Earnings call transcript: Weyco Group reports flat earnings in Q4 2024

Weyco Group Inc. (WEYS) reported its financial results for the fourth quarter of 2024, showing stable earnings despite a slight decline in net sales. The company announced net earnings of $30.3 million, or $3.16 per diluted share, for the full year, remaining nearly unchanged from the previous year. The stock saw a minor decrease of 1.04% following the announcement, closing at $32.75. According to InvestingPro analysis, the company maintains a "GREAT" financial health score of 3.18, trading below its Fair Value. With a P/E ratio of 10.68 and strong fundamentals, Weyco Group appears positioned for stable performance.

Key Takeaways

• Full-year net sales decreased by 9% to $290 million.
• Q4 net sales remained flat at $80.5 million.
• Gross earnings margin improved to 45.3% from 44.9% last year.
• The company is focusing on product innovation and expanding retail presence.
• Economic challenges and shifting consumer preferences affected performance.

Company Performance

Weyco Group’s performance in 2024 reflected the challenging economic environment, with full-year net sales dropping to $290 million from $318 million in 2023. Despite this decline, the company’s net earnings remained stable, indicating effective cost management and operational efficiencies. The dress footwear market faced significant hurdles, but Weyco’s focus on hybrid and casual styles showed promise in adapting to changing consumer preferences.

Financial Highlights

• Full-year net sales: $290 million (down 9% from 2023)
• Q4 net sales: $80.5 million (essentially flat compared to Q4 2023)
• Net earnings: $30.3 million (nearly flat from $30.2 million in 2023)
• Gross earnings margin: 45.3% of net sales (up from 44.9% in 2023)

Outlook & Guidance

Weyco Group is projecting capital expenditures of $1-3 million for 2025. The company is negotiating with Chinese suppliers to mitigate the impact of tariffs, which may lead to price increases. With an emphasis on product innovation and expanding its retail footprint, Weyco aims to strengthen its market position despite economic uncertainties.

Executive Commentary

CEO Tom Florsheim, Jr. highlighted the cautious consumer environment, stating, "Consumers remain cautious amid ongoing economic uncertainty." He also emphasized the company’s strategic focus, saying, "We are navigating short-term pressures and evolving our portfolio of brands." Florsheim noted the challenge of sourcing outside China, remarking, "It’s almost impossible for us to replace [Chinese manufacturers]."

Risks and Challenges

• Economic Uncertainty: Ongoing economic challenges may continue to impact consumer spending.
• Tariff Impacts: Increased tariffs could affect cost structures and pricing strategies.
• Supply Chain Dependencies: Heavy reliance on Chinese manufacturers presents potential risks.
• Market Shifts: Changing consumer preferences towards casual and hybrid styles necessitate adaptation.
• Weather Conditions: Mild winter weather affected sales of certain product lines like BOGS.

Weyco Group’s strategic initiatives and focus on innovation are central to its efforts to navigate the current economic landscape and evolving market demands.

Full transcript - Weyco Group Inc (WEYS) Q4 2024:

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: you

Conference Operator: for standing by, and welcome to the Weyco Group Fourth Quarter and Full Year twenty twenty four Earnings Conference 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. As a reminder, today’s program is being recorded. And now I’d like to introduce your host for today’s program, Judy Anderson, Chief Financial Officer.

Please go ahead.

Judy Anderson, Chief Financial Officer, Weyco Group: Thank you. Good morning, and welcome to Weyco Group’s conference call to discuss fourth quarter and full year twenty twenty four results. On this 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 and year, 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. These risk factors are incorporated herein by reference. Overall net sales for the fourth quarter of twenty twenty four were $80,500,000 compared with $80,600,000 in the fourth quarter of twenty twenty three. Consolidated gross earnings were 47.9% of net sales for the quarter compared to 50.3% of net sales in last year’s fourth quarter.

