Tom Florsheim, Jr. – Chairman and CEO John Florsheim – President, Chief Operating Officer and Assistant Secretary John Wittkowske – SVP, CFO and Secretary

Good day, ladies and gentlemen, and welcome to the first quarter Weyco Group earnings conference call. My name is Alisha and I will be your coordinator for today’s call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this call is being recorded for replay purposes. And I would now like to hand the call over to your host for today, Mr. John Wittkowske, Senior Vice President and Chief Financial Officer. You may proceed, sir.

Thank you. Good morning everyone and welcome to our Weyco Group’s conference call to discuss our first quarter 2013 earnings. On this call with me 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 will 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 event or results may differ materially. We refer you to Weyco Group’s most recent Form 10-K, as filed with the Securities and Exchange Commission. This 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. Our net sales for the first quarter of 2013 were $73.6 million, compared to $75.3 million in 2012. Operating earnings were $4.7 million for the first quarter versus $5.8 million in 2012. Net earnings attributable to Weyco Group were $3.2 million, that’s compared to $3.9 million. Diluted earnings per share were $0.30 per share this year versus $0.35 per share in 2012. Net earnings for the first quarter of 2012 included approximately $301,000, or $0.03 per diluted share of income resulting from an adjustment to reduce the estimated liability for future payments to be made as a result of the 2011 Bogs acquisition. No significant adjustment was made to the estimated liability in the first quarter of 2013. North American wholesale sales of footwear for the first quarter of 2013 were…

Thanks John and good morning. Our wholesale business in North America was down slightly as we encountered a sluggish retail environment during the first quarter. We believe consumer spending at apparel and footwear were soft in response to unseasonably cold weather across much of the US as well as economic factors such as increased gas prices and their assumption of the fall payroll tax. Nunn Bush, which does a significant amount of business with mid-tier department stores and shoe chains was impacted to the largest degree of our major brands with the decline of 11%. The decrease was mainly due to soft sales at department stores. While the overall Nunn Bush performance at retail continued to strong, some major change cut back on their storewide inventory levels reducing filling orders on core product. While this affected Nun Bush’s near term business we believe the brand has momentum going into the back half of the year with a larger number of new programs in the pipeline. New products slated for fall expands Nun Bush’s casual assortment and builds off the brand’s position in the market as a provider of comfort solutions for value conscious consumers. Our Stacy Adams sales increased 2% in the first quarter. Stacy Adams decrease in its department store business was offset by an increase in sales to shoe chains as well as independent retailers. We were pleased with the continued evolution of Stacy Adams from our niche high fashion brand to a leader in accessible mainstream fashion and footwear market. Florsheim ended the quarter with a 3% increase in sales. Success of new more casually oriented products helped to lift sales. Florsheim kids business which was launched for fall 2012 also continued to show well and we see the kids business as development opportunity for the brand.…

(Operator Instructions) Your first question comes from the line of Rebecca Simmons with Doctor Inc.

I just wanted to see if you could give a little more color, I know you mentioned that Bogs in the US was down a bit. I know a lot of retailers have been getting get hit by some weather shifts and just want to know if you gave a little more color there.

A little more color in terms of Bogs are just generally North American retail.

I am looking at Bogs in particular.

I think that with Bogs we had a bit of carryover effect. With this fog was again a very mild fog, we had two in a row now. And as the retailers moved into the first quarter, inventories in the U.S. were still fairly – they still had inventory well and that affected our first quarter business. We are trying to develop as I mentioned less seasonal component to Bogs, hence not insulated rainboots and those kids are very well but because of this carryover effect with the warm fall, we just did not see the new orders resulted in their shipments first quarter. But we do feel that we are making good progress with the brand. We are doing some what we think are interesting things with the product to make it less seasonal and we are looking forward to a good fall and also we have some – we have some things in the pipeline that we think are going to be a positive for the brand as we move into 2014.

And then with Canada, is that then within your expectation so far?

Canada has been very good. It was basically at or above what we expected. The following for that brand is very, very strong up there, and sometimes when you take over license business you can run into some unexpected things that may be difficult the first year and basically the transition from it being a license business toward the operating the business was seamless and we were able to grow the business the first year and the response from the retailers and from the consumers has been great. And we are seeing the business continue into this year in a way that we think is very positive. So that’s all good.

And then how are the order patterns as you move into the second quarter?

We don’t give guidance in terms of looking at our bookings, that’s something that we haven’t done over the years. But overall our business is pretty solid, a lot of our business throughout our company are core filing programs that we get from our major retail partners. And as Tom mentioned in the conference call we saw a bit of a slowdown on that in the first quarter as stores wanted to keep their overall storewide inventory in mind. So our shoes could be selling relatively well but if they are interested in keeping the store level inventories within a certain range, it sometimes can affect us and I think that’s what happened in the first quarter. In April we saw open up a little bit. So we kind of – it’s hard to predict that back half of the year and that’s why we don’t give specific guidance because a lot of it does depend on the general retail environment as well as how car shoes are selling.

Just to add a little bit more color to what John said, I think that we mentioned in the call but our shoes are selling well really across our brands at retail. And we look very carefully at our new shoe business and what our responses to the new lines that we are launching in the brand. And that’s been very positive in the new business. Our new shoe business as we move into fall is good. So while it was a little bit of a little warm quarter I think that – again we see in the conference call, we anticipate a very decent back half, I mean the trends are good especially in North America.

And then lastly looking at your margins, how – could you talk a little bit about how leather prices are looking or any other maybe costs that are impacting you?

You probably noticed our margins were decent for the first quarter. So we are happy about that, overall our margins were up and they were up in wholesale North America as well. I talked about a little bit leather prices in the last call and we are continuing to see pressure in that area. And hopefully that will level out. So we are running into some of that. We’ve been pushing our prices through our retail customers up a bit and plan to continue to do so. I think that we are in an environment particularly any shoe company that’s sourcing out of China where it’s inevitable that we are going to continue to see leather prices continue to move up a bit. And right now the other prices are factor, I think that it’s manageable. We are not seeing anything that’s really off the wall and difficult to manage. And so it’s kind of a progression of what we’ve seen over the last few years and our plan is to continue to – trying to push our prices up a bit and we do that slowly over time so that we don’t have any big price jumps. And we are also looking at alternative sourcing. I think that we are sourcing in India as well, China right now on a pretty big way. And the labor rates are more attractive in India. They have the same impact because leather is a worldwide market. And we are also – we are making some of our Rumi kid shoes in Vietnam and I just was over in Asia (inaudible) more shoes in Vietnam. So I think that, it makes sense right now to look at alternatives to China because of the increasing prices over there which we view – it’s something that’s just become a part of doing business in China. So we are looking at different options.

(Operator Instructions) There are no further questions in the queue at this time. I would now like to turn the call over to John Wittkowske for closing remarks.

Just want to again thank everybody for joining us and we look forward to talking after the second quarter. Have a good day.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a great day.