John Wittkowske - Senior Vice President, Chief Financial Officer and Secretary Tom Florsheim Jr. - Chairman and CEO

Welcome to the Weyco Group Second Quarter 2017 Earnings Release Conference Call. My name is Adrianne, and I'll 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. [Operator Instructions] I'll now turn the call over to John Wittkowske. John Wittkowske, you may begin.

Thank you. Good morning, and welcome to Weyco Group's conference call to discuss our second quarter 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, I'd like to 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 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 10-K identifies important factors and risks that could cause the company's actual results to differ materially from our projection. 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 were $57.5 million, up 1% as compared to 2016 net sales of $56.9 million. Operating earnings were $1.9 million in 2017, a decrease of 7% as compared to $2 million in 2016. Net earnings attributable to Weyco Group were $1.3 million, up 26% from $1 million last year. Diluted earnings per share were $0.12 per share this quarter and $0.09 per share in 2016. In the North American wholesale segment, net sales for the quarter were $42.3 million, up 2% compared with $41.5 million. The increase was primarily due to higher sales of our Stacy Adams and Florsheim brands, driven by strong new product sales. Licensing revenues were $592,000 in the second quarter of 2017 and $596,000 last year. Wholesale gross earnings were 31.3% of net sales in the second quarter versus 32.6% of net sales last…

Thanks, John, and good morning, everyone. As John mentioned, sales in our North American wholesale segment were up 2% for the quarter. After a difficult first quarter, we are pleased with a turnaround in our business. While the environment remains challenging, we were able to increased our share in the men's non-athletic footwear market, and we feel we have good momentum in important segments of our business. Stacy Adams bounced back this quarter, with a 10% increase in sales. Spring seasonal footwear sales accelerated throughout the quarter, and the brands at One Stone [ph] business was strong across most key retailers. Industry wide dress shoes have been a declining business, but Stacy Adams has managed to buck the trend by introducing fresh, versatile footwear that bridges both a dress and casual lifestyle. Sales of Florsheim were up 10% this quarter. As we've mentioned in previous conference calls, we are making significant progress with Florsheim via new product, and we believe we are at the beginning of a good run in this regard. In particular, new Comfortech as well as jeans-friendly footwear have helped create a more diversified core of successful Florsheim shoes at retail. 2017 marks the 125th anniversary of the founding of Florsheim, and we are excited that this year is one of resurgence for the brand. Nunn Bush sales were down 13% for the quarter. The mid-tier department store trade channel has been impacted by e-commerce to a greater degree than any other channel. Nunn Bush derived significant sales volume from this sector, resulting in sales declines over the past year. While this challenge is ongoing, we believe that the brand is starting to gain traction as Nunn Bush experienced its largest selling season of new product in years, for fall 2017. The influx of new product, along…

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Okay. Thank you for joining us on our second quarter conference call, and have a great day.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.