Quarterly operating earnings were flat at $11,500,000 in both the fourth quarters of twenty twenty four and 2023. Net earnings were $10,000,000 or $1.04 per diluted share for the quarter versus $8,500,000 or $0.9 per diluted share in the fourth quarter of twenty twenty three. In the North American Wholesale segment, net sales for the quarter were $60,400,000 up 1% compared to $59,600,000 last year. Higher sales of the Florsheim and Nunn Bush brands were mostly offset by lower sales of Boggs and Stacy Adams. Wholesale gross earnings were 42.4% of net sales compared to 44.9% of net sales in last year’s fourth quarter.

Wholesale selling and administrative expenses totaled $16,700,000 or 28% of net sales for the quarter compared to $18,900,000 or 32% of net sales last year. The decrease was mainly due to lower advertising and employee costs. Wholesale operating earnings increased 14% to $8,900,000 for the quarter from $7,900,000 in 2023 due to higher sales and lower expenses. Net sales in our North American Retail segment were $14,100,000 for the quarter, up 1% over $13,900,000 in 2023. The slight increase was due to higher direct to consumer sales of Bogs and FloorShine Footwear.

Retail gross earnings as a percent of net sales were 6565.8% in the fourth quarters of twenty twenty four and 2023, respectively. Retail operating earnings totaled $2,500,000 for the quarter, down 28% from $3,500,000 last year. The decrease was due to higher retail selling and administrative expenses, primarily web advertising and freight. Our other operations historically included our retail and wholesale businesses in Australia, South Africa and Asia Pacific, collectively referred to as Florsheim Australia. We ceased operations in the Asia Pacific region in 2023 and completed the wind down of that business.

Accordingly, fourth quarter twenty twenty four results of the other category only reflect the operations of Australia and South Africa. Net sales of Florsheim Australia were $6,000,000 down 15% from 7,200,000 in the fourth quarter of twenty twenty three. The decrease was mostly due to closing our Asia operations. Sales in Australia were down 3% for the quarter due to the impact of fewer retail stores operating compared to the same period last year. Australia same store sales were up 11% for the quarter.

Florsheim Australia’s gross earnings were 62.5% of net sales for the quarter compared to 65.4% of net sales in the fourth quarter of twenty twenty three. Its quarterly operating earnings totaled $100,000 for the quarter compared to $200,000 last year. Interest income totaled $900,000 compared to $500,000 in last year’s fourth quarter. This year included interest earned on higher cash balances in The U. S.

And Canada. The provision for income taxes decreased $700,000 compared to last year’s fourth quarter due to a lower effective tax rate this year. I will now discuss the full year 2024 results. Consolidated net sales for the full year were $290,000,000 down 9% compared to sales of $318,000,000 in 2023. Consolidated gross earnings increased to 45.3% of net sales in 2024, up from 44.9% of net sales last year, due mainly to higher gross margins in our North American wholesale segment.

Full year 2024 operating earnings were $36,600,000 down 11% compared to $41,000,000 in 2023. Net earnings were a record $30,300,000 or $3.16 per diluted share in 2024 compared to $30,200,000 or $3.17 per diluted share in 2023. North American wholesale net sales were $228,000,000 in 2024, down 9% compared to $250,000,000 in 2023. The decrease was primarily due to a 27% decline in BOG sales, but also due to lower sales of the Stacy Adams and Nunbrushed brands this year. Florsheim net sales were up 2% for the year.

Wholesale gross earnings as a percent of net sales were 40.2 in 2024 and thirty nine point seven percent in 2023. Gross margins improved because of lower inventory costs, primarily inbound freight. Wholesale selling and administrative expenses totaled $60,100,000 in 2024 compared to $66,000,000 in 2023. The decrease in 2024 was primarily due to lower employee costs, mainly commission based compensation. Also, advertising costs were down due to the reallocation of certain expenditures historically charged to our wholesale segments that primarily benefit our websites.

As a percent of net sales, wholesale selling and administrative expenses were flat at 26% in both 2024 and 2023. Wholesale operating earnings were $31,500,000 in 2024, down 5% from record operating earnings of $33,300,000 in 2023, mainly as a result of lower sales. In our North American Retail segment, net sales were a record $38,700,000 in 2024, up 2% over our previous record of $38,000,000 in 2023. The increase was primarily due to higher direct to consumer sales of Florsheim and BOGS Footwear. Retail gross earnings as a percent of net sales were flat at 65.9% in both 2024 and 2023.

