Welcome to the fourth quarter and year end 2016 earnings conference call. My name is John and I will be your operator for today’s call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. I will now turn the call over to John Wittkowske.

Thank you. Good morning everyone. Before we begin, I am going to read a brief disclaimer but with me today is Tom Florsheim Jr., our Chairman and CEO. So I am going to read a brief disclaimer, then we will get going. 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 results may 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 fourth quarter of 2016 were $82.1 million, down 6% as compared to fourth quarter 2015 sales of $87.4 million. Operating earnings were $8.5 million in the fourth quarter, a decrease of 26% as compared to $11.5 million in 2015. Net earnings attributable to Weyco Group were $8.2 million this quarter, up 17% from $7 million last year. Diluted earnings per share were $0.78 for the fourth quarter of 2016 and $0.65 in 2015. During the fourth quarter of 2016 the company evaluated the current state of its Umi business and determined that the brand did not fit our long term strategic objectives. As a result, we recorded a $1.8 million impairment charge to write off the majority of the value of the Umi trade name. On an after-tax basis the impairment charge was $1.1 million. We are currently looking into strategic alternatives for…

Thank you, John and good morning everyone. Our North American wholesale business was down 9% for the quarter and 10% for all of 2016. We are disappointed with our performance for the quarter and year. Our sales decrease reflects the current disruption in the retail environment driven by changes in consumer behavior. The acceleration in e-commerce has resulted in a decrease in retail foot traffic and has impacted the business model of retailers across multiple channels. In addition, overall footwear and apparel sales have been sluggish as consumer discretionary purchases have migrated away from soft goods and towards larger durable goods purchases, as well as towards expenditures on experiences such as vacations or dining out. This shift has caused many key brick and mortar accounts to reassess their inventory levels and store counts. While the performance of our brands at a consumer level remained strong relative to the non-athletic industry, wholesale shipments throughout the year faced headwinds based on these well documented challenges. Over the long term we believe the non-athletic footwear market will stabilize and return to growth as both e-commerce and brick and mortar retail evolve and find their appropriate levels. In the near term we are focused on navigating these changes in the retail environment and building our brands. BOGS sales fell 7% in the fourth quarter and 23% for the year. While BOGS sales picked up with the cold and snow of December, overall it was a difficult year for BOGS. The unseasonably dry and warm end to 2015 resulted in high inventory levels at retail being carried into 2016. The inventory levels at retail adversely impacted our wholesale shipments throughout the year. The good news is that the winter weather that much of the country experienced this year end helped clear inventory and set the…

[Operator Instructions] And we have a question from Mitch Kummetz from B. Riley.

Let’s see, it’s going to be a handful of questions. Maybe to begin with, I don't know if there's some way you can kind of remind us as to what your channel exposure is, I don't know, if you can’t give percentages but maybe you can kind of rank order the channel and I don't know if the department store is the biggest, then family, then independent; I don't know how that, kind of that order works for you guys.

Mitch, why don’t -- John is going to grab that data and we give it to you, we give you some ballpark numbers for that. And so why don't we move on to your next question and then circle back to that one?

Sure. Talk a little bit about -- you mentioned kind of challenges at bricks and mortar. Obviously some of that is -- a lot of that is just the migration to online. But how much are you guys also seeing some negative impact just as retailers are closing stores?

So far we're not seeing much impact from that because the stores that they're closing are the underperforming stores. And so if you look at our business with any of the major department stores you can kind of apply the 80:20 rule where we're doing a huge percentage of our business in their top half stores. And so if you've got a thousand store chain and they close 150 stores, that doesn't have too much impact on our sales to them.

And then, I would have guessed that maybe you're kind of agnostic as to whether or not your product’s being sold in the store versus online, is it just that you have less of your product online or is this too much -- let’s put it this way, you don't have enough product online with kind of your core customers, is it they're selling online or is it because too much of the business is like transitioning trying to maybe an Amazon or somebody like that where maybe you don't have the same kind of representation?

