Weyco's Q4 2024: Navigating Tariff Challenges and Brand Performance Contradictions

These are the key contradictions discussed in Weyco's latest 2024Q4 earnings call, specifically including: Tariff Policies and Offshore Vendor Response, Forsake Brand Performance, Tariffs and Cost Management, Freight Costs, Tariffs and Cost Impact, and Sourcing and Tariff Rates:



Sales Performance across Segments:
- Overall net sales for the fourth quarter remained flat at $80.5 million, while full-year sales were $290 million, down 9% from the previous year.
- The North American wholesale segment saw an increase in sales by 1% to $60.4 million, while the retail segment's sales were up by 1% to $14.1 million.
- The decline in sales was primarily due to lower sales in the BOGS brand and the closure of operations in the Asia Pacific region.

Gross Margins and Cost Management:
- Gross earnings were 47.9% of net sales for the quarter, compared to 50.3% in the previous year, with full-year gross earnings increasing to 45.3% of net sales.
- Improvements in gross margins, particularly in the North American wholesale segment, were due to lower inventory costs and reduced inbound freight expenses.

Impact of Tariffs and Supply Chain Challenges:
- Additional tariffs imposed on goods sourced from China will increase costs, with a 26% tariff set to rise to 36%.
- The company is negotiating price reductions with Chinese suppliers and may need to raise prices in response to the tariffs.
- The decision to maintain a significant portion of production in China is influenced by long-standing relationships and the need to maintain quality standards.

Dividend and Cash Flow:
- The company declared a regular fourth-quarter dividend of $21.6 million, including a special dividend of $2 per share.
- Cash flow was positive, generating $16.2 million from operations, with a net cash and marketable securities balance of $77.3 million at the end of the year.