Retail operating earnings totaled $5,300,000 in 2024, down 21 compared to $6,800,000 in 2023. The decrease was due to higher retail selling and administrative expenses this year, primarily web advertising and freight. As I discussed earlier, web advertising costs were up due to the reallocation of certain expenditures from our wholesale segment. Net sales at Florsheim Australia totaled $23,600,000 in 2024, down 20% from $29,600,000 in 2023. The decrease was primarily due to closing our Asia Pacific operations.

Sales in Australia were down 10% for the year due mainly to the impact of fewer retail stores operating compared to last year. Australia same store sales were up 2% for the year. Florsheim Australia’s gross earnings were 61% of net sales in 2024 versus 62.5% of net sales in 2023. Florsheim Australia generated operating losses totaling $200,000 in 2024 compared to operating earnings of $1,000,000 in 2023. The decrease was due to lower sales.

Interest income totaled $3,700,000 in 2024 compared to $1,100,000 in 2023. As described earlier, this year included interest earned on higher cash balances in The U. S. And Canada. The annual provision for income taxes decreased $1,200,000 compared to 2023 due to a lower effective tax rate this year.

In early twenty twenty five, the U. S. Government imposed additional tariffs on goods sourced from China. These tariffs will increase our cost of goods across all our brands. In an effort to mitigate the impact of the tariffs, we have already begun negotiating price reductions with our Chinese suppliers and are in the process of reviewing our wholesale pricing for fall.

At 12/31/2024, our cash and marketable securities totaled $77,300,000 and we had no debt outstanding on our $40,000,000 revolving line of credit. During 2024, we generated $16,200,000 of cash from operations. We used funds to pay $9,700,000 in dividends and to repurchase $600,000 of our common stock. We also had $1,400,000 of capital expenditures in 2024. We estimate that our 2025 annual capital expenditures will be between $1,000,000 and $3,000,000 On 01/02/2025, we paid our regular fourth quarter dividend of $0.26 per share as well as a one time special dividend of $2 per share for a total dividend payment of $21,600,000 On 03/04/2025, our Board of Directors declared a regular cash dividend of $0.26 per share to all shareholders of record on 03/14/2025, payable 03/31/2025.

I would now like to turn the call over to Tom Florsheim, Jr, our Chairman and CEO.

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Good morning, everyone. As Judy mentioned, our overall net sales were flat for the fourth quarter and down 9% for the year. While we saw solid sequential improvement in the final quarter, ’20 ’20 ’4 proved to be a challenging year for our wholesale business. Consumers remain cautious amid ongoing economic uncertainty limiting their discretionary spending on non essential goods. Despite these challenges, we are navigating short term pressures and evolving our portfolio of brands to position the company for future growth.

BOGS sales declined 17% in the fourth quarter. The brand faced headwinds due to mild winter weather, which reduced consumers urgency to purchase new boots. With fewer cold and snowy days, pre holiday demand for insulated and waterproof footwear was softer than anticipated. However, winter weather did eventually arrive across most of the country in January and February and retailers are now selling through their inventory. With leaner stock levels, our retail partners are in a much better position to bring in fresh assortments and we are starting to see renewed interest in the category for fall twenty twenty five.

As discussed in previous calls, we believe the BOGS new seamless construction, which is lighter and more durable than traditional vulcanized product is a key differentiator in the insulated boot segment. We are also excited about our new offerings in non insulated footwear such as the BOGS BOGA, which launches in March. The BOGA is a versatile lightweight clog featuring superior comfort and an outsole that provides better traction and durability than other outdoor clogs. The last two years have been challenging for BOGS and we are focused on re energizing the brand through product innovation and expanding its retail presence in the spring summer selling season. Our combined legacy business grew 8% in the fourth quarter with Florsheim leading the way with a 22% increase, Nunn Bush rising 4% and Stacy Adams declining 8%.

