Q1 2026 Weyco Group Inc Earnings Call

May 6, 2026

Operator: Good day, and thank you for standing by. Welcome to the Weyco Group Q1 2026 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Judy Anderson, Chief Financial Officer. Please go ahead.

Speaker #1: Good day, and thank you for standing by. Welcome to the WAYCO Group Q3, 2026 earnings release conference call. At this time, all participants are in a listen-only mode.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone.

Judy Anderson: Thank you. Good morning, and welcome to Weyco Group's conference call to discuss Q1 2026 results. On the call with me today are Tom Florsheim Jr., Chairman and Chief Executive Officer, and John Florsheim, President and Chief Operating Officer. Before we begin to discuss the results for the quarter, I will read a brief cautionary statement. During this call, we may make projections or other forward-looking statements regarding our current expectations concerning future events and the future financial performance of the company. We wish to caution you that these statements are just predictions and that actual events or results may differ materially. We refer you to the section entitled Risk Factors in our most recent annual report on Form 10-K, which provides a discussion of important factors and risks that could cause our actual results to differ materially from our projections.

Judy Anderson: These risk factors are incorporated herein by reference. They include, in part, the uncertain impact of US trade and tariff policies, which remain highly dynamic and unpredictable, the impact of inflation on our costs and consumer demand for our products, increased interest rates, and other macroeconomic factors that may cause a slowdown or contraction in the US or Australian economies. Overall net sales for Q1 2026 were $68 million, flat compared to Q1 2025. Consolidated gross earnings were 44.2% of net sales compared to 44.6% of net sales last year. Earnings from operations were $7.5 million for the quarter, up 7% from $7 million in 2025.

Operator: Good day, and thank you for standing by. Welcome to the Weyco Group Q1 2026 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Judy Anderson, Chief Financial Officer. Please go ahead.

Overall, net sales for the first quarter of 2026 were $68 million, flat compared to the first quarter of 2025.

Judy Anderson: Net earnings totaled $6.1 million, up 10% from $5.5 million last year. Diluted earnings per share were $0.64 per share in 2026, up from $0.57 per share in the prior year. Net sales in our North American wholesale segment totaled $53.6 million for the quarter, down 1% from $54.3 million last year. Florsheim sales were up, but the increase was more than offset by lower sales of the Stacy Adams and Nunn Bush brand, I'm sorry, Stacy Adams and Bogs brands. Nunn Bush sales were flat for the quarter. Wholesale gross earnings as a percent of net sales were 38.7% and 39.4% in Q1 2026 and 2025, respectively.

Consolidated growth earnings were 44.2% of net sales compared to 44.6% of net sales last year. Earnings from operations were 7.5 million for the quarter up 7% from 7 million in 2025.

Net earnings totaled, 6.1 million dollars up, 10% from 5.5 Million last year.

Diluted earnings per. Share were 64 cents per share in 2026 up from 57, cents per share in the prior year.

Net sales in our North American Wholesale segment totaled 53.6 million for the quarter down 1% from 54.3 Million last year.

Floor Shine sales were up, but the increase was more than offset by lower sales of Stacy at of the Stacy Adams, and Nunn Bush. I'm sorry. Stacy Adams and bogs brands.

None. Bush sales were flat for the quarter.

Judy Anderson: Gross margins continued to be negatively impacted by incremental tariffs, partially offset by selling price increases instituted in the H2 of last year. Wholesale selling and administrative expenses totaled $13.8 million, or 26% of net sales, versus $14.8 million, or 27% of net sales last year. The decrease in 2026 was largely due to lower employee costs. Wholesale operating earnings totaled $7 million for the Q, up 5% from $6.6 million in 2025, mainly due to lower selling and administrative expenses. Net sales in our retail segment totaled $8.8 million for the Q, up 2% from $8.7 million in 2025 due to increased sales of our e-commerce businesses.

Wholesale gross earnings. As a percent of net sales were 308.7% and 39.4% in the first quarter of 2026 and 2025 respectively.

Gross. Margins. Continue to be negatively impacted by incremental tariffs.

