Good day, ladies and gentlemen and thank you for standing by. Welcome to the Second Quarter 2020 Earnings Release Conference Call for Weyco Group. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] At this time, I would like to turn the conference over to your host, Mr. John Wittkowske. Thank you. Sir, please begin.

Thank you. Good morning, everyone and welcome to Weyco Group's conference call to discuss our second quarter 2020 results. 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 would 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 events 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 as well as other filings with the SEC. The Form 10-K, as well as our most recent Form 10-Q identify important factors and risks that could cause the Company's actual results to differ materially from our projections. With respect to the ongoing COVID-19 pandemic, numerous factors will determine the extent and length of the impact on the Company, including the extent and duration of the pandemic and resulting global economic slowdowns. Actions by governments such as stay at home and similar orders that among others -- among other effects require retail store closures, the financial health of the Company's customers and business partners, including the effects of any bankruptcy proceedings by such party, the performance of the Company's supply chain and the health and welfare of the Company's employees, 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. The COVID-19 pandemic significantly impacted the Company's second quarter results. The majority of retailers including our retail stores were closed for a vast majority of the quarter due to…

Thanks, John and good morning, everyone. The retail environment continues to be significantly affected by the COVID-19 pandemic. The impact was particularly harsh in the second quarter with retailers closed the majority of the quarter and consumers staying at home even after stores began to reopen. However, we remain focused on the long-term goals and objectives of the Company as we navigate through this unprecedented situation. Consumer purchasing behaviors have changed over the past number of months. Consumers are seeking new and increased opportunities to participate in outdoor and socially distanced activities, which has created an opportunity for outdoor minded products such as BOGS. We have already seen solid increases in BOGS online business during the second quarter and as we move into BOGS busy season in the back half of the year, we are optimistic that the brand may have new opportunities to grow and potentially increase market share. Over the past several seasons, we have talked about the evolution of our legacy brands in a more casual product. We have made strides in this area, both -- but both Florsheim and Stacy Adams are -- still saw a high percentage of what we refer to as go to work type shoes. The dress and dress casual footwear market has currently seen significantly lower demand, because many people have not yet returned to offices and also due to weddings and other dress-up type events being canceled due to COVID. Nunn Bush has performed better because of -- because of its more casual product offering. We expect that our dress and dress casual business will have the opportunity to recover when people are no longer spending so much time in their homes and are able to return to normal social activities, although the timing of a return to normal is…

[Operator Instructions] Our first question or comment comes from the line of Fredrick Zoller [ph]. Your line is open.

Yes. Hi, how you're guys doing?

Good morning.

Good morning.

Yes. Just a quick question on the JCPenney issue. The possibility of them reopening store is on a future day once they re-emerge from bankruptcy, is that, I'm just curious, because I wasn't even aware that you guys even had shoes there. So I thought it was mostly Macy's, but can you just give me maybe the top brick and mortar stores that you guys percentage wise that you sell, have the most sales in, because I know Macy's is a big one. And also the JCPenney thing, the possibility of them re-emerging from bankruptcy, is that something that could boost earnings going down the line if they were to re-emerge from bankruptcy and make it come [indiscernible].

Yes, I mean we don't break down our sales to customers by customer, but JCPenney was a big account, Macy's is a big account. With JCPenney reemerge coming out, they filed for Chapter 11 reorganization and we are again shipping them, but with secure -- it's secured. So that they emerge and come back stronger, it will be good for our business. We are back shipping them in a way where we don't have any kind of exposure. If that answers your question.

And I think, was the second part of your question, whether you feel, they're going to emerge as an ongoing entity from Chapter 11?

Well, it just seems to me that at least in my general area that they still have stores open and they're still selling the shoes, without it, I looked into it, I looked it up and they have shoes in stock. So we are still selling shoes. So, I mean the $3.3 million.

No, what happens with the Chapter 11 is, allows them to continue as a functioning business. And what they've done is they've slated I think. And I'm not going to get the number exactly right, but I think it's about 250 stores that they are closing. And so they are running, quite an amount of business sales in those stores. But in their remaining stores which I think is, in the neighborhood of 700, 800 stores, they're continuing to do business. And then right now, there is actually, I think in the next couple of weeks, there's a number of bidders for JCPenney, so they will go forward. And you know we -- it's hard to predict with COVID-19 exactly, how everything shakes out, but we certainly are encouraged by the fact that there is some bid, that there are multiple bidders for the JCPenney business and at least in the near term, they are going to continue as an important customer of ours.

