John Wittkowske - Chief Financial Officer Tom Florsheim - Chairman and Chief Executive Officer John Florsheim - President and Chief Operating Officer.

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Good day, ladies and gentlemen, and welcome to the First Quarter 2015 Weyco Group Earnings Conference Call. My name is Tony and I'll be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session.

[Operator Instructions] I would now like to turn the conference over to your host for today Mr. John Wittkowske, Chief Financial Officer. Please proceed..

Thank you. Good morning and welcome to Weyco Groups conference call to discuss our first quarter 2015 earnings. On this call today are Tom Florsheim Jr., our Chairman and CEO and John Florsheim, our President and COO. Before we begin to discuss the results for the quarter, I’ll read a brief disclaimer.

During the course of 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 such statements are just predictions and that actual events or results may differ materially.

We refer you to Weyco Group’s most recent Form 10-K that is filed with the Securities and Exchange Commission. The Form 10-K identifies important factors and risks that could cause the company’s actual results to differ materially from our projections. Additionally, some comparisons may refer to non-GAAP measures.

Our SEC filings may contain additional information about these non-GAAP measures and why we use them. We achieved record first quarter net sales of $78.1 million in 2015, which represents a 4% increase over the last year’s net sales of $74.9 million. Operating earnings increased 19% to $5.8 million, up from $4.9 million.

Net earnings attributable to Weyco Group rose 13% to $3.6 million, up from $3.2 million. Diluted earnings per share were $0.33 in the first quarter compared with $0.29 in 2014. In the North American wholesale segment, net sales for the first quarter of 2015 were $61.1 million, up 8% as compared with $56.7 million in 2014.

Wholesale gross earnings as a percent of net sales were 31%, compared to 30.4% last year. Selling and administrative expenses for the wholesale segment were $14.2 million or 23% of net sales compared with $13.7 million or 24% of net sales in 2014.

Driven by higher sales volumes, wholesale operating earnings increased 35% to $4.8 million, up from $3.6 million. Net sales of our North American retail segment, which include our retail stores and U.S. Internet sales, were $4.9 million in the first quarter, down 5% as compared to $5.2 million in 2014. The Company’s U.S.

Internet sales increased 9% to $2.4 million, up from $2.2 million. Same-store sales, which include U.S. Internet sales were down 1% for the quarter. There were two fewer retail stores operating during the first quarter of 2015 than there were in last year's first quarter.

Retail operating earnings were $272,000 in the first quarter compared with $418,000 last year. This decrease was mainly due to lower net sales at the Company’s brick and mortar stores.

Our other operations, which include the wholesale and retail businesses of Florsheim Australia and Florsheim Europe, had net sales of $12 million in the first quarter, down 8% as compared with $13 million in 2014. This decrease resulted from the translation of local currency sales into U.S. dollars.

The majority of other net sales were generated by Florsheim Australia. In local currency, Florsheim Australia’s net sales were up 11% for the quarter. This increase was driven by an 11% increase in retail businesses and a 12% increase in the wholesale business. As the result of the weaker Australian dollar, when translated to U.S.

dollars, Florsheim Australia’s net sales were down 2% for the quarter. Florsheim Europe’s net sales were down 9% in local currency and 25% in U.S. dollars. The operating earnings of Florsheim Australia and Florsheim Europe were $703,000 in the first quarter, down 20% as compared with $884,000 in the same period last year.

This decrease was primarily due to lower operating earnings at Florsheim Europe. At March 31, 2015, our cash and marketable securities totaled $41.1 million and we had $6.6 million outstanding under our $60 million revolving line of credit.

During the first three months of 2015, we generated $1.6 million in cash from operations, received net proceeds of $1.4 million from the maturity of marketable securities, and drew down $1.2 million on our line. We use these proceeds to pay $4.1 million in dividends and to repurchase $2.4 million of our company’s stock.

We also spent $530,000 on capital expenditure. We expect capital expenditures to be approximately $2 million to $3 million in 2015. On May 5, 2015, our Board of Directors declared a cash dividend of $0.20 per share to all shareholders of record on May 29, 2015, payable on June 30.

This represents an increase of 5% above the previous quarterly dividend rate of $0.19 per share. I would now like to turn the call over Tom Florsheim Jr., our Chairman and CEO..

Thanks John and good morning. As previously mentioned, our wholesale business in North America grew by 8% during the first quarter. Given the uneven nature of retail at the beginning of this year, we feel good about our performance.

Looking forward we believe we are well-positioned with all of our major brands and have good momentum as we complete the fall 2015 booking season. Our BOGS business once again had a largest percent increase with a gain of 20% in the first quarter.