The dress continues to face challenges as retailers prioritize other segments. However, Florsheim has bucked this trend solidifying its market position by gaining share in refined dress footwear while expanding its presence in hybrid and casual styles. Stacy Adams had a difficult quarter reflecting broader challenges in the dress footwear market. The brand remains a leader in contemporary dress footwear and continues to perform well in retail accounts that emphasize dress shoes. However, future growth depends on the brand diversifying its product assortment to capture demand for hybrid and refined casual styles.

While this transition takes time, early successes in the hybrid category are encouraging. Nunn Bush had a solid quarter growing 4%. With a strong value proposition and innovative comfort technology, Nunn Bush has evolved beyond its dress shoe roots and has experienced retail success in the casual, hybrid and soft toe work categories. This spring, Nunn Bush is launching a collaboration with Milwaukee Chef and influencer, Adam Pollock. Pollock, who has appeared on culinary shows such as Hal’s Kitchen and Beat Bobby Flay, worked with Dunbush designers to create an inspired collection of slip resistant and water resistant shoes designed for a variety of work environments.

Over the last few years, Nunn Bush has built a meaningful presence in the work shoe category and we believe the Nunn Bush and Anna Paul collaboration will help further expand sales in this important area of business. In our retail segment, sales were up 1% for the quarter and 2% for the year. We continue to invest in our direct to consumer business viewing our online stores as billboards for our brands and our e commerce platform is a key driver of profitable growth. Florsheim Australia’s net sales declined 15% for the quarter and twenty percent for the year. This business includes the Australia and New Zealand markets as well as Pacific Rim countries in South Africa.

The decline in 2024 was largely due to the closure of our Hong Kong office and retail stores as the division was not profitable. We are now managing our Asia wholesale customers through our Melbourne office. While 2024 was a challenging year for Florsheim Australia, we are pleased to report an increase in same store retail sales in Australia. Our top priority for Florsheim Australia in 2025 is growth of our wholesale business. For the year, our overall gross margins were 45.3% in 2024, up from 44.9% in 2023.

We are happy with our margins and as Judy mentioned, have been negotiating with our suppliers in China to mitigate the effects of tariffs and will likely need to raise our prices in the near future to account for tariff related cost increases. That concludes our formal remarks. Thank you for your interest in Weyco Group and I’d now like to open the call to your questions.

Conference Operator: And our first question comes from the line of David Wright from Henry Investment Trust. Your question please.

David Wright, Investor, Henry Investment Trust: Yes. Well, hello. Good morning, everyone.

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Good morning.

David Wright, Investor, Henry Investment Trust: I want to thank you very much, Tom, for the extensive commentary and Judy as well for what happened for the year and providing some context. And as always, I really appreciate you having these calls and taking the time to prepare for them and conduct them. Can somebody walk me through kind of the mechanics of tariff for Waco? You have an order coming your way and like what happens, what are the mechanics that gets the money from wherever it comes from to wherever it goes?

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Sure. The mechanics are basically and you’re not talking about just these additional tariffs, you’re talking about tariffs in general, correct?

David Wright, Investor, Henry Investment Trust: Well, yes, for sure. I mean, it would apply to the additional ones. I’m just trying to visualize the flow of the cash. Okay.

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Yes, essentially, we have to put up a bond that’s equal to the amount of tariffs that we pay on average in a monthly period. And so when the goods are cleared and we have we brokered the goods ourselves and we clear them, then we pay customs for whatever tariffs are on goods for the U. S. Government. So if the tariff is 26%, which it is, has just gone from 26% to 36% in total, then if you take a shoe that’s roughly $20 first cost, when that shoe is cleared, we have to pay 36% of the $20 which is a little more than $7 And so it’s a real cost to us.

It’s paid by us here in The U. S. Or in cases where we’re importing goods into Australia or into Canada, then we pay their tariffs the same way essentially.

David Wright, Investor, Henry Investment Trust: So you posted a bond, you’re getting deliveries every week, let’s say, and then monthly or quarterly or whenever you’re writing a check to whom?

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: U. S. Customs.

Judy Anderson, Chief Financial Officer, Weyco Group: Yes.