Wholesale selling and administrative expenses total 13.8 million or 26% of that sales versus 14.8 million or 27% of that sales last year.

The decrease in 2026 was largely due to lower employee costs.

Wholesale, operating earnings totaled, 7 million for the quarter up, 5% from 6.6 million in 2025 mainly due to lower selling and administrative expenses.

Judy Anderson: Retail gross earnings as a percent of net sales were 66.1% and 66.6% in the Q1s of 2026 and 2025, respectively. Retail operating earnings totaled $800,000 for the quarter and $600,000 last year. Our other operations consist of our retail and wholesale businesses in Australia and South Africa, collectively referred to as Florsheim Australia. Net sales of Florsheim Australia were $5.6 million in 2026, up 10% from $5.1 million in 2025. The increase was due to the appreciation of the Australian dollar relative to the US dollar as Florsheim Australia's net sales in local currency were flat for the Q1.

net sales in our retail segment totaled 8.8 million for the quarter up to percent from 8.7 million in 2025 due to increased sales of our e-commerce businesses

Retail growth earnings. As a percent of net sales were 66.1% and 66.6% in the first quarter of 2026 and 2025 respectively. Retail, operating earnings totaled 800,000 for the quarter and dollars last year.

Our other operations consist of our retail and wholesale businesses in Australia in South Africa, collectively referred to as floorshine Australia.

Net sales of Florsheim Australia were $5.6 million in 2026, up 10% from $5.1 million in 2025.

Judy Anderson: Florsheim Australia's gross earnings as a percent of net sales were 62.9% and 62.7% in the Q1s of 2026 and 2025, respectively, and its quarterly operating losses totaled $200,000 in both periods. In February of 2025, the US imposed reciprocal and retaliatory tariffs on certain imported goods under the International Emergency Economic Powers Act, also known as IEEPA. We paid a total of approximately $19.8 million in IEEPA tariffs in 2025 and the Q1 of 2026. The IEEPA tariffs increased the cost of our products by 19% and to 50%, resulting in gross margin compression.

The increase was due to the appreciation of the Australian dollar relative to the US dollar as Floor Shine, Australia's net sales and local currency were flat for the quarter.

Floor sign, Australia's gross earnings. As a percent of net sales were 62.9% and 62.7% in the first quarter of 2026 and 2025 respectively and its quarterly. Operating losses. Totals 200,000 dollars in both periods.

In February of 2025, the US. Imposed recall and retaliatory tariffs on certain imported goods under the international emergency economic Powers Act, also known as aiba,

we paid a total of approximately 9.98 million dollars in AA Terrace in 2025 and the first quarter of 2026.

Judy Anderson: On 20 February 2026, the U.S. Supreme Court ruled that IEEPA does not authorize the President to impose tariffs, declaring the IEEPA tariffs invalid. In April 2026, U.S. Customs and Border Protection, or CBP, commenced a phased process to accept claims for potential refunds of IEEPA tariffs previously paid. The refund process formally opened on 20 April 2026. On that date, we submitted claims covering our phase 1 entries totaling $18.6 million. The timing for submitting claims related to our phase 2 entries, totaling $1.2 million, has not yet been established. The timing and amount of any recoveries remains uncertain and subject to execution by the CBP.

The IIPA tariffs increase the cost of our products by 19% and up to 50%, resulting in gross margin compression.

Authorized the president to impose tariffs. Declaring the AIFA terrorists invalid.

In April of 2026, US Customs, and Border Protection or CBP.

Commenced a phased process to accept claims for to for potential refunds of AA tariffs. Previously paid

The refund process formally opened on.

April 20th, 2026 and on that date. We submitted claims covering our Phase 1, entries totaling 18.6 million,

The timing for submitting claims related to our Phase 2 entries, totaling 1.2 million dollars, has not yet been established.

The timing and amount of any recoveries remains uncertain and subject to execution by the CBD.

