Weyco Group Inc (WEYS) Q4 2024 Earnings Call Highlights: Navigating Tariffs and Boosting Earnings

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Thu, Mar 6, 2025, 12:11 AM 5 min read

Overall Net Sales (Q4 2024): $80.5 million, compared to $80.6 million in Q4 2023.
Consolidated Gross Earnings (Q4 2024): 47.9% of net sales, down from 50.3% in Q4 2023.
Net Earnings (Q4 2024): $10 million or $1 per diluted share, up from $8.5 million or $0.90 per diluted share in Q4 2023.
North American Wholesale Net Sales (Q4 2024): $60.4 million, up 1% from $59.6 million in Q4 2023.
Wholesale Gross Earnings (Q4 2024): 42.4% of net sales, down from 44.9% in Q4 2023.
Wholesale Operating Earnings (Q4 2024): Increased 14% to $8.9 million from $7.9 million in Q4 2023.
North American Retail Net Sales (Q4 2024): $14.1 million, up 1% from $13.9 million in Q4 2023.
Retail Gross Earnings (Q4 2024): 65% of net sales, compared to 65.8% in Q4 2023.
Retail Operating Earnings (Q4 2024): $2.5 million, down 28% from $3.5 million in Q4 2023.
Florsheim Australia Net Sales (Q4 2024): $6 million, down 15% from $7.2 million in Q4 2023.
Florsheim Australia's Same Store Sales (Q4 2024): Up 11%.
Interest Income (Q4 2024): $900,000, up from $500,000 in Q4 2023.
Consolidated Net Sales (Full Year 2024): $290.3 million, down 9% from $318 million in 2023.
Consolidated Gross Earnings (Full Year 2024): 45.3% of net sales, up from 44.9% in 2023.
Net Earnings (Full Year 2024): $30.3 million or $3.16 per diluted share, compared to $30.2 million or $3.17 per diluted share in 2023.
North American Wholesale Net Sales (Full Year 2024): $228 million, down 9% from $250 million in 2023.
Wholesale Gross Earnings (Full Year 2024): 40.2% of net sales, up from 39.7% in 2023.
Retail Net Sales (Full Year 2024): $38.7 million, up 2% from $38 million in 2023.
Retail Operating Earnings (Full Year 2024): $5.3 million, down 21% from $6.8 million in 2023.
Florsheim Australia Net Sales (Full Year 2024): $23.6 million, down 20% from $29.6 million in 2023.
Interest Income (Full Year 2024): $3.7 million, up from $1.1 million in 2023.
Cash and Marketable Securities (End of 2024): $77.3 million, with no debt on the $40 million revolving line of credit.
Cash from Operations (2024): $16.2 million.
Dividends Paid (2024): $9.7 million.
Capital Expenditures (2024): $1.4 million.

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Release Date: March 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Net earnings for the fourth quarter increased to $10 million, or $1 per diluted share, compared to $8.5 million, or $0.90 per diluted share, in the same quarter of 2023.
North American wholesale segment saw a 1% increase in net sales, driven by higher sales of the Florsheim and Nunn Bush brands.
Wholesale operating earnings increased by 14% due to higher sales and lower expenses, particularly in advertising and employee costs.
Retail segment net sales reached a record $38.7 million for the year, up 2% from the previous year, driven by direct-to-consumer sales.
Interest income significantly increased to $3.7 million in 2024 from $1.1 million in 2023, benefiting from higher cash balances in the US and Canada.

Negative Points

Overall net sales for the fourth quarter were flat at $80.5 million compared to $80.6 million in the previous year.
Consolidated gross earnings for the fourth quarter decreased to 47.9% of net sales from 50.3% in the previous year.
Retail operating earnings for the quarter decreased by 28% due to higher retail selling and administrative expenses.
Florsheim Australia's net sales declined by 15% for the quarter and 20% for the year, primarily due to the closure of Asia Pacific operations.
The company faces increased costs due to new tariffs imposed by the US government on goods sourced from China, which will impact future pricing.

Q & A Highlights

Q: Can you explain the mechanics of tariffs for WEYCO? How does the process work from order to payment? A: Thomas Florsheim, CEO, explained that WEYCO must put up a bond equal to the average monthly tariffs. When goods are cleared, WEYCO pays customs the tariffs, which have increased from 26% to 36% recently. The payment is based on the declared value of the shipment, and customs can audit these declarations.

Q: What percentage of your cost of goods sold came from China last year, and what are the tariffs on other countries like India and Vietnam? A: Thomas Florsheim, CEO, stated that about 75% of purchases are from China, with India being the second largest source. Tariffs on leather shoes from China are now 36%, while tariffs from other countries like India and Vietnam vary but are generally lower.

Q: What is the expected tariff range for non-Chinese imports in 2025? A: Thomas Florsheim, CEO, estimated that the average tariff for non-Chinese imports would be around 25%. However, this could change due to potential reciprocal tariffs affecting countries like Vietnam.

Q: Are your offshore vendors willing to share the cost of tariffs? A: Thomas Florsheim, CEO, confirmed that vendors are receptive to sharing some of the tariff costs due to long-standing relationships. However, there is a limit to what they can absorb, and price increases will be necessary.

Q: How is WEYCO managing the impact of tariffs on its business? A: Thomas Florsheim, CEO, mentioned that WEYCO is negotiating with suppliers for price reductions and considering price increases to mitigate tariff impacts. The company is also exploring sourcing from other countries but remains committed to China due to quality and volume needs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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