Weyco Group Q1 Earnings Call Highlights

Key Points

• Weyco posted Q1 2026 results with flat net sales of $68 million but improved profitability—operating earnings rose to $7.5 million and diluted EPS increased to $0.64—as lower operating expenses and cleaner inventory helped offset tariff-driven gross margin pressure.
• The company paid about $19.8 million in IEEPA tariffs and has filed $18.6 million in phase‑1 refund claims after the Supreme Court invalidated those tariffs, but recoveries remain uncertain as CBP processes claims and a new across‑the‑board ~10% tariff adds planning risk; any refunds would be taxable.
• Weyco ended the quarter with $93.9 million in cash and marketable securities and no outstanding revolver debt, inventory down to $50.5 million (expected to normalize to $60–$70 million), and the board raised the quarterly cash dividend to $0.28 per share (a 4% increase).

Weyco Group NASDAQ: WEYS reported first-quarter 2026 results that showed higher earnings on flat revenue, as lower operating expenses and improved inventory conditions helped offset tariff-driven gross margin pressure. Management also discussed ongoing uncertainty around U.S. trade policy following a Supreme Court decision invalidating certain tariffs and the company’s steps to seek refunds.

Quarterly results: earnings rise on flat sales

Chief Financial Officer Judy Anderson said overall net sales for the first quarter of 2026 were $68 million, flat compared with the first quarter of 2025. Consolidated gross earnings were 44.2% of net sales versus 44.6% a year earlier. Earnings from operations rose to $7.5 million from $7.0 million, while net earnings increased to $6.1 million from $5.5 million. Diluted earnings per share were $0.64, up from $0.57 in the prior-year quarter.

Chairman and CEO Tom Florsheim Jr. said the company’s overall sales were flat and wholesale sales slipped 1%, adding that, given economic uncertainty, the company believes it is “holding our position within our competitive market segments,” with Florsheim continuing “its strong performance streak.”

Segment performance: wholesale declines slightly, retail and Australia improve

Anderson said North American wholesale net sales totaled $53.6 million, down 1% from $54.3 million last year. She said Florsheim sales were up, while lower sales at Stacy Adams and BOGS more than offset that growth; Nunn Bush was flat. Wholesale gross earnings were 38.7% of net sales, down from 39.4%, with Anderson citing incremental tariffs as a headwind that was partially offset by selling price increases instituted in the second half of the prior year.

Wholesale selling and administrative expenses fell to $13.8 million, or 26% of net sales, from $14.8 million, or 27%, “largely due to lower employee costs,” Anderson said. Wholesale operating earnings increased to $7.0 million from $6.6 million, mainly due to the lower expense base.

Retail segment net sales rose to $8.8 million from $8.7 million, driven by increased e-commerce sales, Anderson said. Retail gross earnings were 66.1% of net sales compared with 66.6% last year, while retail operating earnings improved to $800,000 from $600,000.

Other operations, referred to as Florsheim Australia, posted net sales of $5.6 million, up 10% from $5.1 million. Anderson said the increase was due to the appreciation of the Australian dollar versus the U.S. dollar, as local-currency sales were flat. Florsheim Australia’s gross earnings were 62.9% of net sales, and operating losses totaled $200,000, unchanged from the year-ago period.

Brand commentary: Florsheim gains, Stacy Adams and BOGS decline

Florsheim Jr. said the company’s “legacy business,” which includes Florsheim, Nunn Bush, and Stacy Adams, was flat for the quarter. He said the Florsheim division increased 5%, driven by strength in traditional dress footwear. While the broader dress category has been “trending downward over time,” he said Florsheim continues to gain share and is viewed by retailers as a key brand for consumers in that category. He added the company is investing in new designs and aims to expand Florsheim’s penetration in hybrid and casual footwear.

Nunn Bush was flat, and Florsheim Jr. described the brand as positioned as a “leading value option” in comfort casual and comfort dress footwear as consumers face pressure on household budgets. He said private-label imports remain a key competitive factor for retailers seeking higher margins, while Nunn Bush offers a branded alternative with “proven comfort technology, competitive pricing, and in-stock inventory.”

Stacy Adams sales declined 9%. Florsheim Jr. said retail sell-throughs have been solid, but retailers “are not investing in fashion dress shoes as they have in the past,” particularly in department stores and family footwear channels. He said the company is working to diversify the Stacy Adams assortment with more casual offerings.