Judy Anderson: Following the U.S. Supreme Court's ruling, the president announced the implementation of a new across-the-board tariff under a separate statutory authority, currently set at 10%, although the scope and rate remain subject to change. U.S. trade policies continue to evolve and remain unpredictable, creating near-term gross margin uncertainty. We have mitigation strategies in place and will continue to adjust as appropriate in response to future policy developments. At 31 December 2026, our cash and marketable securities totaled $93.9 million, and we had no outstanding debt on our $40 million revolving line of credit. During the first 3 months of 2026, we generated $17.4 million in cash from operations and used funds to pay $23.9 million in dividends. We also had $600,000 of capital expenditures.

Following the Supreme Court's ruling. The president announced the implementation of a new across the board tariffs under a separate statutory Authority. Currently set at 10%, although the scope and rate remains subject to change.

Us trade policies, continue to evolve and remain unpredictable, creating near-term, gross margin uncertainty.

We have mitigation strategies in place and we'll continue to adjust as appropriate in response to Future policy development.

At December 31st 2026, our cash and marketable securities totaled 93.9 million, and we had no outstanding debt on our forty million dollar revolving line of credit.

During the first 3 months of 2026, we generated 17.4 million in cash from operations and used funds to pay 23.9 million dollars in dividends.

Judy Anderson: We estimate that annual capital expenditures in 2026 will be between $2 to 3 million. On 5 May 2026, our board of directors declared a cash dividend of $0.28 per share to all shareholders of record on 19 May 2026, payable 30 June 2026. This represents an increase of 4% above the previous quarterly dividend rate of $0.27. I would now like to turn the call over to Tom Florsheim Jr., Chairman and CEO.

We also had 600,000 dollars of capital expenditures.

We estimate that annual capital of expenditures in 2026 will be between 2 and 3 million.

On May 5th 2026. Our board of directors, declared a cash dividend of 28 cents per share to all shareholders of record on May 19th. 2026 payable June 30th 2026,

This represents an increase of 4% of the previous quarterly dividend rate of 27 cents.

Tom Florsheim Jr.: Thanks, Judy, and good morning, everyone. Our overall company sales were flat for the quarter, with wholesale segment sales down 1%. Given the uncertainty in the economic environment, we believe we are holding our position within our competitive market segments, with Florsheim continuing its strong performance streak. Our legacy business, which includes Florsheim, Nunn Bush, and Stacy Adams, was flat for the quarter. The Florsheim division was up 5%, driven by strong sales in the traditional dress category. As discussed in previous conference calls, while the overall dress footwear market has been trending downward over time, Florsheim continues to gain market share. Retailers see the brand as the go-to choice to meet consumer demand in this category. From a design perspective, we continue to invest in developing fresh shoe concepts and believe we can leverage Florsheim's heritage to expand our penetration in hybrid and casual footwear.

I would now like to turn the call over to Tom foreign, Junior, chairman and CEO.

Thanks, Judy, and good morning, everyone.

Our overall company sales were flat for the quarter.

With wholesale segment sales down 1%.

Given the uncertainty in the economic environment, we believe we are holding our position within our competitive market. Segments with 4 shine continuing, its strong performance Street,

Our Legacy business, which includes floor shamed, on Bush, Stacy, and Stacy Adams was flat for the quarter.

The floor division was up 5% driven by strong sales in the traditional dress category.

As discussed in previous conference calls. While the overall dress Footwear Market has been trending downward over time, Floor Shine continues to gain market, share.

Retailers. See the brand as the go-to choice to meet consumer demand in this category?

Tom Florsheim Jr.: We are making steady inroads in both categories and feel confident about our long-term growth prospects. Nunn Bush was flat for the quarter. We believe the brand is well-positioned as a leading value option in comfort casual and comfort dress footwear in an economy where many consumers are feeling stretched to cover day-to-day expenses. In the current market, the biggest competition comes from private label footwear that retailers import to pursue higher margins. Nunn Bush provides a compelling alternative with a trusted brand name, proven comfort technology, competitive pricing, and in-stock inventory that retail partners can use to match demand. Our Stacy Adams division was down 9% for the quarter. At retail, Stacy Adams sell-throughs have been solid. However, retailers are not investing in fashion dress shoes as they have in the past. This is especially true in department stores and family footwear channels.

From a design perspective, we continue to invest in developing fresh shoot Concepts and believe we can leverage 4 times Heritage to expand our penetration in hybrid and Casual Footwear.