David Wright, Investor, Henry Investment Trust: And so does customs have your invoices when the stuff comes in or are you just declaring what the value of the shipment is and calculating the tariff based on your declaration?

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Judy, do you know the specifics of that?

Judy Anderson, Chief Financial Officer, Weyco Group: It’s based on our declaration.

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Yes. Everything’s done paperless today. Correct. And all the documents are available if custom wants to look at them, but we’re CPATAP approved. We have a good relationship with customs and it’s done pretty seamlessly.

And we do receive containers every single day here.

David Wright, Investor, Henry Investment Trust: Right. So it’s not like somebody is it’s not like customs is some guy is sitting there with an adding machine going over your invoice. So all these lots of shoes, you’re just saying, hey, here’s a shipment of $100,000 and we owe you $36,000

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Exactly. And then they have the right to audit what we’re declaring at any point for something like five years.

David Wright, Investor, Henry Investment Trust: Very good. Well, I appreciate kind of the detail around that question. I hope you didn’t think it was unusual. And congratulations on another record year and thanks again for that special dividend.

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Well, thanks for your questions and we look forward to hearing from you on our next call. Okey doke.

Conference Operator: Thank you. Our next question comes from the line of John Tacher from Pinnacle. Your question please.

John Tacher, Investor, Pinnacle: Good morning everyone.

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Good morning John.

John Tacher, Investor, Pinnacle: Following up on David’s tariff question. Can you remind us, excuse me, what percentage of your cost of goods sold came from China last year roughly as well as other countries of origin like Vietnam, India and whatever other countries you might have sourced from?

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Sure. I was anticipating that question. And what I’m going to give you is actually what we’re looking at in the current year. Just give me one second to pull this up. Hang on one second.

I apologize, I’m having trouble pulling up the email. But John, I think the main question right now goes to probably China and about 75% of our purchases this year will be from China. Our second biggest country is India. We’ve been in India for about almost forty years. And with all of this on the horizon, we’ve been growing our sourcing in India.

But we’re also in Cambodia, which is smaller, it’s just probably a little under 5%, Vietnam, which is also under 5%, and then the Dominican Republic, which is about the same. And so it basically goes China Seventy Five Percent, India probably about 15 and then the rest divided between those other three countries.

John Tacher, Investor, Pinnacle: Okay. That’s helpful. And what are the tariffs today on those other countries, India, Cambodia, Vietnam and Dominican Republic at this point?

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Yes. Essentially, most of the product that we bring in is leather upper products. The duty the Harmonized duty code in The U. S. Is fairly complex.

And so you have different duties for like the Bob’s boots than you do for the leather shoes. But if you’re talking about just the leather shoes, which is the biggest part of what we import, the tariff has historically been 8.5%. And with what happened in 2018 with the tariffs that President Trump imposed at that time, they’re originally higher, but then they were reduced to 7.5 additional. And so that brought us to 16% on leather footwear. And President Biden kept those that 7.5% in place.

And so the 16% is what we were paying as of the end of twenty twenty four. And then President Trump put in the additional 10%, which happened maybe two or three weeks ago. And so that brought the total number up to 26%. And now with the additional 10% that went into effect on Tuesday, that brought the number to 36%. And if you look at other shoes, the base number is different.

For example, on PU upper shoes it’s 6%. On some of the BOGS product it’s 12%. On other BOGS product it’s really already very high at like 37.5%. And then the additional 10 plus 10 that’s been put on the last few weeks is 20% on top of those other numbers. If that’s clear, I’d be happy to elaborate if you’d like me to.

John Tacher, Investor, Pinnacle: Well, I guess on the mix of business, the type of shoe that you anticipate importing in this year from those non Chinese countries, what’s a reasonable tariff range do you think for 2025? Would it be 25% to 35% or 35% to 45% or just kind of a range for the current mix of business?

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: I would say that since well, let me back up and just say this. We carry typically about 3,000,000 pairs of inventory in here and we ship about 7,000,000 pairs a year. And when we saw this as potentially happening, we brought as much of our shipments forward as we could. And the way that these tariffs worked is anything that was in transit from China on the first date that the tariffs were declared, the first ten percent, those avoided the tariff. And so we had another approximately 1,000,000 pairs in transit that avoided any of these extra tariffs.

