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    WEYS
    Earnings call· Jun 2026(Q2 FY26)

    WEYCO GROUP Q2 FY26 earnings call WEYS

    Aug 5, 2026 Source

    Executive summary

    Weyco Group Q2 FY26 — Strong Earnings Driven by Tariff Refunds and Wholesale Growth

    Weyco Group delivered strong Q2 FY26 results, with significant earnings growth primarily driven by the recognition of $15.3 million in tariff refunds. The company's wholesale business showed resilience with 7% sales growth, while direct-to-consumer e-commerce also performed well. Management is navigating an unpredictable tariff environment and strategically increasing inventory to support anticipated demand and mitigate potential supply disruptions.

    Highlights

    5

    • Net sales increased 7% to $62.2 million in Q2 FY26, driven by wholesale and e-commerce growth.

    • Diluted EPS surged to $1.39 in Q2 FY26, up from $0.24 in the prior year, primarily due to tariff refunds.

    • Consolidated gross earnings significantly improved to 70.4% of net sales, up from 43.3% in Q2 FY25, largely due to $15.3 million in tariff refunds.

    • Wholesale net sales grew 7% to $48.8 million, with Florsheim up 12% and BOGS up 10%.

    • Cash and marketable securities stood at $98.1 million with no debt outstanding on the $40 million revolving credit line.

    Concerns

    4

    • US trade and tariff policies remain unpredictable, with a 10% incremental tariff increased to 12.5% on July 24th, creating near-term gross margin uncertainty.

    • Nunn-Busch sales declined 3% for the quarter, facing high competition in the opening price point segment.

    • Florsheim Australia's local currency sales were down 1%, despite a 10% reported increase due to AUD appreciation.

    • Wholesale selling and administrative expenses increased to $18.1 million, or 37% of net sales, up from 29% last year, primarily due to higher employee costs.

    Guidance & targets

    2
    CategoryTargetConfidence
    Annual Capital Expenditures
    between $2 million and $3 million
    medium materiality
    High
    Inventory Balance
    about $70 million
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Wholesale
    Growth driven by Florsheim, Stacey Adams, and Boggs brands. Gross margin significantly improved due to $14.3 million in tariff refunds and selling price increases. S&A expenses increased due to higher employee costs.
    Florsheim sales: up 12%Stacey Adams sales: up 4%Nunn-Busch sales: down 3%BOGS sales: up 10%Gross earnings as a percent of net sales: 70% (vs 37.6% in Q2 FY25)Selling and administrative expenses: $18.1 million (37% of net sales vs $13.1 million or 29% in Q2 FY25)Operating earnings: $16 million (vs $4.1 million in Q2 FY25)
    		$48.8 million7%—70%
    Retail
    Sales increase primarily due to higher sales on the Florsheim website. Gross earnings significantly improved due to $1 million in tariff refunds.
    Gross earnings as a percent of net sales: 79.2% (vs 66.6% in Q2 FY25)Operating earnings: $1 million (vs $100,000 in Q2 FY25)
    		$7 million4%—79.2%
    Florsheim Australia (Other Operations)
    Reported sales increase due to Australian dollar appreciation; local currency sales declined. Operating earnings improved from a loss in the prior year despite a challenging economic environment.
    Local currency sales: down 1%Gross earnings as a percent of net sales: 63.1% (vs 60.9% in Q2 FY25)Operating earnings: break-even (vs operating losses of $200,000 in Q2 FY25)
    		$6.4 million10%—63.1%

    Operational metrics

    15
    IEPA Tariffs Paid
    $19.8 million
    2025 and Q1 FY26

    Approximate amount paid under the International Emergency Economic Powers Act (IEPA) before its invalidation.

    Phase 1 Tariff Refund Claims Submitted
    $18.6 million
    April 2026

    Submitted to US Customs and Border Protection (CBP) following the US Supreme Court's ruling.

    Tariff Refunds Recognized (COGS Reduction)
    $15.3 million
    Q2 FY26

    Recognized as a reduction to cost of sales during the quarter, related to Phase 1 entries.

    Inventory Reduction from Tariff Refunds
    $3.3 million
    Q2 FY26

    Reduction of inventory due to tariff refunds recognized.

    Interest Income from Tariff Refunds
    $700,000
    Q2 FY26

    Included in total interest income for the quarter.

    Remaining Phase 3 Tariff Entries
    $1.2 million
    Q2 FY26

    No refunds related to Phase 3 entries have been recognized as timing and amount remain uncertain.

    Incremental Tariff Rate (Post-IEPA)
    10%
    Feb 2026 - July 23, 2026

    Imposed under a separate statutory authority after the IEPA ruling.

    Incremental Tariff Rate (Increased)
    12.5%
    July 24, 2026 onwards

    Increased on imports from China, Republic, and Vietnam.

    Effective Tax Rate
    28.4%vs 51.1% in Q2 FY25
    Q2 FY26

    The higher rate in 2025 was due to a $1.1 million valuation allowance on deferred tax assets at Florsheim Australia.