We are making steady inroads in both categories and feel confident about our long-term growth prospects.

None Bush was flat for the quarter. We believe the brand is well positioned as a leading value option.

In Comfort, casual, and comfort dress, Footwear in an economy, where many consumers are feeling stretched to cover day-to-day expenses.

In the current market, the biggest competition comes from private label footwear that retailers import to pursue higher margins.

None Bush provides a compelling alternative with a trusted brand name, proven Comfort, technology, competitive, pricing, and in-stock, inventory, that Retail Partners can use to match demand

Our Stacy Adams division was down 9% for the quarter.

At retail, Stacy Adams sell through have been South however, retailers are not investing in fashion dress shoes as they have in the past.

Tom Florsheim Jr.: We are focused on diversifying the Stacy Adams product assortment to be less centered on dress shoes, with more casual offerings that align with today's lifestyle. Our Bogs brand was down 11% for the quarter. We anticipate a strong second half of the year as cold weather and precipitation last winter in the Midwest and East Coast helped clear excess inventory of weather boots. We are also encouraged by the launch of new, less insulated spring footwear, which is selling well and paving the way for more year-round Bogs business. This spring, Bogs implemented a marketing reset focused on storytelling, with an emphasis on user authenticity and real-world use of the brand's products. The campaign highlights what differentiates Bogs from a performance standpoint, and is being featured across multiple channels, including social media as well as streaming on YouTube.

This is especially true in department stores and family footwork channels.

Heard on dress shoes with more casual offerings. That align with today's lifestyle.

Our bogs brand was down 11% for the quarter. We anticipate a strong second, half of the year is cold weather and precipitation. Last winter in the Midwest and East Coast. Help clear excess, inventory of weather boots. We are also encouraged by the launch of new less, insulated spring Footwear, which is selling. Well, and Paving the way for more year round box business.

Tom Florsheim Jr.: Net sales in our retail segment were up 2% for the quarter, led by strong Florsheim e-commerce sales. In Q1 2025, we were still working through excess inventory across various areas of our branded portfolio. This year, we had less closeout inventory to sell through our websites, resulting in higher web margins as we sold more full-price footwear. We continue to invest in our e-commerce platform to better showcase our brands and drive long-term growth in direct-to-consumer sales. Florsheim Australia's net sales were up 10% for the quarter, but flat local currency. Consumers in these markets, including Australia, New Zealand, South Africa, and other Pacific Rim countries, are facing many of the same pressures as in North America. As a result, sales remain somewhat soft. We are focused on keeping expenses in line as we work to return to our growth trajectory.

This spring bogs implemented, a marketing reset focused on storytelling with an emphasis on user authenticity and real world. Use of the Brand's products, the campaign highlights. What differentiates bogs from a performance standpoint, it is being featured across multiple channels including social media as well as streaming on YouTube.

Net sales in our retail segment. We're up 2% for the quarter led by Strong Porsche e-commerce sales.

In the first quarter of 2025, we are still working through excess inventory across various areas of our branded portfolio.

This year, we had less closed out, inventory to sell through our websites, resulting in higher web margins as we sold more full price Footwear, we continue to invest in our e-commerce platform to better showcase Our Brands and drive long-term growth and direct to Consumer sales.

4, shim Australia's, net sales were up, 10% for the quarter, but flat local currency consumers in these markets, including Australia, New Zealand, South Africa, and other Pacific Rim countries are facing many of the same pressures as, in North America.

As a result, sales remained somewhat soft.

Tom Florsheim Jr.: Our overall gross margins were 44.2% for the quarter. Our Q1 margins are down approximately 50 basis points compared to the same period in 2025. With all the remaining uncertainty surrounding tariffs, it is hard to know how the margin picture will play out for the remainder of the year. Our overall inventory as of 31 March 2026 was $50.5 million, compared to $65.9 million at 31 December 2025. Our inventories are also down about $18 million compared to 31 March of last year. The decrease in inventory was due to timing, and our inventory is expected to get back into the $60 to 70 million range as we move through the year. This concludes our formal remarks.