And so when you look at the blend, the remaining pairs that we’ll bring in this year, it will probably be in the I would guess in the low 30s. You’ve got some product that’s going to be higher because of bogs, but you’ve got some product that would be lower because it has PU uppers, which we do carry in, for example on the Nunn Bush brand. And so I would say the average would be in the low 30s.

John Tacher, Investor, Pinnacle: Okay. And that’s for non Chinese imports, correct?

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Oh, no. I’m sorry. I thought you were speaking of China. If you average everything in, Judy, do you have a calculator here because I think, hang on, if you just take 25% times 8.5%, seventy five % times 30% that would probably be pretty good guess.

Judy Anderson, Chief Financial Officer, Weyco Group: Say it again.

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: 25% times 8.5 and then 75% times 31% say and then add those. One second John, we’re doing a little math here. The thing that everybody has the thing that everybody has to realize is that on April 2, there are possibly going to be these reciprocal tariffs. And so it makes it very uncertain as far as the best way forward from the standpoint of sourcing because you don’t want to move a lot of product to say Vietnam right now because Vietnam is on the hit list. And so you could end up with even higher tiers out of Vietnam.

And so our what we’re doing is kind of waiting to see what happens in April. Judy, do you have that number?

Judy Anderson, Chief Financial Officer, Weyco Group: 25%.

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Twenty five %, John. So average of about 25%.

John Tacher, Investor, Pinnacle: Okay. All right. That’s very helpful. And in your commentary, you said you’re working with your offshore vendors regarding pricing. Are they receptive to eating part of the cost of the tariffs or kind of what’s that dynamic like in terms of?

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Yes. The short answer is yes, they are. We have won relationships with the factories that we do business with in China going back over a decade, some twenty years. And we’ve cultivated those relationships. We’re good we’re a very good partner to business with and we’ve grown our business with people that we feel make great shoes and offer good value.

And so when this happened, actually before this happened, we checked in with them and they are willing to help us out. I mean, there’s a limit to what they can do because the margins in manufacturing are not big. But we have made a lot of great shoes in China over the past, say twenty five years as long as we’ve been in China and it’s very hard to completely replace them. We are committed to having a fairly large percentage of our production remain in China at this point because with the peers that we need and with our quality standards, it’s almost impossible for us to replace them. And I think it’s important from a context standpoint because of the desire to bring more manufacturing back to The U.

S, we manufactured 100% of our shoes in The U. S. Until say the early 80s. We started sourcing elsewhere after that. And the companies that remained in The U.

S. Had to sell shoes for much more and several of those companies have gone out of business. And so for our industry,

John Tacher, Investor, Pinnacle: it was

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: necessary for shoe manufacturing to move overseas. And so I think it’s over 90% of the shoes that are sold in The U. S. Are made overseas and that’s because it takes a tremendous amount of unskilled labor to make footwear and you just literally cannot do it in The U. S.

The component infrastructure is gone here. There’s no easy way and probably it would be impossible to bring manufacturing back to The U. S.

John Tacher, Investor, Pinnacle: All right. Okay. Well, that’s good. I mean, so you’re pulling what levers you can to perhaps have your vendors share part of the cost?

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Absolutely. And as I said before, we have very good relationships. And so the factories over there are all working with us and trying to help. So that will mitigate some of this. You’re not going to mitigate it at all though.

So you’re going to have to raise prices. Yes, we’re going to have to raise prices.

John Tacher, Investor, Pinnacle: Okay. As will everyone else.

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Right, exactly.

John Tacher, Investor, Pinnacle: Yes. Okay, good. I appreciate the color. Thank you.

Tom Florsheim, Jr, Chairman and CEO, Weyco Group: Thanks, John.

Conference Operator: And this does conclude the question and answer session of today’s program. I’d like to hand the program back to Judy Anderson for any further remarks.

Judy Anderson, Chief Financial Officer, Weyco Group: Thank you everyone for tuning in today and we hope you have a great week. Thank you.

Conference Operator: Thank you ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.

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