    Dividends Paid
    $26.6 million
    First six months of 2026

    Funds used for dividend payments during the first half of the fiscal year.

    Capital Expenditures
    $1.5 million
    First six months of 2026

    Capital expenditures incurred during the first half of the fiscal year.

    Cash Dividend Declared
    $0.28
    Q2 FY26

    Declared on August 4th, 2026, to shareholders of record on August 18th, 2026, payable September 30th, 2026.

    Legacy Business Sales Growth
    6%
    Q2 FY26

    Growth for the combined legacy business.

    Florsheim Australia Local Currency Sales Growth
    down 1%
    Q2 FY26

    Sales performance in local currency, contrasting with reported growth due to FX.

    Interest Income
    $1.5 millioncompared to $800,000 in Q2 FY25
    Q2 FY26

    Includes $700,000 of interest income related to tariff refunds recognized in the second quarter.

    Industry KPIs

    9
    MetricValueDetails
    EPS$1.39USD per share
    Revenue$62.2 millionUSD
    Inventory$49.1 millionUSD
    Net income$13.3 millionUSD
    Gross margin70.4%% of net sales
    Operating margin27.3%%
    Operating income EBIT$17 millionUSD
    Cash investments balance$98.1 millionUSD
    Tariff impact mitigation$15.3 millionUSD

    Risks & headwinds

    6
    Unpredictable US trade and tariff policiesNear-term, second half of the year

    10% incremental tariff increased to 12.5% on July 24th

    Mitigation: Mitigation strategies in place that will continue to adjust as appropriate.

    Impact of inflation on costs and consumer demandOngoing

    Not quantified

    Increased interest rates and other macroeconomic factorsOngoing

    May cause a slowdown or contraction in the US or Australian economies

    Challenging environment for discretionary consumer goodsOngoing

    Not quantified

    Mitigation: Company executing well despite market conditions.

    Competition in opening price point segment for Nunn-BuschOngoing

    Nunn-Busch sales declined 3%

    Mitigation: Differentiating the brand by investing in comfort technology and higher quality materials.

    Retailers' worry about impact of price increases on discretionary incomeBack-to-school season

    Not quantified, but noted as a market concern

    What to watch in Q3 FY26

    4

    Impact of increased incremental tariffs

    H2 FY26
    Current10% tariff increased to 12.5% on July 24th
    TargetQuantification of impact on gross margins and effectiveness of mitigation strategies

    Why it matters

    Tariff policies remain unpredictable and directly affect gross margins, a key profitability driver.

    The administration continues to pursue additional tariff actions and it is difficult to know what impact additional tariffs could have on our margins as we move through the second half of the year.

    Q&A highlights

    2

    Is it too early to discuss back-to-school sales, and what color can be provided on that space?

    Management stated back-to-school is not a major factor for their market but creates retail traffic. They noted retailers are concerned about the impact of price increases in kids' footwear due to pressures on discretionary income and inflation.

    “Retailers in general are worried about the impact of price increases so that in the kids' footwear market, they've been hesitant to take price increases because of pressures on discretionary income right now. and all the inflationary concerns.”

    asked by John Drescher · answered by John Florsheim

    1 min read5 chapters

    Detailed Narrative

    01

    Tariff Impact and Recovery

    The company recognized $15.3 million in tariff refunds as a reduction to cost of sales in Q2 FY26, following the US Supreme Court's invalidation of IEPA tariffs. This included $14.3 million for the wholesale segment and $1 million for retail, plus $3.3 million as an inventory reduction and $700,000 in interest income. The administration subsequently imposed a 10% incremental tariff, which was increased to 12.5% on July 24th, creating ongoing uncertainty for gross margins.

    02

    Brand Performance in Wholesale

    Florsheim led the way with a 12% increase in sales, building momentum in traditional dress shoes and hybrid/casual footwear. Stacey Adams sales increased 4%, showing recovery, while Nunn-Busch sales declined 3% due to intense competition in the opening price point segment. BOGS sales increased 10%, driven by its seamless construction differentiation, positioning it for a strong second half.

    03

    Inventory Management Strategy

    Weyco Group's inventory stood at $49.1 million at June 30, 2026, down from $65.9 million at December 31, 2025. The company plans to increase inventory to approximately $70 million by the end of Q4 FY26. This conscious decision aims to mitigate potential supply disruptions from evolving tariff policies and support a healthy backlog for the second half, leveraging available cash.

    04

    Direct-to-Consumer Growth

    The retail segment's 4% sales increase was primarily driven by very strong Florsheim e-commerce sales. This indicates successful investment in the direct-to-consumer platform in the US market and contributes positively to overall company performance.

    05

    International Performance

    Florsheim Australia's reported net sales increased 10% due to favorable foreign exchange, but local currency sales declined 1%. This reflects a challenging economic environment in Australia, where the team is focused on maximizing sales opportunities and maintaining disciplined expense control.

    AI-generated summary of the company’s earnings call. Not investment advice.