Executive Summary

Q2 2025 net sales were $58.2M, down from $63.9M in Q2 2024 and $68.0M in Q1 2025 as retailers stayed cautious and consumer discretionary demand softened amid tariff uncertainty .
Diluted EPS was $0.24 versus $0.59 last year and $0.57 in Q1; operating income fell to $3.9M from $6.7M last year as gross margin compressed to 43.3% (from 43.9% YoY and 44.6% in Q1) largely due to incremental tariffs .
Management raised U.S. selling prices effective July 1 and outlined tariff mitigation (pre‑buy inventory, supplier cost reductions, sourcing diversification), yet emphasized tariffs remain fluid, adding near‑term margin uncertainty .
Balance sheet remains strong: $77.4M cash at quarter end and ~$83.8M cash plus marketable securities; no revolver debt; Board declared a $0.27 quarterly dividend payable Sept 30, 2025 .
Catalysts: tariff reset decisions mid‑August, H2 pricing impact, BOGS fall launches and outdoor demand normalization; dividend continuity supports downside protection while tariff path and consumer sentiment drive near-term stock reaction .

What Went Well and What Went Wrong

What Went Well

Pricing action implemented July 1 and supplier cost concessions secured; management moved select styles out of China and continued diversification (China 60%, India 14%, Vietnam 10%, Cambodia 10%) to mitigate tariff impact .
Liquidity and capital returns: cash + marketable securities of ~$83.8M, no debt on $40M revolver; $0.27 dividend declared, following a track record of returns (special $2.00 in Nov 2024) .
Product initiatives: BOGS fall introductions (seamless construction; expansion into year‑round work category) and cleaner retailer inventories position the brand for potential H2 traction .

What Went Wrong

Broad demand softness: Wholesale net sales fell to $45.6M, with Nunn Bush −11%, Stacy Adams −10%, Florsheim −5%, BOGS −14% as retailers tightened inventory buys against weaker consumer spending .
Margin pressure: Consolidated gross margin declined to 43.3%, wholesale gross margin to 37.6%, with tariffs eroding profitability; retail margin modestly lower at 66.6% .
International drag: Florsheim Australia posted a $0.2M operating loss (vs. $0.2M profit last year) and weaker AUD reduced reported sales; effective tax rate spiked to 51.1% on a $1.1M valuation allowance at Florsheim Australia .

Financial Results

Consolidated quarterly results

Metric	Q4 2024	Q1 2025	Q2 2025
Net Sales ($USD Millions)	$80.471	$68.030	$58.221
Gross Profit Margin %	47.9%	44.6%	43.3%
Earnings from Operations ($USD Millions)	$11.539	$7.031	$3.893
Net Earnings ($USD Millions)	$10.000	$5.543	$2.256
Diluted EPS ($USD)	$1.04	$0.57	$0.24

Q2 year-over-year comparison

Metric	Q2 2024	Q2 2025
Net Sales ($USD Millions)	$63.932	$58.221
Gross Profit Margin %	43.9%	43.3%
Earnings from Operations ($USD Millions)	$6.661	$3.893
Net Earnings ($USD Millions)	$5.607	$2.256
Diluted EPS ($USD)	$0.59	$0.24
Effective Tax Rate %	25.1%	51.1%

Segment breakdown (Q2)

Segment Metric	Q2 2024	Q2 2025
Wholesale Net Sales ($USD Millions)	$50.3	$45.6
Wholesale Gross Margin %	38.2%	37.6%
Wholesale Operating Earnings ($USD Millions)	$5.8	$4.1
Retail Net Sales ($USD Millions)	$7.6	$6.8
Retail Gross Margin %	67.5%	66.6%
Retail Operating Earnings ($USD Millions)	$0.7	$0.1
Other (Australia/South Africa) Net Sales ($USD Millions)	$6.1	$5.8
Other Gross Margin %	62.0%	60.9%
Other Operating Earnings ($USD Millions)	$0.2	$(0.2)

