Weyco Group Q3 Earnings Call Highlights

Key Points

• Weyco’s third-quarter results improved: Sales rose 5% to $77 million, while net earnings climbed to $11.5 million and diluted EPS to $1.19. Gross margin increased to 49.7%, helped by lower tariff rates and $3.3 million in tariff refunds recognized during the quarter.
• Wholesale growth was led by Florsheim, Stacy Adams and BOGS: Wholesale sales rose 6% to $64 million, while Nunn Bush declined slightly. Management warned that unpredictable trade policies and supply-chain inflation could pressure margins, and said it is reluctant to raise prices in the current consumer environment.
• The company declared regular and special dividends of $0.28 and $2 per share, respectively. Weyco ended September with $95.2 million in cash and marketable securities and no revolver debt, while its Australian business remained under pressure.

Weyco Group NASDAQ: WEYS reported higher third-quarter sales and earnings, aided by growth across several footwear brands, lower incremental tariff rates and the recognition of tariff refunds in cost of sales.

Net sales for the third quarter of 2026 increased 5% year over year to $77 million. Net earnings rose to $11.5 million, from $6.6 million a year earlier, while diluted earnings per share increased to $1.19 from $0.69. Operating earnings were $13.7 million, compared with $8.1 million in the prior-year quarter.

Consolidated gross earnings reached 49.7% of sales, compared with 40.7% a year earlier. Chief Financial Officer Judy Anderson said the figure included $3.3 million of tariff refunds that were recognized as a reduction to cost of sales as related inventory was sold during the quarter.

Tariff refunds lift margins, while uncertainty remains

Anderson said the U.S. Supreme Court invalidated IEEPA tariffs early in 2026. Weyco had paid about $19.8 million of those tariffs, including $18.6 million related to Phase 1 entries and $1.2 million related to Phase 3 entries.

The company submitted refund claims for Phase 1 entries in April, with substantially all of those claims approved and recognized during the second quarter. During the third quarter, the company recognized $3.3 million of refunds that had previously been recorded in inventory.

Weyco submitted claims related to Phase 3 entries in early October. Anderson said approximately $400,000 of those entries had been approved for liquidation, while another $800,000 remained under review. The company did not recognize Phase 3 refunds in third-quarter results, citing uncertainty around the timing and amount of recoveries.

Under separate tariff authority, incremental tariffs on imports from China, the Dominican Republic and Vietnam were 12.5% during the quarter, while other imports faced a 10% rate. Anderson said trade policies remain unpredictable and could create near-term gross-margin uncertainty, though the company has developed mitigation strategies.

During the question-and-answer session, President and Chief Operating Officer John Florsheim added that supply-chain inflation presents another potential pressure point. He said the company does not want to raise wholesale prices in the current market because consumers are under pressure, which could constrain its ability to offset higher costs.

Wholesale growth led by Florsheim, Stacy Adams and BOGS

Wholesale sales rose 6% to $64 million, from $60.2 million in the third quarter of 2025. The increase was driven by higher sales at Florsheim, Stacy Adams and BOGS, while Nunn Bush sales declined slightly.

Wholesale gross earnings increased to 46% of sales from 35.7% a year earlier, primarily reflecting lower incremental tariff rates and approximately $3 million in tariff refunds recognized in the segment. Wholesale selling and administrative expenses increased to $16 million, or 25% of sales, from $14 million, or 23% of sales, as employee costs increased.

Wholesale operating earnings increased to $13.4 million from $7.5 million, driven mainly by higher sales and gross margins.

Chairman and Chief Executive Officer Tom Florsheim Jr. said combined sales of Weyco’s legacy brands rose 6%, led by a 9% increase at Florsheim. He said the brand’s dress-footwear performance has helped broaden its presence in casual boots, sneakers and hybrid footwear.

Stacy Adams shipments increased 9%, while BOGS sales rose 6%. Florsheim Jr. said BOGS is gaining traction through product innovation, including seamless construction technology, and is expanding into lightly insulated, non-insulated and non-rubber footwear categories.

Nunn Bush sales declined 1%. Florsheim Jr. said the brand faces competition from retailers’ private-label offerings and lower-priced footwear licensed under apparel brands, but Weyco continues to focus on comfort features and product differentiation.

Responding to an analyst question about sales momentum amid pressure on middle-market consumers, Florsheim Jr. said some competitors have weakened and that Weyco’s products are performing well across its brands. He also said retailers have indicated that softness in athletic footwear has created more budget opportunity for dress and casual brands.

Retail e-commerce rises; Australia remains pressured

Retail segment sales increased 3% to $7.2 million. The gain primarily reflected higher Florsheim website sales, partly offset by lower sales resulting from store closures. Florsheim e-commerce sales increased 17% during the quarter, according to Florsheim Jr.

Retail gross earnings increased to 70.7% of sales from 66.4%, reflecting lower incremental tariff rates. Retail operating earnings were $700,000, compared with $600,000 a year earlier.

Florsheim Australia, which includes the company’s retail and wholesale businesses in Australia and South Africa, reported sales of $5.8 million, down 3% in U.S. dollars. Sales declined 10% in local currency, mainly because of lower wholesale sales. The stronger Australian dollar reduced the local-currency decline when translated into U.S. dollars.

Florsheim Australia posted an operating loss of $400,000, compared with a loss of $100,000 a year earlier. Florsheim Jr. said the Australian market remains difficult, with higher fuel costs adding to pressure, and the company expects challenging conditions to persist in the near to medium term.

Cash position supports regular and special dividends

At Sept. 30, Weyco held $95.2 million in cash and marketable securities and had no debt outstanding on its $40 million revolving credit line. The company generated $26.6 million in operating cash flow during the first nine months of 2026, paid $29.4 million in dividends and spent $1.9 million on capital expenditures.

Inventory stood at $60 million at quarter-end, down from $66 million at Dec. 31, 2025. Management said it expects inventory to reach approximately $70 million by the end of the fourth quarter. Weyco expects approximately $3 million in capital expenditures for the full year.

The board declared a regular quarterly cash dividend of $0.28 per share and a special cash dividend of $2 per share. Both dividends are payable Jan. 8, 2027, to shareholders of record on Nov. 17, 2026.

About Weyco Group (NASDAQ:WEYS)

Weyco Group, Inc is a footwear company that designs, sources, markets and distributes branded men's shoes and accessories. Its portfolio includes Florsheim, Nunn Bush, Stacy Adams, BOGS and Forsake, serving dress, casual, outdoor and work-oriented footwear markets.

The company sells its products through department stores, specialty footwear retailers, independent retailers, e-commerce platforms and its own branded websites. Its business is organized around wholesale and direct-to-consumer channels, with products distributed primarily in North America and also in select international markets, including Europe and Australia.

Weyco traces its history to 1892 and is headquartered in Milwaukee, Wisconsin.

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