Good day, ladies and gentlemen, and welcome to the Second Quarter 2014 Weyco Group Conference Call. My name is Stephanie and I will be your coordinator for today. At this time, all participants are in listen-only mode. Later we will facilitate a question-and-answer session. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today Mr. John Wittkowske, Chief Financial Officer. Please proceed.

Thank you, Stephanie. Good morning, everyone and welcome to Weyco Group’s conference call to discuss our second quarter 2014 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 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 event or results might differ materially. We refer you to Weyco Group’s most recent Form 10-K, as 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. Net sales for the second quarter of 2014 were $62.9 million, compared with 2013 sales of $65 million. Operating earnings were $3.4 million for the second quarter versus $3.7 million for the second quarter of 2013. Net earnings attributable to Weyco Group and diluted earnings per share were flat at $2.2 million and $0.20 per share respectively for the second quarters of 2014 and 2013. In the North American wholesale segment, net sales for the second quarter of 2014 were $44.8 million compared with $47.5 million in 2013. Wholesale gross earnings were 30.5% in the second quarter of 2014 compared to 29.9% in 2013. Selling and administrative expenses for the wholesale segment were $11.9 million or 27% of net sales compared to $12 million or 26% of net sales in 2013. Operating earnings for the…

Thanks John and good morning everyone. Overall, as mentioned earlier in the call, our North American second quarter wholesale sales were off 6%. Sales decrease was driven in large part by lower shipments to two large mid-tier department stores and a decline in our business in the off price channel. The lower volume with department stores reflects initiatives on the part of both accounts to reduce their inventory models and accelerate product turn. Our sell-throughs at the consumer level remain strong with both accounts. And we believe that shipments will return to normal levels in the back half of the year. The decline in the off price segment was the result of lower levels of close out inventory which make up the majority of the sales to the straight channel. Our second quarter BOGS business was up 36% with sales up across all major trade channels. While second quarter is a low volume quarter for BOGS, we continue to be excited by the momentum the brand is showing in a number of categories outside its classic insulated boot business. We have seen a nice uptick in the BOGS hunting and work segment sales as well as with women’s and kids’ rain boot. We believe that these categories can play an important part in BOGS’ future growth store. In the third quarter, we are shipping an expanded assortment of non-insulated footwear across the men’s, women’s and kids BOGS collections and we are looking forward to seeing sales results at retail. Our orders for BOGS remains strong and we expect solid growth to continue in the second half of 2014. Stacy Adams sales were flat for the quarter with lower sales to department stores offset by higher sales to internet retailers. While Stacy Adams is focused on making in roads, with jeans,…

(Operator Instructions). Your first question comes from the line of Rebecca Simmons with DRZ, Inc. Please proceed.

Good morning, Rebecca.

Good morning. Thanks for taking my questions.

Sure.

I think I need to change my list of questions here. It seems like you anticipated a lot of them before I got chance to ask.

We write the conference call impact you don’t mind.

I could tell. So, maybe we could just talk a little bit more about I mean you talked about the inventory strategy changes that impacted your wholesale size. I know these are [two] large customers, I mean are you anticipating maybe any other large customers or any other areas that you think may kind of follow that trend?

John, are you going to answer that?

Yes, I'll answer that. I mean we don't really anticipate this being something that’s wide spread across the industry. In the case of these two retailers, I think its strategy specific to them. So no, I don’t -- you don’t really anticipate that. I mean I think in general, you saw because there is in the first quarter business was at the retail level was impacted by weather so inventory is backed up in general across a number of different retail segments. So you saw slowdown in terms of EDI reordering second quarter aside from the initiative of these two large retailers.

And I think, Rebecca, it’s Tom, just jumping in. The other thing that's important to keep in mind is we have visibility into how our sell-throughs at pretty much all the major retailers. And our sell-throughs as we mentioned in the conference calls have been very strong, we have product really across brands that is doing extremely well. And when these initiatives occur at some of the major retailers, they do it across the whole department. So even thought it affects us from the standpoint that they're bringing their inventories down, it really -- we get caught up in a situation where, it doesn't have anything to do with the performance of our product; it’s their general initiative to bring down their inventories, and they just do it across the board regardless of performance. But the reason that we feel good about the second half of the year is that we have a combination of carry forward product and new product that we delivered this spring that is performing extremely well.

Okay. So, feel pretty good overall about inventory levels going forward?

Yes, very good, in terms of our retailers inventories and our own inventory.

Okay. And pleasantly surprised to see gross margins kind of bounced back and up over last year. I mean given the difficult environment, a lot of your peers aren’t seeing that. Could you talk a little bit more about kind where the drivers for that were?

Sure. I mean I think one of the things that we have really focused on the last couple of years is our forecasting. And really the key -- one of the keys to maintaining or slightly increasing our gross margin has been that we have been able to reduce our obsolete inventory. And so when you sign last obsolete inventory to the discount channel that definitely helps your margins. The other thing that we have done over the last several years, I’ve talked about this a little bit in the calls is rather than have wait, go two years without a price increase and then try to pass along a $2 per peer price increase what we have done is work with our major retailers to solely move up, both our price to them but also the average retailers that they were selling our product for so their margins are protected. And I think that that approach has worked well because we are in a environment right where the growth of disposable income is not very good with middle market customers. So it’s hard to do anything drastic as far as retail prices. But by taking a slow methodical approach that seems to be working. And in general, we are seeing our product even in brands like Nunn Bush selling at higher average retails.

Okay. And I think you said in your prepared remarks you think that the back half of the year you can continue to kind of gain that benefit?

I think that yes, we are going to continue on the same path. We're continuing to be careful with our inventories, where we for example in BOGS have really brought up the inventory. A good part of that is in core product that will carry forward into 2015. And so if the winter doesn't develop, like we hope it does we will not be hurt, it will not effect our margins. And as far as the price increases, we're kind of continuing on the same path there. And we don't see from the supply side anything drastic happening, it just seems like things are settled down a bit in the raw materials market. I think overall business in China isn't really strong right now. So the factories are being a little more measured in how they push prices up. And so, I think that all those factors lead us to feel that we're going to be able to maintain or maybe even slightly increase our margins in the second half.

Okay. And then when I'm thinking a quarter to date trends are what are you seeing more recently. Have you already seen most of the impact from some of this inventory reworking, are things kind of back to where you want them to be or is that kind of still overhang?

No, I think that the retailers that needed to get their inventories and might have so done so and that’s why we feel that going into the second half is going to be busy than more as usual. And I think what John was saying is part of that while is absorbing excess inventory that guy left over because first quarter wasn’t very good. And so what we’re hearing from the major retailers is that they’re in pretty good shape and so we see much more normalized business in the second half of the year.

Okay. Well great, well congratulations on continuing to manage a very good the cold environment well and I appreciate you’re taking the time.

Thank you, Rebecca.

(Operator Instructions). We’ve no further question in queue. I will turn the call over back to Mr. John Wittkowske for closing remarks. Please proceed.

Thanks, excuse me, thank you. Thank you everyone for joining us on our call. And have a great day and we’ll talk to you in a few months.

Thank you.

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