1) Financial Performance Overview - Overall net sales for Q1 2026 were $68 million, flat compared to Q1 2025. - Consolidated gross earnings were 44.2% of net sales, down from 44.6% YoY. - Earnings from operations increased by 7% to $7.5 million from $7 million in the prior year. - Net earnings rose 10% to $6.1 million, up from $5.5 million. - Diluted earnings per share improved to $0.64, compared to $0.57 last year.

2) Segment Results - North American Wholesale Segment: Sales totaled $53.6 million, down 1% from $54.3 million. - Florsheim sales increased, but were offset by declines in Stacy Adams and BOGS brands. - Wholesale gross earnings as a percentage of net sales decreased to 38.7% from 39.4%. - Retail Segment: Sales increased by 2% to $8.8 million, driven by e-commerce growth. - Retail gross earnings as a percentage of net sales were 66.1%, down from 66.6%. - Florsheim Australia: Net sales rose 10% to $5.6 million, but were flat in local currency.

3) Operational Challenges and Tariff Impact - The company faced gross margin compression due to IEPA tariffs, which increased product costs by 19% to 50%. - The Supreme Court ruled the IEPA tariffs invalid, allowing for potential refunds, with claims submitted totaling $18.6 million. - A new 10% across-the-board tariff has been implemented, adding uncertainty to future margins.

4) Cost Management and Efficiency - Selling and administrative expenses decreased to $13.8 million (26% of net sales) from $14.8 million (27% of net sales) due to lower employee costs. - The company maintained a clean inventory, reducing it to $50.5 million from $65.9 million at the end of 2025, which positively impacted margins. - Capital expenditures for 2026 are estimated between $2 million and $3 million.

5) Guidance and Outlook - The company is focused on maintaining its market position amid economic uncertainty and evolving trade policies. - Future margin projections remain uncertain due to potential changes in tariffs and economic conditions. - The company plans to continue investing in e-commerce and product diversification to drive growth.

Bottom line: Weyco Group, Inc. demonstrated resilience in Q1 2026 with stable sales and improved earnings despite external pressures from tariffs and economic uncertainty. The company's strategic focus on e-commerce and cost management positions it well for future growth, although tariff-related challenges remain a significant concern for margins.