We are focused on keeping expenses in line as we work to return to our growth trajectory.

Our overall growth, margins were 44.2% for the quarter.

Our first quarter, margins are down approximately 50 basis points compared to the same period in 2025.

With all the remaining uncertainty surrounding tariffs. It is hard to know how the margin picture will play out for the remaining of the remainder of the year.

Our overall inventory is a March 31st. 2026 was 50.5 million.

Compared to 65.9 million at December, 31st 2025 our inventories are also down about 18 million compared to March 31st of last year.

The decrease in inventory was due to timing and our inventory is expected to get back into the 60 to 70 million dollar range as we move through the year,

Tom Florsheim Jr.: Thank you for your interest in Weyco Group, and I'd now like to open the call to any questions.

This concludes our formal remarks.

Operator: Thank you. At this time, again, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again, and please stand by while we compile Q&A questions. Okay. At this time, we have David Wright of Henry Investment Trust. Your line is now open.

Thank you for your interest in waking Waco group. And I'd now like to open the call to any questions.

Thank you. And

at this time again, we will conduct the question and answer session. As a reminder, to ask a question, you will need to spread press star 1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please, press star 1 1 again and please stand by while we compare Pio Q&A questions.

At this time, we have David Wright of Henry Investment Trust.

David Wright: Good morning, everyone.

Your line is now open.

Tom Florsheim Jr.: Good morning.

Good morning, everyone.

David Wright: Commend you for a surprisingly good quarter given the environment. Thanks for raising the dividend. Also commend you for some really outstanding clear disclosure about your tariff picture. That's appreciated. Judy, a question. If you receive tariff refunds, what is the tax treatment?

Good morning.

Um, uh, commend you for a, a surprisingly good quarter, given the environment.

and um, um, thanks for raising the dividend and, um,

Also commend you for some really outstanding. Um clear disclosure about your tariff picture. Um

That's appreciated. Um,

Judy Anderson: We will be taxed on them.

Judy, a question: if you received tariff refunds, what is the tax treatment?

Tom Florsheim Jr.: Yes.

David Wright: Right.

Judy Anderson: As a tax, yeah.

David Wright: You had a deduction when you paid the tariff, and you have income when you get a refund.

Judy Anderson: That is correct. It was part of our cost of sales last year. We'll get a refund this year. It'll be a credit in our cost of sales and have to pay taxes on it.

So you you had a deduction when you, you had a deduction when you paid the Tariff and you have income when you get a refund.

it'll be a a credit in our cost of sales and um,

David Wright: Okay. Can you give any sense of what kind of the annualized run rate tariff burden is at the current 10%?

Have to pay taxes on it.

Okay. Um, Can can you give any sense of what kind of the annualized Run rate tariff burden is at the current 10%?

Tom Florsheim Jr.: Well, it's a little at 10%. If it was 10% all year, it would be about an extra $10 million over and above what we normally pay in tariffs. Those normal tariffs are baked in, but the tariffs in the shoe industry are actually high compared to a lot of other categories. The problem, David, is the administration has said that their intent is to get these tariffs back up to where they were under IEEPA. It makes planning very difficult, but we're assuming that that will happen. They're doing these 301 investigations, which they say are going to be complete by the end of July.

Tom Florsheim Jr.: Thank you for your interest in Weyco Group, and I'd now like to open the call to any questions.

Well.

it's, it's a little I

Um, over and above what? We normally pay in tariffs and those normal tariffs are baked in. But the tariffs in the shoe industry are actually regular our our high compared to a lot of other categories.

the problem David is the Administration has said,

that their intent is to get these tariffs back up to where they were under iipa and so,

It makes planning very difficult. Uh, but we're

David Wright: Good morning, everyone.

Tom Florsheim Jr.: Good morning.

Tom Florsheim Jr.: Then we're gonna find out what the incremental tariff rate will be under the Section 301 for the different countries where we import shoes. It's not that clear a picture, which is why we didn't really wanna commit to where margins are gonna be this year.

Assuming that that will happen. So, they're doing these 301 investigations, which they say are going to be complete by the end of July.

And then we're going to find out what the incremental tariff rate will be under the 301 section.

