------------------------------ | :---------------------------- | :------------------------------ | :---------------------------- | | Current | $215 | $215 | $1,385 | $1,381 | | Due from one through five years | $3,518 | $3,592 | $3,977 | $3,950 | | Due from six through ten years | $2,836 | $2,830 | $2,347 | $2,455 | | Due from eleven through twenty years | — | — | $799 | $773 | | Total | $6,569 | $6,637 | $8,508 | $8,559 | Marketable Securities Unrealized Gains and Losses | Item | 2023 Unrealized Gains (Thousands) | 2023 Unrealized Losses (Thousands) | 2022 Unrealized Gains (Thousands) | 2022 Unrealized Losses (Thousands) | | :------------------------------------ | :-------------------------------- | :--------------------------------- | :-------------------------------- | :--------------------------------- | | Marketable securities | $118 | $(50) | $145 | $(94) | [5. INVENTORIES](index=48&type=section&id=5.%20INVENTORIES) Total inventories significantly decreased to $74.9 million in 2023, with 91% valued using the LIFO method, and liquidations increasing cost of sales - Finished shoes included inventory in-transit of **$16.7 million** at December 31, 2023, down from **$33.2 million in 2022**[189](index=189&type=chunk) - Approximately **91% of inventories** were valued by the LIFO method of accounting at December 31, 2023 (compared to **94% in 2022**)[189](index=189&type=chunk) - Liquidations of LIFO inventory quantities in 2023 increased cost of sales by **$2.1 million**[190](index=190&type=chunk) Inventories | Item | 2023 (Thousands) | 2022 (Thousands) | | :------------------------------------ | :--------------- | :--------------- | | Finished shoes | $94,663 | $151,370 | | LIFO reserve | $(19,773) | $(23,394) | | Total inventories | $74,890 | $127,976 | [6. PROPERTY, PLANT AND EQUIPMENT, NET](index=49&type=section&id=6.%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT%2C%20NET) Net property, plant and equipment increased to $29.5 million in 2023, comprising land, buildings, machinery, retail fixtures, and construction in progress Property, Plant and Equipment, Net | Item | 2023 (Thousands) | 2022 (Thousands) | | :------------------------------------ | :--------------- | :--------------- | | Land and land improvements | $3,843 | $3,843 | | Buildings and improvements | $32,204 | $32,204 | | Machinery and equipment | $37,296 | $36,820 | | Retail fixtures and leasehold improvements | $4,674 | $4,623 | | Construction in progress | $1,972 | $322 | | Property, plant and equipment | $79,989 | $77,812 | | Less: Accumulated depreciation | $(50,485) | $(49,000) | | Property, plant and equipment, net | $29,504 | $28,812 | [7. LEASES](index=49&type=section&id=7.%20LEASES) The company leases retail stores, offices, and distribution facilities, all classified as operating leases, with total lease costs of $5.1 million in 2023 - The company leases retail shoe stores, offices, and distribution facilities worldwide, with all leases classified as operating leases[192](index=192&type=chunk) - As of December 31, 2023, the weighted-average remaining lease term was **3.7 years**, and the weighted-average discount rate used was **4.33%**[196](index=196&type=chunk) - Cash paid for amounts included in the measurement of lease liabilities was **$4.9 million in 2023**[197](index=197&type=chunk) Lease Costs | Item | 2023 (Thousands) | 2022 (Thousands) | | :------------------------------------ | :--------------- | :--------------- | | Operating lease costs | $4,912 | $5,233 | | Variable lease costs | $201 | $1 | | Total lease costs | $5,113 | $5,234 | Operating Lease Maturities | Year | Operating Leases (Thousands) | | :------------------------------------ | :--------------------------- | | 2024 | $4,342 | | 2025 | $3,505 | | 2026 | $3,090 | | 2027 | $1,976 | | 2028 | $946 | | Thereafter | $377 | | Total lease payments | $14,236 | | Less: imputed interest | $(726) | | Present value of lease liabilities | $13,510 | [8. INTANGIBLE ASSETS](index=51&type=section&id=8.%20INTANGIBLE%20ASSETS) Indefinite-lived intangible assets include goodwill and trademarks, with a $0.5 million impairment charge for the Forsake trademark in 2023 - Goodwill was evaluated qualitatively for impairment in 2023 and 2022, with no indicators of impairment noted[198](index=198&type=chunk) - An impairment charge of **$0.5 million** was recorded for the Forsake trademark in 2023 (and **$1.2 million in 2022**) due to decreases in sales projections[199](index=199&type=chunk) - Amortization expense related to intangible assets was **$0.2 million** in both 2023 and 2022[200](index=200&type=chunk) Indefinite-Lived Intangible Assets | Item | 2023 (Thousands) | 2022 (Thousands) | | :------------------------------------ | :--------------- | :--------------- | | Goodwill | $12,317 | $12,317 | | Trademarks | $33,168 | $33,618 | | Total | $45,485 | $45,935 | Amortizable Intangible Assets, Net | Item | 2023 Net (Thousands) | 2022 Net (Thousands) | | :------------------------------------ | :------------------- | :------------------- | | Customer relationships | $506 | $739 | | Total amortizable intangible assets | $506 | $739 | [9. OTHER ASSETS](index=52&type=section&id=9.