All right, thank you.

Thank you.

Thank you. [Operator Instructions] Our next question or comment comes from the line of John Deysher from Pinnacle. Your line is open.

Good morning, everyone. A couple of questions. One, on the share repurchase; I think you bought back $1.3 million worth in the first quarter. Did you buy any in the second quarter?

No. I don't think so.

And if not, why not? And what's the appetite at this point for buying back stock at the levels, it's trading at?

Right now, I mean, we think it's a good buy at the level it's trading at, but we're trying to be smart about using our cash. We see the possibility that this is going to go on for a while and we just don't think that at this point it's wise to do stock buybacks.

Okay, so you're holding cash for other purposes. Okay.

Just to sustain -- just, John, just to sustain the business, I mean, if you think about, I think that we're not alone. If you look at what most companies are doing right now, because of the uncertainty surrounding the situation, you want to make sure that you have ample cash reserves.

Okay. So even though you've got a $60 million, I think undrawn revolver, your customers want to see the cash on the balance sheet. Is that fair?

Yes. And also because, the revenues have fallen to such an extent that we are in a position right now where we lost money in the last quarter, which I think is the first quarter, I can remember. And I have been here a long time that we've lost money. We just are conservative, and the fact that we want to make sure that if this goes on for a while, we're going to try to right size, so that we could get to breakeven as quickly as possible. But we just feel more comfortable having money in the bank right now.

John, the other thing is, if you look at, almost of our companies out there here suspended both stock buybacks and also a number of suspended dividend. We have maintained our dividend. And so we had to make choices in terms of where, what's important to our shareholders? And also just looking down the line, we certainly hope the pandemic will be over sooner rather than later. I mean when this all started, we thought three months, six months now, like, we're just basically being very conservative in terms of power approaching us to make sure that we maintain liquidity.

Yes. With that said, we are investing, continuing to invest in areas of our business that we feel are going to be where we grow in the future, like D2C market. So we're -- it's not like, I just want to make it clear that we're not just trying to pile up cash that we're looking very strategically where we want to invest.

Okay, that's fair. In terms of rightsizing the business, how much in terms of dollars would you say you'll be able to take out of the expense structure in the next 12 months?

And that's a difficult question to answer at this point. I think we'll be in a better position to answer that next quarter. John, we're looking at everything. And we've started this process, a number of months ago, we've made a number of changes already. There is more to come. We're just -- we'll reexamine -- reexamining every aspect of our business. And for a while, I think companies have the luxury of funding some things that maybe weren't that profitable, because we're making a fair amount of money in other areas of our business. We are -- we're literally studying every single expense line in our Company right now and, to figure -- to figure out the question you just posed. And I would prefer to give you some more specific answers after the next quarter.

Okay, that's fine. And I guess finally, you mentioned that you're selling, back to selling JCPenney on a secured basis. Is that cash on delivery or what exactly does secured mean?

You know, we can't -- we actually, yes, yes.

But we can't do specific -- but we've taken steps to mitigate our exposure.

Yes, there is no, the way that we're doing it. There is no risk.

There is no risk. Okay. Well, I mean let's ignore, JCPenney, conceptually, what are the ways besides cash on delivery that you could guarantee payment, conceptually, what are the alternatives?

Yes, you know, John, I mean, we're happy to like talk to you offline about this, but I don't want to get into like specifics of how we're handling our credit with different accounts.

All right.

Feel free to call me.

Yes. We're both were both in today.

Yes.

Okay. I'll give you the ring.

Okay.

Thanks.

Thank you.

Thank you. [Operator Instructions] I'm showing no additional audio questions in the queue at this time, I'd like to turn the call back over to management for any closing remarks.

We just want to thank everybody for listening to the call today. Stay safe, and we'll talk to you next quarter. Thank you.

Ladies and gentlemen, thank you for participating in today's conference, this concludes the program. You may now disconnect. Everyone have a wonderful day.