KPIs and balance sheet

KPI	Dec 31, 2024	Mar 31, 2025	Jun 30, 2025
Cash and Cash Equivalents ($USD Millions)	$70.963	$71.546	$77.430
Accounts Receivable, Net ($USD Millions)	$37.464	$39.765	$32.022
Inventories ($USD Millions)	$74.012	$68.186	$71.258
Total Liabilities ($USD Millions)	$78.501	$50.745	$52.874
Total Equity ($USD Millions)	$245.585	$248.550	$248.062
Cash Dividends Declared (per share, $)	$2.26	$0.26	$0.27

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
U.S. Wholesale Pricing	H2 2025	Planned to raise selling prices beginning Summer 2025	Raised effective July 1, 2025	Implemented (raised)
Capital Expenditures	FY 2025	N/A (not previously disclosed)	$1–$2 million	New
Quarterly Dividend	Q2 2025	$0.26 (Q1 declared)	$0.27 (payable Sept 30, 2025)	Maintained at raised level
Sourcing Mix	Current	Prior to 2025: ~75% China	~60% China; India ~14%; Vietnam ~10%; Cambodia ~10%	Diversified away from China
Tax Rate	Near term	No forward guidance	Q2 actual 51.1% on valuation allowance; future uncertain	Higher in Q2; no outlook

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024)	Q1 2025	Current Period (Q2 2025)	Trend
Tariffs/Macro	Flagged impending China tariffs; focusing on pricing review for Fall	Tariffs enacted; effective total China tariff cited at 161%; mitigation via pre-buy inventory and planned price increases	Tariff rate temporarily 30% (May 12–Aug 12) after peaking at 145%; other countries at 10% rising to 19–25% on Aug 7; margins pressured and outlook uncertain	Worsening near-term; policy fluid
Supply Chain Diversification	Not a major focus	Accelerating sourcing diversification	Factory footprint shifting: China ~60%; India ~14%; Vietnam ~10%; Cambodia ~10%; dual sourcing to manage tariff volatility	Improving diversification
Consumer Demand/Wholesale	Soft demand; BOGS impacted by weather	Florsheim up; Stacy Adams/Nunn Bush/BOGS down; cautious discretionary spend	Sales down across brands; retailers cautious with inventory buys	Persistently soft
Retail/E-commerce	Record 2024 retail sales; higher web advertising/freight costs	Retail down 12% YoY; BOGS website pullback from promotions	Retail −11%; site traffic up but conversion down; maintaining pricing integrity amidst promotional environment	Mixed; volume down, disciplined pricing
Product Performance (BOGS)	Weather-sensitive; mild Fall headwinds	−5% in Q1; demand subdued	−14% in Q2; new fall product intros; less reliance on cold-weather; clean retailer inventories	Potential H2 recovery
Inventory Management	Inventories normalized vs earlier spikes	Built inventory ahead of tariffs; Q1 inventory $68.2M	Inventories $71.3M; moving toward normal levels in pairs; dollar value may rise with tariffs; LIFO accounting	Normalizing in pairs; dollar value variable
International (Australia/South Africa)	Australia down; smaller store base; same-store up	Australia −7%; improving gross margin; operating loss narrowed	Australia −4% reported (−2% local-currency); $0.2M operating loss; strategic importance affirmed; South Africa mostly wholesale, profitable	Mixed; strategic retention

Management Commentary

“The tariff‑environment created headwinds for our business in second quarter… consumers pulled back on discretionary spending… higher tariff‑import costs set in, eroding our margins and reducing our profitability for the period” — Thomas W. Florsheim, Jr., Chairman & CEO .
“We have taken various measures to minimize the impact… proactively bringing in a large amount of inventory ahead of the tariff effective dates… negotiated factory cost reductions… moved sourcing of certain footwear styles out of China… raised U.S. selling prices effective July 1, 2025” — Judy Anderson, CFO .
“Prior to 2025, 75% of our factory base was located in China. We are actively working to further diversify our supply chain… we’re proud of the quality and value we provide… we expect the challenging environment to persist through the second half of the year” — CEO .
“In regards to our BOGS business… we are gearing up for a number of new fall product introductions… expanding the product line to be less dependent on cold weather demand… newly engineered products in the work category” — CEO .