The brand benefited from late winter weather that impacted much of the country through March resulted in strong sell-throughs of cold weather boots. BOGS also had increased shipments and categories beyond its classic insulated boots. Non-insulated rain boots were up substantially in the first quarter.

We also expanded our casual products including shipments of all weather footwear and the introduction of BOGS sandals for both men and women. While it’s very early in the spring season, the initial read on BOGS sandal sales in the e-commerce trade channel has been positive.

We remain very enthused about the potential of BOGS and are anticipating further success broadening the reach of the brand into other footwear segments this fall and beyond. Our Stacy Adams sales increased 15% this past quarter continuing the strong trend the brand exhibited in the back half of last year.

Sales of Stacy Adams were up across all major trade channels. From a product perspective, shipments of the modern dress, shoe category were up significantly. The brand also increased its casual shoe sales this past quarter which is inline with Stacy Adams’ long-term objective of extending its reach and to the relaxed lifestyle segment.

License product sales were up over 20% in the first quarter. In January, the company announced the new licensing agreement with Silversilk Group a leader in fashion sportswear for men to design in market Stacy Adams sportswear. The agreement with Silversilk replaces an existing agreement with prior sportswear licensee that we chose not to renew.

We believe that there is significant upside in the sportswear market and the partnership with Silversilk will also complement our efforts to our casual footwear. Nunn Bush had a good quarter with a 5% sales increase. The sales gain was driven primarily by an increase in the department store trade channel.

New initiatives such as Nunn Bush Work as well as Nunn Bush Kids have helped boost the business, and we are expanding both concepts with new styles for fall 2015. The brand also continues to see solid sell-throughs on its existing core comfort product in the dress casual and casual segments.

Florsheim business was down with a 3% sales loss for the first quarter. Florsheim remains steady, and we believe we are on a right path from a product perspective to get back on our growth track in the U.S. market. Retail performance remains positive and we are enthused about the new collection we are delivering for fall.

The challenge with Florsheim is building an appropriate distribution that can sell the brand’s price points which are the opening price points in the premium market. We are focused on growing the Florsheim business in better departments, specialty stores, as well as expanding our e-commerce initiatives.

As John mentioned North American wholesale margins were up slightly versus a year ago. Given margin pressures from the currency translation associated with our Canadian division, we are pleased with this performance. From a sourcing standpoint, we are seeing prices that are much more stable than our recent history. The strength of the U.S.

dollar is helping to offset increased labor, and in general our overseas factories are holding their prices. This is a welcome to [indiscernible]. Our North America retail segment was down 1% in terms of same store sales. Our e-commerce business now represents approximately 50% of our direct to consumer sales in the U.S.

E-commerce remains a strong growth area with a 9% increase in the first quarter. Sales at our brick and mortar stores were down 9%. The decline in our traditional retail stores was exacerbated by the strong dollar as we saw a decrease in tourist traffic in key markets such as New York and Miami.

As stated in past conference calls, we are reducing the number of stores in the U.S. market. We are currently in the process of remodeling some key locations as well as looking for additional opportunities where we believe stores will enhance Florsheim’s profile from a marketing perspective.

In addition, we are investing in our e-commerce platform around the globe and enhancing our capacity to increase this important segment of the business. Overseas, we believe our retail model remains very viable.

While same-store sales were flat in Asia reflecting the subdued climate in Mainland China, Hong Kong, and Macau, our Australia same-store sales were up 5% and we’ve recently opened several promising new stores in that country. The Florsheim Australia wholesale business was also up 12%.

However, Florsheim Australia’s net sales were negatively impacted by the weakness of the Australian dollar. Despite the headwinds based on currency translation, we remain excited about our long-term growth prospects of Florsheim in other brands overseas. Overall, our second quarter is off to a solid start. Even though we had a strong March in U.S.

wholesale, some of our March orders got pushed to April due to delays caused by the waiver situation with the West Coast ports. I am very happy to report the flow of merchandise through the West Coast is almost back to normal. Our backlogs are up compared to last year and our product across brands continues to experience [indiscernible] retail.

That concludes our formal remarks. We appreciate your interest in Weyco Group and now we would like to open the call to any questions..

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[Operator Instructions] There are no questions in the queue at this moment..

Okay, then turn it back over to me. We appreciate everybody’s attendance on our call and we will talk to you next quarter. Thanks again. Have a great day..

Ladies and gentlemen that concludes today’s conference call. You may now disconnect and everyone have a great day..