%20OTHER%20ASSETS) Other assets totaled $24.3 million in 2023, primarily comprising cash surrender value of life insurance and an investment in real estate - The company has life insurance policies on five current and former executives, with an approximate aggregate benefit of **$21.9 million** as of December 31, 2023[201](index=201&type=chunk) - An investment in real estate of **$1.9 million** represents a **50% interest** in a building in Montreal, Canada, serving as the Canadian office and distribution center, accounted for under the equity method[202](index=202&type=chunk) Other Assets | Item | 2023 (Thousands) | 2022 (Thousands) | | :------------------------------------ | :--------------- | :--------------- | | Cash surrender value of life insurance | $20,568 | $19,884 | | Amortizable intangible assets, net | $506 | $739 | | Investment in real estate | $1,909 | $1,926 | | Other | $1,291 | $1,278 | | Total other assets | $24,274 | $23,827 | [10. SHORT-TERM BORROWINGS](index=52&type=section&id=10.%20SHORT-TERM%20BORROWINGS) The company amended its $40.0 million line of credit, with no outstanding borrowings at December 31, 2023, a significant reduction from 2022 - The line of credit agreement was amended on September 28, 2023, extending its maturity to September 28, 2024[203](index=203&type=chunk) - The maximum available borrowing limit is **$40.0 million**, with amounts outstanding bearing interest at the one-month term secured overnight financing rate ("SOFR") plus **125 basis points**[203](index=203&type=chunk) - At December 31, 2023, there were no outstanding borrowings on the line of credit, a decrease from approximately **$31.1 million** at December 31, 2022[203](index=203&type=chunk) - The company was in compliance with all financial covenants at December 31, 2023[203](index=203&type=chunk) [11. CONTINGENT CONSIDERATION](index=52&type=section&id=11.%20CONTINGENT%20CONSIDERATION) The contingent consideration liability for the Forsake acquisition was settled for $0.5 million in Q1 2023, following a $0.9 million gain in 2022 - The contingent consideration liability for the 2021 acquisition of Forsake was settled for **$0.5 million** in the first quarter of 2023[204](index=204&type=chunk) - In 2022, a gain of approximately **$0.9 million** was recorded to write-down the fair value of the contingent consideration from **$1.3 million to $0.5 million**[204](index=204&type=chunk) [12. EMPLOYEE RETIREMENT PLANS](index=52&type=section&id=12.%20EMPLOYEE%20RETIREMENT%20PLANS) The company maintains frozen defined benefit and unfunded supplemental pension plans, with an unfunded benefit obligation of $14.0 million in 2023 - The company has a frozen defined benefit pension plan (effective December 31, 2016) and an unfunded supplemental pension plan for key executives[205](index=205&type=chunk) - The unfunded benefit obligation was **$14.0 million** at December 31, 2023, down from **$16.1 million** at December 31, 2022[124](index=124&type=chunk) - The expected long-term rate of return on plan assets was **6.75%** for both 2023 and 2022[210](index=210&type=chunk) - A lump-sum benefit payment of **$4.3 million** was made to a former executive in December 2022, resulting in a **$0.9 million pension settlement charge**[212](index=212&type=chunk) - The company contributed **$1.0 million** to its defined contribution plan in both 2023 and 2022[218](index=218&type=chunk) Pension Plan Assets by Category | Asset Category | Plan Assets at December 31, 2023 | Plan Assets at December 31, 2022 | | :---------------------- | :------------------------------- | :------------------------------- | | Equity Securities | 58 % | 57 % | | Fixed Income Securities | 28 % | 31 % | | Other | 14 % | 12 % | | Total | 100 % | 100 % | Discount Rates for Funded Status | Plan | 2023 Discount rate for determining funded status | 2022 Discount rate for determining funded status | | :-------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Defined Benefit Pension Plan | 5.15 % | 5.41 % | | Supplemental Pension Plan | 5.16 % | 5.44 % | Pension Expense | Item | 2023 (Thousands) | 2022 (Thousands) | | :------------------------------------ | :--------------- | :--------------- | | Service cost | $467 | $445 | | Interest cost | $2,632 | $1,754 | | Expected return on plan assets | $(2,301) | $(2,896) | | Pension settlement charge | — | $894 | | Net amortization and deferral | $495 | $875 | | Pension expense | $1,293 | $1,072 | [13. COMPREHENSIVE INCOME](index=57&type=section&id=13.%20COMPREHENSIVE%20INCOME) Total accumulated other comprehensive loss decreased to $17.3 million in 2023, driven by positive foreign currency translation and pension liability adjustments - Reclassification adjustments out of accumulated other comprehensive loss for pension items (prior service cost and actuarial losses) totaled **$366,000 net of tax in 2023**[220](index=220&type=chunk) Accumulated Other Comprehensive Loss | Item | December 31, 2023 (Thousands) | December 31, 2022 (Thousands) | | :------------------------------------ | :------------------------------ | :------------------------------ | | Foreign currency translation adjustments | $(7,954) | $(8,596) | | Pension liability, net of tax | $(9,357) | $(11,597) | | Total accumulated other comprehensive loss | $(17,311) | $(20,193) | Changes in Accumulated Other Comprehensive Loss | Item | Foreign Currency Translation Adjustments (Thousands) | Defined Benefit Pension Items (Thousands) | Total (Thousands) | | :------------------------------------ | :------------------------------------------- | :-------------------------------- | :---------------- | | Balance, December 31, 2022 | $(8,596) | $(11,597) | $(20,193) | | Other comprehensive income before reclassifications | $642 | $1,874 | $2,516 | | Amounts reclassified from accumulated other comprehensive loss | — | $366 | $366 | | Net current period other comprehensive income | $642 | $2,240 | $2,882 | | Balance, December 31, 2023 | $(7,954) | $(9,357) | $(17,311) | [14. INCOME TAXES](index=58&type=section&id=14.%20INCOME%20TAXES) The total provision for income taxes increased to $10.7 million in 2023, with an effective tax rate of 26.1%, primarily due to state income taxes - The 2019 through 2022 tax years remain subject to examination by taxing authorities[226](index=226&type=chunk) Provision for Income Taxes | Item | 2023 (Thousands) | 2022 (Thousands) | | :------------------------------------ | :--------------- | :--------------- | | Current | $8,214 | $8,902 | | Deferred | $2,462 | $1,297 | | Total provision | $10,676 | $10,199 | Effective Tax Rate Reconciliation | Item | 2023 | 2022 | | :------------------------------------ | :----- | :----- | | U.S. federal statutory income tax rate | 21.0 % | 21.0 % | | State income taxes, net of federal tax benefit | 4.1 | 2.9 | | Foreign income tax rate differences | 0.3 | 0.7 | | Other | 0.7 | 1.1 | | Effective tax rate | 26.1 % | 25.7 % | Deferred Income Tax Liabilities | Item | 2023 (Thousands) | 2022 (Thousands) | | :------------------------------------ | :--------------- | :--------------- | | Deferred income tax assets | $9,826 | $10,257 | | Deferred income tax liabilities | $(20,549) | $(17,749) | | Net deferred income tax liabilities | $(10,723) | $(7,492) | Unrecognized Tax Benefits | Item | 2023 (Thousands) | 2022 (Thousands) | | :------------------------------------ | :--------------- | :--------------- | | Unrecognized tax benefits balance at January 1 | $305 | $155 | | Increases related to current year tax positions | $366 | $228 | | Decreases due to lapsing of statute of limitations | $(63) | $(78) | | Unrecognized tax benefits balance at December 31 | $608 | $305 | [15. COMMITMENTS](index=59&type=section&id=15.%20COMMITMENTS) As of December 31, 2023, Weyco Group had commitments to purchase $41.2 million of inventory, all due within one year - As of December 31, 2023, the company had commitments to purchase **$41.2 million of inventory**, all of which were due in less than one year[227](index=227&type=chunk) [16. SHARE REPURCHASE PROGRAM](index=60&type=section&id=16.%20SHARE%20REPURCHASE%20PROGRAM) The company's share repurchase program authorized 8.5 million shares, with 170,422 shares purchased for $4.3 million in 2023 - The share repurchase program, established in 1998, has authorized a total of **8.5 million shares** for repurchase[228](index=228&type=chunk) - As of December 31, 2023, there were **868,757 authorized shares** remaining under the program[229](index=229&type=chunk) Share Repurchases | Item | 2023 | 2022 | | :------------------------------------ | :----- | :----- | | Shares purchased | 170,422 | 171,397 | | Total cost | $4.3 million | $4.2 million | [17. EARNINGS PER SHARE](index=60&type=section&id=17.%20EARNINGS%20PER%20SHARE) Diluted earnings per share for 2023 was $3.17, based on 9.535 million diluted weighted average shares outstanding - Diluted weighted average shares outstanding for 2023 exclude anti-dilutive share-based awards totaling **618,000 shares**[230](index=230&type=chunk) Earnings Per Share Calculation | Item | 2023 (Thousands, except per share) | 2022 (Thousands, except per share) | | :------------------------------------ | :--------------------------------- | :--------------------------------- | | Net earnings | $30,188 | $29,540 | | Basic weighted average shares outstanding | 9,449 | 9,555 | | Effect of dilutive securities: Employee share-based awards | 86 | 69 | | Diluted weighted average shares outstanding | 9,535 | 9,624 | | Basic earnings per share | $3.19 | $3.09 | | Diluted earnings per share | $3.17 | $3.07 | [18. SEGMENT INFORMATION](index=60&type=section&id=18.%20SEGMENT%20INFORMATION) Weyco Group operates two reportable segments: North American Wholesale and North American Retail, with "Other" operations not meeting separate segment criteria - The company has two reportable segments: North American wholesale operations and North American retail operations; the "other" category includes wholesale and retail operations in Australia, South Africa, and Asia Pacific[232](index=232&type=chunk) - In 2023 and 2022, there was no single customer with sales of **10% or more of total sales**[233](index=233&type=chunk) - Long-lived assets by geographic location totaled **$89.9 million in 2023**, with **$75.3 million in the United States**[236](index=236&type=chunk) Segment Financial Data | Item | Wholesale 2023 (Thousands) | Retail 2023 (Thousands) | Other 2023 (Thousands) | Total 2023 (Thousands) | Wholesale 2022 (Thousands) | Retail 2022 (Thousands) | Other 2022 (Thousands) | Total 2022 (Thousands) | | :-------------------------- | :----------------------- | :---------------------- | :--------------------- | :--------------------- | :----------------------- | :---------------------- | :--------------------- | :--------------------- | | Net sales | $250,400 | $38,012 | $29,636 | $318,048 | $283,235 | $36,694 | $31,808 | $351,737 | | Earnings from operations | $33,288 | $6,752 | $984 | $41,024 | $32,641 | $6,058 | $1,666 | $40,365 | | Total assets | $276,626 | $4,594 | $28,122 | $309,342 | $292,262 | $5,460 | $28,898 | $326,620 | | Capital expenditures | $2,544 | — | $765 | $3,309 | $882 | $12 | $1,448 | $2,342 | Geographic Net Sales | Country | 2023 (Thousands) | 2022 (Thousands) | | :-------------------------- | :--------------- | :--------------- | | United States | $266,515 | $292,441 | | Canada | $21,897 | $27,488 | | Australia | $23,012 | $25,196 | | Asia | $4,143 | $3,472 | | South Africa | $2,481 | $3,140 | | Total | $318,048 | $351,737 | [19. SHARE-BASED COMPENSATION PLAN](index=62&type=section&id=19.%20SHARE-BASED%20COMPENSATION%20PLAN) The 2017 Incentive Plan grants stock options and restricted stock awards to officers and key employees, with $1.4 million in compensation expense in 2023 - The 2017 Incentive Plan grants options to purchase common stock and restricted stock awards to officers and key employees[237](index=237&type=chunk) - Stock options granted in 2023 and 2022 vest ratably over **five years** and expire **10 years** from the grant date; restricted stock granted vests ratably over **four years**[238](index=238&type=chunk)[240](index=240&type=chunk) - Share-based compensation expense was approximately **$1.4 million in 2023** (compared to **$1.5 million in 2022**)[242](index=242&type=chunk) - At December 31, 2023, there was **$2.1 million** of total unrecognized compensation cost related to non-vested stock options, expected to be recognized over a weighted-average remaining vesting period of **3.7 years**[243](index=243&type=chunk) Stock Option Activity | Item | 2023 Shares | 2023 Weighted Average Exercise Price | 2022 Shares | 2022 Weighted Average Exercise Price | | :------------------------------------ | :---------- | :--------------------------------- | :---------- | :--------------------------------- | | Outstanding at beginning of year | 1,345,369 | $25.83 | 1,279,833 | $25.44 | | Granted | 149,200 | $25.79 | 143,500 | $28.83 | | Exercised | (487,331) | $25.02 | (60,914) | $24.96 | | Forfeited or expired | (40,021) | $26.31 | (17,050) | $24.79 | | Outstanding at end of year | 967,217 | $26.22 | 1,345,369 | $25.83 | Restricted Stock Activity | Item | 2023 Shares of Restricted Stock | 2023 Weighted Average Grant Date Fair Value | 2022 Shares of Restricted Stock | 2022 Weighted Average Grant Date Fair Value | | :------------------------------------ | :------------------------------ | :---------------------------------------- | :------------------------------ | :---------------------------------------- | | Non-vested - December 31, 2022 | 71,808 | $24.67 | 78,470 | $23.11 | | Issued | 27,700 | $25.79 | 27,620 | $28.83 | | Vested | (28,243) | $23.60 | (34,282) | $24.46 | | Forfeited | (2,175) | $25.13 | — | — | | Non-vested - December 31, 2023 | 69,090 | $25.54 | 71,808 | $24.67 | [20. VALUATION AND QUALIFYING ACCOUNTS](index=67&type=section&id=20.%20VALUATION%20AND%20QUALIFYING%20ACCOUNTS) The balance for doubtful accounts and returns and allowances increased to $2.51 million in 2023, with $5.63 million in additions charged to earnings Valuation and Qualifying Accounts | Item | Doubtful Accounts 2023 (Thousands) | Returns and Allowances 2023 (Thousands) | Total 2023 (Thousands) | Doubtful Accounts 2022 (Thousands) | Returns and Allowances 2022 (Thousands) | Total 2022 (Thousands) | | :------------------------------------ | :--------------------------------- | :-------------------------------------- | :--------------------- | :--------------------------------- | :-------------------------------------- | :--------------------- | | BALANCE, DECEMBER 31 | $1,493 | $1,017 | $2,510 | $1,110 | $1,000 | $2,110 | | Add - Additions charged to earnings | $519 | $5,115 | $5,634 | $151 | $5,584 | $5,735 | | Deduct - Charges for purposes for which reserves were established | $(136) | $(5,098) | $(5,234) | $(348) | $(5,344) | $(5,692) | [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=68&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reported no changes in or disagreements with accountants on accounting and financial disclosure - There were no changes in or disagreements with accountants on accounting and financial disclosure[251](index=251&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=68&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) The CEO and CFO concluded that disclosure controls were ineffective due to a material weakness in IT general controls, for which remediation is underway - The CEO and CFO concluded that the company's disclosure controls and procedures were not effective as of December 31, 2023, due to a material weakness in internal control over financial reporting[253](index=253&type=chunk) - The material weakness existed relating to the design, implementation, and monitoring of general information technology controls in the areas of program change management, user access, and segregation of duties[261](index=261&type=chunk) - Management, under the oversight of the Audit Committee, has begun evaluating and implementing measures to remediate the material weakness, including engaging a third-party service provider[262](index=262&type=chunk) - The attestation report from the independent registered public accounting firm regarding this material weakness is contained in Item 8[252](index=252&type=chunk)[264](index=264&type=chunk) [ITEM 9B. OTHER INFORMATION](index=70&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) No director or Section 16 officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q4 2023 - During the three months ended December 31, 2023, no director or Section 16 officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement"[266](index=266&type=chunk) [ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](index=70&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[264](index=264&type=chunk) [PART III.](index=70&type=section&id=PART%20III.) This part incorporates information on directors, executive compensation, security ownership, related transactions, and accounting fees by reference to the Proxy Statement [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=70&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information regarding directors, executive officers, and corporate governance is incorporated by reference from Part I and the 2024 Proxy Statement - Information required by this Item is incorporated by reference from Part I, "Information About Executive Officers" and the Company's definitive Proxy Statement for the Annual Meeting of Shareholders scheduled for May 7, 2024[265](index=265&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=70&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Information regarding executive compensation is incorporated by reference from the company's 2024 