For the different countries where we import shoes?

Tom Florsheim Jr.: Happy to answer any additional questions about that because we are well-versed. We have been studying it.

And so it's it's not that clear a picture which is why we didn't really want to commit to where margins are going to be this year.

David Wright: Well, just kind of big picture, I mean, I assume you communicate somehow through a trade group or directly with, I guess, the Department of Commerce. Does anybody in the administration really think that shoe manufacturing is coming back to America?

So, um, happy to answer any additional questions about that because we are well-versed, we have been studying it.

Judy Anderson: We will be taxed on them.

Tom Florsheim Jr.: Yes.

David Wright: Right.

Judy Anderson: As a tax, yeah.

David Wright: You had a deduction when you paid the tariff, and you have income when you get a refund.

Well well, just kind of big picture. I mean, I assume you are communicate somehow through a trade group or directly with I guess the Commerce Department.

Judy Anderson: That is correct. It was part of our cost of sales last year. We'll get a refund this year. It'll be a credit in our cost of sales and have to pay taxes on it.

Tom Florsheim Jr.: We actually do have a very good trade group called the FDRA. They've been holding regular conference calls about this, and they are trying to talk to the administration about exactly what you just asked about. You know, I mean, it's less than 1%, are made in the US. We are really hoping that the Section 301 tariffs are gonna be more targeted than these IEEPA tariffs or the tariffs that they have in place right now, which are under Section 122, which are just 10% across the board, all countries on all products. It would make sense to have this more targeted, in our opinion, and we're trying to get that message across to the administration. We don't know.

Um, does anybody in the administration really think that shoe manufacturing is coming back to America?

We, we actually do have a very good trade group called The ftra.

David Wright: Okay. Can you give any sense of what kind of the annualized run rate tariff burden is at the current 10%?

And um, they've been holding regular conference calls about this, and they are trying to talk to the administration.

About exactly what you just asked about, you know. I think they are aware that no shoes. I mean, it's less than 1% are made in the US.

And we are really hoping that the 301 tariffs are going to be more targeted than these iea tariffs or the tariffs that they have in place right now which are under Section 1222, which are just 10% across the board. All countries on all products.

And so um, it would make sense to have this more targeted in our opinion and we're trying to get that message across to the administration. Um,

Tom Florsheim Jr.: You know, we don't know if these 301 tariffs would be done in a more strategic way.

but we we don't know, you know, we don't know if if if

if um,

David Wright: Okay. I just have a couple more. It seems like your price increases were pretty well absorbed because, you know, that's what the results suggest. Would that be your observation as well?

these 301 tariffs would be done in a more strategic way.

Okay, I just have a couple more. Um,

It seems like your price increases were pretty well absorbed because, you know, that's what the results suggest. Um, would that be your observation as well?

Tom Florsheim Jr.: Well, we raised our prices 10% 1 July, so it doesn't really cover what we were paying in IEEPA tariffs. It does cover, you know, right now the extra tariff is 10%, so that is looking better. You know, our margins have come back somewhat. We're still below where we've been the last couple of years before the tariffs. We've really been watching the expense side of the business. The other thing that's going on, David, it's John, is our inventory is pretty clean. You know, last year, we had some heavy closeout inventory in a couple of brands, and that's been, you know, that's been cleaned up, and that helps. It helps from an overall wholesale market perspective.

Well, we we raised our prices 10%.

July 1st.

So,

Tom Florsheim Jr.: Happy to answer any additional questions about that because we are well-versed. We have been studying it.

it doesn't really cover what we were paying in here. I said, does cover, you know, right now, the extra tariff is 10%, so that is looking looking better. Um,

And so you know our margins have come back somewhat, we're still below where we've been the last couple years before the tariffs. Um, and we've really been watching the expense side of the business.

The other thing, the other thing that's going on here, this is John is our inventory is pretty clean. So, you know, you're, you know, last year we had some some heavy

clothes on inventory in a couple of Brands and he has been

John Florsheim: Yeah, that's a very good point. That definitely plays into this, and it impacts in a positive way, both our wholesale margins and our retail margins. We also have cleaner inventories in Australia, which helps our margins there.