BOGS sales fell 11%. Florsheim Jr. said the company anticipates a stronger second half, citing winter weather conditions that helped clear excess inventory of weather boots in parts of the U.S. He also pointed to new, less insulated spring footwear that is “selling well” and supporting efforts to build a more year-round business. He said BOGS launched a marketing reset focused on “storytelling” and “user authenticity,” running across social and streaming channels including YouTube.

In retail, Florsheim Jr. said e-commerce sales were led by Florsheim and that the company had less closeout inventory than the prior-year quarter, resulting in “higher web margins as we sold more full-price footwear.” He said Weyco continues to invest in its e-commerce platform to support direct-to-consumer growth.

Tariffs, potential refunds, and policy uncertainty

Anderson said the U.S. imposed reciprocal and retaliatory tariffs on certain imported goods in February 2025 under the International Emergency Economic Powers Act (IEEPA), and that the company paid approximately $19.8 million in IEEPA tariffs in 2025 and the first quarter of 2026. She said the IEEPA tariffs increased product costs by 19% to 50%, contributing to gross margin compression.

Anderson said the U.S. Supreme Court ruled on Feb. 20, 2026, that IEEPA did not authorize the president to impose tariffs, declaring the IEEPA tariffs invalid. She said U.S. Customs and Border Protection began a phased refund-claim process in April 2026, formally opening on April 20. Weyco submitted claims totaling $18.6 million for phase 1 entries on that date, while the timing for claims tied to phase 2 entries totaling $1.2 million had not been established. Anderson emphasized that the timing and amount of any recoveries remain uncertain and depend on CBP execution.

She also said that following the ruling, the president announced a new across-the-board tariff under a separate authority, currently set at 10%, with scope and rate subject to change. Florsheim Jr. told a caller that if a 10% incremental tariff stayed in place all year, it would amount to “about an extra $10 million, over and above what we normally pay in tariffs,” while noting that tariff levels in the footwear category are already high relative to other goods. He added that the administration has indicated an intent to raise tariffs again, making planning difficult, and referenced ongoing Section 301 investigations expected to conclude by the end of July.

Asked about the tax treatment of any tariff refunds, Anderson said the refunds would be taxable, explaining that the tariffs were included in cost of sales when paid and any refund would become a credit to cost of sales, triggering taxes.

Inventory, expenses, liquidity, and dividend

Florsheim Jr. said first-quarter gross margin was down about 50 basis points year over year and that tariff uncertainty makes it difficult to forecast margins for the rest of the year. He and President and COO John Florsheim also highlighted “cleaner” inventory levels versus last year, which they said supported both wholesale and retail margins.

Inventory as of March 31, 2026 was $50.5 million, down from $65.9 million at Dec. 31, 2025, and down about $18 million from March 31 of last year. Florsheim Jr. said the decrease was due to timing and that inventory is expected to return to the $60 million to $70 million range through the year.

On operating expenses, Anderson attributed lower employee costs to several factors, including lower benefit costs and items such as reduced FICA expense tied to bonus timing. John Florsheim added that temporary labor needs in the warehouse were lower, reflecting improved operating efficiency. Tom Florsheim Jr. said the company had not reduced headcount.

Anderson said the company ended the period with $93.9 million in cash and marketable securities and no outstanding debt on its $40 million revolving credit facility. During the first three months of 2026, Weyco generated $17.4 million in cash from operations, paid $23.9 million in dividends, and spent $600,000 on capital expenditures. The company expects 2026 capital spending of $2 million to $3 million.

Anderson also said the board declared a quarterly cash dividend of $0.28 per share, payable June 30, 2026, to shareholders of record on May 19, 2026. The dividend represents a 4% increase from the prior quarterly rate of $0.27 per share.

About Weyco Group NASDAQ: WEYS

Weyco Group, Inc is a publicly traded footwear company NASDAQ: WEYS based in Glendale, Wisconsin, that designs, sources, markets and distributes branded footwear products. The company operates through a portfolio of five consumer brands—Florsheim, Stacy Adams, Nunn Bush, BOGS and Rafters—offering a full range of dress, casual and performance footwear for men and women.

The Florsheim brand, with roots dating back to 1892, provides classic and contemporary men's dress shoe styles, while Stacy Adams and Nunn Bush deliver fashion-forward and casual offerings.

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