Yes, I mean, we are somewhat agnostic as to where -- whether it's e-commerce where our product is sold or brick and mortar. To kind of sum up the general problem with the retail environment right now is a lot of our major customers have made this gigantic investment in their brick and mortar stores and as the business transfers to e-commerce, the business overall is not as profitable for them because the model -- people just haven't figured out the model yet. You've got a lot of discounting that is done on the web, you have free freight and so it's more difficult for the large brick and mortar retailers who made all this investment to just transition their business to e-commerce and sell the same profitability level. So that's just thrown the whole retail market into a state of trying to figure out what the new model is. And I think that in the short term that -- they're struggling -- brick and mortar businesses are struggling with their businesses, so that has an impact on us. Whether we I think long term will sell as much product as business transfers to e-commerce, on department stores websites and pure plays websites and so people are still going to buy shoes -- and your point in the beginning of whether they buy on the web or they buy in the stores doesn't really impact us that much. But what impacts us is that our major customers are struggling with this transition. So I'm not sure -- I hope that answers your question; it was a little bit of a rambling answer, so I apologize for that.

That's actually very helpful. I appreciate it. And then on the Umi brand you guys announce that you're going to explore strategic alternatives for that. I mean it's a relatively small brand for you guys. Is there any way you can say -- I'm guessing it's losing money; is there any way you can say if that's the case and how much? And like if you can't find a buyer for it, I mean would you consider just shutting it down or --?

Yes, I think we can talk about that. Umi has basically been a breakeven proposition for us. If you look at the brand historically it's been breakeven. And we just think that we can utilize our resources that are elsewhere and so if we don't -- if we don't find a buyer for the brand, yes, we will probably shut it down.

And then lastly it sounds like you're optimistic that some of the brands can return to growth this year. You talked about BOGS getting back to growth, I mean you said -- expect an increase in Florsheim, there's all sorts of things that you're optimistic around with Stacey and Nunn Bush. How much of that optimism is just a function of the channel inventories are now a lot cleaner than a year ago, or are you seeing something in your pre-books already that kind of leads to a belief that you'll see growth in your pre-books, or is it more a function of you guys just like what you're doing product wise and you think that you can maybe take some share across these brands?

It's really the latter. I mean we're kind of in the middle of our selling season right now. It's too early to say that our pre-books are up. But we are seeing very good selling particularly in Stacy Adams and Florsheim with some of the new product. We've had a great reaction to the new Nunn Bush line. We changed our senior designer in Nunn Bush a year ago and we're seeing some very positive results from that. And so it's more just a factor of feeling good about where we are with our key brands, and thinking that that we're going to be able to grow our market share even though the overall market is not growing right now. John is back. I think he can give you some numbers to your first question.

Yes, Mitch, and again I'll just sort of give you some rough numbers, I don't -- these are actually very consistent between 2015 and 2016. So there's been very little change. Department stores still represent the biggest part of our business, in the upper 20s percent of our business and the next two categories are the shoe chain stores and the Internet retailers, and they both are about the same as well, sort of around the 17%, 18% range. And then independents and the off-price and some of those are at the lower end of that, on that spectrum but they've been very consistent between two full years.

And then maybe just as a last question, a follow up to that. Are you seeing more challenges across one channel versus another? I mean it seems like the department store channel in general we continue to hear is particularly difficult.

I mean, the other channel, the department store channel is definitely one that has its challenges. But the other place where we're seeing -- saw decreases in 2016 was in the discounters. And what's happening there is a lot of brands, from the standpoint of managing their inventories I think are struggling with this new retail dynamic and dumping goods. And so in order to do business with some of the discounters you really have to sell extremely low prices and fortunately we've been in a position where we have managed inventories well and we haven't had to sell our clothes outs at fire sale type prices and so that's hurt us in that channel and that's just business that we messed but we walked away from, because it doesn't make sense below a certain cost -- below a certain price, yes. End of Q&A

[Operator Instructions] And I have no further questions at this time.

Okay. Then we thank everybody for your time and look forward to talking to you after the first quarter. Have a great day.