Q&A Highlights

Inventory strategy and LIFO: Pre‑purchase benefits flowed through H1; inventories trending to normal levels in pairs, but dollar value may rise with 30% China tariff embedded in cost; company confirms LIFO accounting .
Sourcing diversification detail: Open orders now ~60% China, ~14% India, ~10% Vietnam, ~10% Cambodia; dual‑sourced SKUs enable flexibility if tariffs shift; strong relationships and balance sheet to “weather the storm” .
Retailer creditworthiness: Monitoring closely in a shaky environment; no immediate distress among major customers; approach balances support with prudence to maintain business while limiting risk .
Australia/South Africa strategy: Australia remains strategically important with ~30 Florsheim stores and dominant market share; South Africa mostly wholesale, profitable; continued focus on wholesale recovery and SG&A efficiencies .

Estimates Context

S&P Global Wall Street consensus for Q2 2025 was unavailable for WEYS; therefore, a beat/miss vs estimates cannot be determined. Actuals are provided below for reference.

Metric	Consensus (S&P Global)	Actual Q2 2025	Surprise
Primary EPS	*Unavailable	$0.24	N/A
Revenue ($USD Millions)	*Unavailable	$58.221	N/A

*Values retrieved from S&P Global; consensus data unavailable.

Key Takeaways for Investors

The quarter’s compression in sales and margins was driven by tariffs and discretionary demand softness; management’s mitigation (pricing, supplier concessions, diversification) is underway but tariff volatility keeps near‑term margin visibility low .
Wholesale softness was broad across brands; Florsheim remains relatively resilient while BOGS depends on fall/winter demand normalization; clean outdoor inventories and new product intros provide H2 optionality .
Liquidity and capital returns underpin the equity story: ~$83.8M cash + marketable securities and no debt support continued dividends and opportunistic repurchases despite cyclical headwinds .
Watch August tariff developments (China rate post‑Aug 12 and non‑China increases Aug 7): pricing integrity and dual‑sourcing provide levers, but margin path is linked to policy outcomes .
Inventory normalization in pairs reduces risk; dollar value could rise with tariff‑inclusive costs—expect careful working capital management as sourcing shifts and pricing actions flow through .
Australia/South Africa remain strategic, with brand strength and potential wholesale recovery; FX and macro conditions can affect reported results .
Near‑term trading: sensitivity to tariff headlines and consumer confidence; medium‑term thesis: brand durability, pricing power, and diversified sourcing can restore margins as conditions stabilize .

What Went Well and What Went Wrong — Additional Detail

Wholesale SG&A held flat YoY in Q2 ($13.1M vs $13.4M), demonstrating cost discipline despite fixed‑cost deleverage from lower sales .
Retail conversion softness underscores competitive promotional landscape; management is investing in engagement tools while maintaining pricing integrity, potentially sacrificing near‑term volume for long‑term brand equity .
Tax rate spike (51.1%) from a valuation allowance at Florsheim Australia significantly reduced net income; this is non‑operational, but highlights international earnings sensitivity and FX .

Additional Document References

Q2 press release conference call logistics and replay details (for archival and ongoing monitoring) .
Prior quarter results for trajectory context: Q1 2025 net sales $68.0M, EPS $0.57; Q4 2024 net sales $80.5M, EPS $1.04; 2024 full year demonstrated strong brand resilience despite weather/macro .

WEYCO GROUP INC (WEYS)·Q2 2025 Earnings Summary