Good day, and thank you for standing by. Welcome to the Weyco Group First Quarter 2024 Earnings Release Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker for today, Judy Anderson, Chief Financial Officer. Please go ahead.

Thank you. Good morning, and welcome to Weyco Group's conference call to discuss first quarter 2024 results. On this call with me today are Tom Florsheim, Jr. Chairman and Chief Executive Officer; and John Florsheim, President and Chief Operating Officer. Before we begin to discuss the results for the quarter, I will read a brief cautionary statement. During 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 these statements are just predictions and that actual events or results may differ materially. We refer you to the section entitled Risk Factors in our most recent annual report on Form 10-K, which provides a discussion of important factors and risks that could cause our actual results to differ materially from our projections. These risk factors are incorporated herein by reference. They include, in part, the uncertain impact of inflation on our costs and consumer demand for our products, increased interest rates and other macroeconomic factors that may cause a slowdown or contraction in the U.S. or Australian economies. Overall net sales were $71.6 million, down 17% compared to record first quarter sales of $86.3 million in 2023. Consolidated gross earnings increased 44.7% of net sales compared to 43.1% of net sales in last year's first quarter due to higher gross margins in our North American Wholesale segment. Earnings from operations were $8.3 million, down 21% from record first quarter operating earnings of $10.4 million in 2023. Net earnings were $6.7 million or $0.69 per diluted share compared to record first quarter net earnings of $7.4 million or $0.78 per diluted share last year. Net sales in our North American wholesale segment were $56.2 million, down 20% compared to record sales…

Thanks, Judy, and good morning, everyone. It was a challenging quarter as our North American wholesale business was down 20% versus first quarter -- record first quarter sales in 2023. Our performance reflected industry headwinds as retailers are taking a conservative approach to inventory management given the soft sales trend in footwear and apparel categories, and their focus on mainly lowering -- on maintaining lower inventory levels. While our shipments were down significantly, we remain encouraged by solid retail sell-throughs, especially in our legacy men's brands. Our overall legacy business was down 13%, with Stacy Adams, Nunn Bush and Florsheim brands down 16%, 13% and 11%, respectively. After working through high inventories for much of 2023, retailers are reducing their upfront buys and are placing more orders on an ad-needed basis. We did see a nice uptick in our at-once business, but it was not enough to make up for the deficit. We anticipate this conservative trend among retailers will continue through the second quarter but are optimistic that demand will improve in the back half of the year. From a competitive perspective, we believe we are outperforming our peers in traditional dress and refined casuals. We remain focused on evolving our brand to fit a more relaxed lifestyle and continue to expand our offerings in true casual and hybrid footwear. This spring, across all 3 brands, we introduced new product that has been well received by consumers. While there is uncertainty in the current retail environment due to a variety of factors, we feel confident about the long-term trajectory of our legacy brands. In our Outdoor division, BOGS sales were down 48% as the weather boot market remains under pressure. As discussed during our fourth quarter conference call, we believe that outdoor market will be challenging in 2024. Additionally,…

[Operator Instructions] Our first question comes from the line of David Wright of Henry Partners.

Thanks again for having the conference call, