Weyco (WEYS) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Overview of the company's financial statements, management's analysis, market risks, and internal controls Item 1. Financial Statements Presents unaudited condensed consolidated financial statements and accompanying notes for the specified periods Condensed Consolidated Balance Sheets (Unaudited) 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) 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) 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) 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) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1. Financial Statements 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] - The preparation of financial statements requires management to make estimates and assumptions, and actual results could differ from those estimates[14] Note 2. New Accounting Pronouncements 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] - 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] Note 3. Earnings Per Share 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] Note 4. Investments 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] 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 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] 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] Note 6. Segment Information 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] 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] 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 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] Note 8. Leases 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] 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] 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 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] Note 10. Share-Based Compensation Plans 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] 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 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] Note 12. Comprehensive Income 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 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 Analyzes the company's financial condition, operational results, key business trends, and liquidity Forward-Looking Statements 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] General Business Overview and Segments 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] - 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] - The majority of operations are in the United States, making results primarily affected by U.S. economic conditions and the retail environment[45] Current Business Trends - Tariffs 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] - 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] - U.S. trade and tariff policies currently remain fluid and unpredictable, and the company is committed to adapting and implementing mitigation strategies[46] Executive Overview 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] - 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] - 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][50] - 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] - 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] Second Quarter Highlights 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 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 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] - 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] - A prefunded dividend of $21.6 million was paid to shareholders in January 2025[55] Consolidated Results of Operations 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] - 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] 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] - 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] - 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][66] Segment Analysis 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 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] - 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] - 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] - Wholesale operating earnings decreased 30% for Q2 2025 and 19% for YTD 2025, driven by lower sales and gross margins[73] North American Retail Segment 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] - 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] - 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] - 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] Other (Florsheim Australia) 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] - 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] - 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] Other Income and Expense 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][82] - 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] Liquidity and Capital Resources Assesses the company's cash flow generation, debt capacity, and overall financial flexibility Operating Activities 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] - 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] Investing Activities 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] - 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] Financing Activities 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] - 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] - On August 5, 2025, a cash dividend of $0.27 per share was declared, payable September 30, 2025[90] - 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] - 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] Financing Activities – Non-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] Other (Liquidity Outlook) 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] - 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk States that there are no applicable quantitative and qualitative disclosures about market risk for the company - Not applicable[95] Item 4. Controls and Procedures 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][97] - 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] PART II. OTHER INFORMATION Covers legal proceedings, risk factors, equity security sales, other disclosures, and exhibits Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] - 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][103] - 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] - 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] 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 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] Item 6. Exhibits 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 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]