Weyco Group ((WEYS)) has held its Q2 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Weyco Group’s recent earnings call painted a picture of mixed fortunes, with a strong cash position and effective inventory management strategies being overshadowed by significant challenges. The sentiment was largely negative, reflecting a difficult economic environment marked by declining sales and earnings, adverse tariff impacts, and operational losses in certain segments.
Cash and Marketable Securities
Weyco Group reported a robust cash and marketable securities position of $83.8 million as of June 30, 2025, with no outstanding debt on their $40 million revolving line of credit. The company generated $14.4 million in cash from operations in the first half of 2025, highlighting its strong liquidity position amidst challenging market conditions.
Inventory Management
The company successfully managed its inventory levels, bringing them down to normal after previous increases due to anticipated tariffs. As of June 30, 2025, inventory stood at $71.3 million, a reduction from $74 million at the end of 2024, demonstrating effective inventory control.
Brand Integrity and Pricing Strategy
Despite a challenging market environment, Weyco Group maintained its pricing integrity, avoiding excessive promotions to uphold the quality and value of its products across all brands. This strategy reflects the company’s commitment to brand strength and long-term customer trust.
Decline in Net Sales and Earnings
Weyco Group faced a significant decline in net sales and earnings, with Q2 2025 net sales at $58.2 million, down 9% from the previous year. Net earnings dropped by 60% to $2.3 million, and earnings from operations decreased by 42% to $3.9 million, indicating substantial financial challenges.
Impact of Tariffs
Tariffs on goods sourced from China, which peaked at 145% in April 2025, negatively impacted Weyco Group’s gross margins. Although temporarily reduced to 30% for a short period, tariffs remain a significant hurdle for the company.
Decrease in Wholesale and Retail Sales
Both the wholesale and retail segments experienced declines, with North American wholesale sales down 9% to $45.6 million and retail sales down 11% to $6.8 million. The decrease was attributed to lower consumer demand across all brands.
Florsheim Australia Operating Loss
Florsheim Australia reported an operating loss of $200,000 for the quarter, contrasting with a $200,000 operating profit in the previous year. Net sales fell by 4% to $5.8 million, exacerbated by currency fluctuations.
High Effective Tax Rate
The effective tax rate surged to 51.1% from 25.1% last year, primarily due to a $1.1 million valuation allowance on deferred tax assets at Florsheim Australia, adding to the financial strain.
Forward-Looking Guidance
Weyco Group’s forward-looking guidance remains cautious, with the company acknowledging the ongoing unpredictability of the market and potential future impacts of tariff policies. The company is working to diversify sourcing and mitigate tariff impacts on gross margins, but remains vigilant about the challenges ahead.
In summary, Weyco Group’s earnings call reflected a challenging period marked by declining sales and earnings, significant tariff impacts, and operational hurdles. While the company maintains a strong cash position and effective inventory management, the overall sentiment was one of caution as it navigates an uncertain economic landscape.