Proxy Statement - Information required by this Item is incorporated by reference from the Company's 2024 Proxy Statement[267](index=267&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=72&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information regarding security ownership of certain beneficial owners and management, and equity compensation plan information, is incorporated by reference from the company's 2024 Proxy Statement - Information required by this Item is incorporated by reference from the Company's 2024 Proxy Statement[268](index=268&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=72&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Information regarding certain relationships and related transactions, and director independence, is incorporated by reference from the company's 2024 Proxy Statement - Information required by this Item is incorporated by reference from the Company's 2024 Proxy Statement[269](index=269&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES](index=72&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) Information regarding principal accounting fees and services is incorporated by reference from the company's 2024 Proxy Statement - Information required by this Item is incorporated by reference from the Company's 2024 Proxy Statement[270](index=270&type=chunk) [PART IV.](inde

Financial Data and Key Metrics Changes - Net sales for Q4 2023 were $80.6 million, down 19% from $99 million in Q4 2022 [6] - Consolidated gross earnings increased to 50.3% of net sales in Q4 2023 from 46.6% in Q4 2022 [6] - Quarterly operating earnings were $11.5 million, down 24% from $15.1 million in Q4 2022 [6] - Net earnings for Q4 2023 were $8.5 million or $0.90 per diluted share, compared to $10.2 million or $1.06 per diluted share in Q4 2022 [6] Business Line Data and Key Metrics Changes - North American Wholesale segment net sales were $59.6 million, down 21% from $75.5 million last year, primarily due to a 32% decline in BOGS sales [7] - North American Retail segment net sales were $13.9 million, down 3% from $14.3 million last year, with retail operating earnings reaching a record $3.5 million, up 6% from $3.3 million in 2022 [8][9] - Florsheim Australia net sales were $7.2 million, down 23% from $9.2 million in Q4 2022, due to the loss of a significant wholesale customer [10] Market Data and Key Metrics Changes - Consolidated net sales for the full year 2023 were $318 million, down 10% from $351.7 million in 2022 [12] - North American Wholesale net sales for 2023 were $250.4 million, down 12% from $283.2 million in 2022 [13] - Florsheim Australia's net sales totaled $29.6 million in 2023, down 7% from $31.8 million in 2022 [14] Company Strategy and Development Direction - The company is focusing on product innovation for the BOGS brand, emphasizing seamless rubber boot construction to enhance durability and reduce weight [17] - There is a strategic shift towards casual and hybrid footwear to adapt to changing consumer preferences, with a significant portion of sales in casual styles [29] - The company is investing in its distribution platform to improve efficiency, particularly in e-commerce and dropship operations [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a slowdown in sales due to consumers prioritizing spending on experiences over apparel [16] - The outdoor boot market is expected to remain challenging in 2024 as retailers adjust their inventory levels [17] - Management expressed confidence in maintaining healthy gross margins and strong cash flow, with plans to explore acquisitions and shareholder returns [20] Other Important Information - Cash and marketable securities totaled $75.9 million with no debt outstanding on the revolving line of credit [15] - The board declared a cash dividend of $0.25 per share, payable on March 29, 2024 [15] Q&A Session Summary Question: Compliment on financial performance and cash management - Management appreciated the acknowledgment of their financial results and cash management strategies [22][23] Question: Breakdown of cash holdings geographically - The majority of cash is held in the U.S. and Canada, earning between 5% and 5.5% [24] Question: Consideration of shareholder capital return options - Management is exploring various options for cash utilization, including potential special dividends and stock buybacks [25] Question: Inquiry about the decline in traditional dress shoe sales - Management confirmed a significant decline in traditional dress shoe sales and emphasized the shift towards more casual and hybrid styles [26][27][28]