Dj Vp Combs Sells 1059 Of Weyco Group Inc >Weys

Shares of Weyco Group, Inc. WEYS have gained 12.8% since the company reported its earnings for the quarter ended Sept. 30, 2025. This compares to the S&P 500 index’s decline of 1.8% over the same time frame. Over the past month, the stock moved 12.1% versus the S&P 500’s 1.6% change.

For the third quarter of 2025, Weyco reported earnings per share of 69 cents compared to 84 cents in the third quarter of 2024. 

Net sales of $73.1 million denoted a 2% decline from $74.3 million in the year-ago period. The declines in both revenue and profitability metrics were primarily attributed to incremental tariffs and lower sales volume.

Gross earnings represented 40.7% of net sales, down from 44.3% in the prior-year quarter. Earnings from operations decreased 21% to $8.1 million from $10.2 million, and net earnings fell 18% year over year to $6.6 million.

Weyco Group, Inc. Price, Consensus and EPS Surprise

Weyco Group, Inc. price-consensus-eps-surprise-chart | Weyco Group, Inc. Quote

North American Wholesale Performance

Weyco’s North American wholesale segment, which comprises the majority of its business, recorded net sales of $60.2 million for the third quarter, a 2% decrease from $61.1 million in the prior year. The sales volume dropped by 7%, but this was partially offset by price increases that took effect on July 1, 2025. The decline in volume stemmed largely from a disruption with a key wholesale customer who failed to adopt new pricing terms, resulting in order cancellations. This issue has been resolved and is not expected to impact future quarters.

Brand-level performance showed variation. Florsheim sales rose 8% as pricing supported revenue, with volumes holding steady due to strength in dress footwear. Nunn Bush posted a 1% sales increase, where pricing gains outpaced the decline in volume. Stacy Adams experienced a 5% drop in sales, while BOGS sales declined sharply by 17% due to reduced shipments and seasonal softness. Despite the pricing actions, wholesale gross margins declined to 35.7% from 40.1%, largely due to the impact of the tariffs. Operating earnings for the wholesale segment fell 20% to $7.5 million from $9.4 million.

Retail and International Operations

The North American retail segment posted net sales of $7 million, down 4% from $7.2 million in the year-ago quarter. The decline was primarily driven by weaker demand on Weyco’s own e-commerce sites, especially for Florsheim and Stacy Adams products. Increased consumer price sensitivity led to a shift toward more promotional channels and lower-priced options. Despite a 10% price increase on July 1, the company acknowledged that retail sites priced at full MSRP lost some traffic to discount-heavy partners. Gross earnings as a percentage of net sales slipped slightly to 66.4% from 66.9% in the prior year, and retail operating income declined to $0.6 million from $0.8 million.

Operations outside North America, mainly through Florsheim Australia, generated net sales of $6 million, unchanged from the prior-year quarter. In local currency, however, sales grew 2%, supported by stronger performance in the retail segment. Gross earnings improved to 61% of sales from 59.2%, but the unit posted an operating loss of $0.1 million compared to breakeven in the previous year.

Management Commentary

CEO Thomas Florsheim Jr. noted that the quarter’s modest decline in sales was driven by the wholesale customer issue and the adverse effects of tariffs. He emphasized the complexity and unpredictability of the current U.S. tariff environment, particularly on goods sourced from China, which faced a 30% tariff during the quarter. While price increases helped mitigate cost pressures, they were not sufficient to fully offset the incremental tariff burden. Management attributed the entirety of margin erosion to these tariffs, confirming in the earnings call that the 10% price hike did not cover the 30% tariff rate on Chinese imports.

Florsheim also outlined long-term strategies to mitigate tariff exposure, including diversifying the company’s factory base beyond China and reinforcing relationships with manufacturing partners who share a commitment to quality and timely delivery. These measures are expected to strengthen operational resilience, though management acknowledged that implementation will take time.

Factors Influencing Results

The quarter’s results were significantly affected by macroeconomic and policy-related variables. Tariff costs were the primary driver of gross margin contraction. Price increases, although necessary, created a wider price gap between Weyco’s direct-to-consumer channels and those of wholesale partners, affecting e-commerce performance. The consumer environment was also described as tepid, with a noticeable shift in spending toward value-oriented purchases. Inventory levels were reduced to $67.2 million as of Sept. 30, down from $74 million at the end of 2024, reflecting tighter control in response to evolving demand patterns.

Management expressed confidence in the company’s ability to adapt to the changing trade landscape. They highlighted encouraging signs in U.S.-China trade talks that may eventually lead to tariff relief, though the outcome remains uncertain. Capital expenditures for 2025 are projected to be between $1 million and $3 million.

Other Developments

Weyco made a strategic decision during the quarter to wind down its Forsake brand due to a prolonged lack of growth and profitability. The brand’s closure is part of a broader effort to optimize the company’s brand portfolio and concentrate on areas with the greatest potential for long-term success. Management expects no material impact on consolidated financials as a result of this action.

In addition, on Nov. 4, 2025, the Board of Directors declared a special cash dividend of $2.00 per share, alongside the regular quarterly dividend of 27 cents per share. The move reflects the company’s strong liquidity position, with $78.5 million in cash and marketable securities and no debt outstanding on its $40 million revolving credit line. Management stated that this return of capital aligns with their long-standing strategy to balance shareholder returns with operational flexibility.

This article originally published on Zacks Investment Research (zacks.com).

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