Weyco's Q2 2025 Earnings Call: Unpacking Contradictions in Inventory, Tariffs, and Global Strategy

Inventory and tariff strategies, geographical diversification, tariff management and impact on inventories, reliance and shift in production sources, strategic importance of Florsheim Australia are the key contradictions discussed in Weyco's latest 2025Q2 earnings call.



Sales Decline and Tariff Impact:
- Weyco Group reported net sales of $58.2 million for Q2 2025, down 9% compared to $63.9 million in Q2 2024.
- The decline was attributed to lower consumer spending amid economic uncertainty and increased tariffs on imported goods.

Operating Earnings and Gross Margins:
- Earnings from operations were $3.9 million for the quarter, down 42% from $6.7 million in Q2 2024.
- Gross earnings as a percentage of net sales were 43.3%, down from 43.9% last year, mainly due to the impact of incremental tariffs.

Inventory Management and Tariff Mitigation:
- Weyco proactively brought in a large amount of inventory ahead of tariff effective dates, which has helped manage tariff impacts.
- The company has also diversified its supply chain away from China, reducing its reliance on the country to approximately 60% of its open orders.

International Operations and Market Challenges:
- Florsheim Australia's net sales were $5.8 million, down 4% from $6.1 million in Q2 2024, with a weaker Australian dollar contributing to the decrease.
- The decrease in wholesale shipments and cautious inventory management by retailers have impacted the segment's performance.

Dividend and Capital Expenditure:
- Weyco declared a cash dividend of $0.27 per share to all shareholders, following a dividend payment of $5 million in Q2 2025.
- Capital expenditures for the year are estimated to be between $1 million and $2 million, reflecting the company's focus on strategic investments amidst economic uncertainty.