You know, that's been cleaned up and so that helps it helps from our overall wholesale Market perspective. Yeah. That's a very good point. That is, that definitely plays into this and it impacts in a positive way. Both our wholesale margins and our retail margins. And we also have cleaner inventories in Australia, which helps our margins there.

Tom Florsheim Jr.: Okay. Last one would be on the I mean, you took $1 million out of SG&A year over year. That's a lot. You highlighted lower employee costs. Was that staff reduction or less compensation? How was that accomplished?

Okay. And then last 1 would be on. Uh, I mean you took a million out of sgna year-over-year. That's that's that's a lot. Um you you highlighted lower employee costs, um was that?

Tom Florsheim Jr.: You know, we don't know if these 301 tariffs would be done in a more strategic way.

Judy Anderson: The lower employee cost was a combination. It was really lower employee benefit costs and it was a combination of a few different categories. For example, last year, we did not give out annual bonuses in Q1, and therefore we had less FICA expense. You know, it's just something as kind of mundane as that. There was a combination of a few things. Our health insurance costs were down. The FICA cost was down. It was a few things that added up in Q1.

Staff reduction or less. Um, compensation. How was how was that accomplished?

It was really, uh, lower, um, employee benefit costs, and um,

John Florsheim: Well, plus temporary, in the warehouse, our overall, costs are down just because we use less, fewer taps, I believe. Yeah.

um, in the warehouse or

all, um,

Judy Anderson: Correct.

David Wright: So, so-

John Florsheim: I was just gonna say, we have not reduced headcount here, though.

This was a useless fewer tabs I believe. Yeah, correct. So

David Wright: Your workforce flexes a little depending on your inventory level?

I was just going to say, we have not reduced headcount here, though.

John Florsheim: Depending upon our needs, especially in the, in the distribution center.

So you work force flexes a little depending on your inventory level.

John Florsheim: The other thing that's going on, David, it's John, is our inventory is pretty clean. You know, last year, we had some heavy closeout inventory in a couple of brands, and that's been, you know, that's been cleaned up, and that helps. It helps from an overall wholesale market perspective.

David Wright: Yeah

John Florsheim: We were able to operate more efficiently, this last quarter versus a year ago.

David Wright: Okay. Well, efficiency is a good word. You've just continued to deliver great results. Great job, and thanks for taking my questions.

Depending upon our needs, um, especially in the, in the Distribution Center. Uh, so we're, we were able to operate more efficiently. Um, this this last quarter versus a year ago.

Tom Florsheim Jr.: Yeah, that's a very good point. That definitely plays into this, and it impacts in a positive way, both our wholesale margins and our retail margins. We also have cleaner inventories in Australia, which helps our margins there.

John Florsheim: Thanks, David.

Well, e e efficiency is is a good word. Um, you could just continue to deliver great results and and uh uh um so great job and thanks for taking my questions.

Judy Anderson: Thank you.

John Florsheim: We appreciate your interest.

Thanks, David. We appreciate your interest.

Operator: Okay. Thank you. At this time, we're not showing any further questions. If anyone has a last question, please hit star one one on your telephone. Okay. This concludes the question and answer session. I would like now to turn it back to Judy Anderson for closing remarks.

David Wright: Okay. Last one would be on the I mean, you took $1 million out of SG&A year over year. That's a lot. You highlighted lower employee costs. Was that staff reduction or less compensation? How was that accomplished?

Okay, thank you. And at this time, we're not showing any further questions. Um, if anyone has a last question, please hit star 111 on your telephone.

Okay, this concludes the question and answer session, I would like now to turn it back to Judy Anderson for closing remarks.

Judy Anderson: Thank you. Just wanted to wish everybody a great day and a good rest of your week. We'll talk to you next quarter. Thank you.

Thank you. Um, just wanted to wish everybody a great day and a good rest of your week, and we'll talk to you next quarter.

Operator: Thank you. That concludes our program. You may now disconnect, and thank you for participating in today's conference.

Thank you.

Thank you, that concludes uh our program. Uh you may now disconnect and thank you for participating in today's conference.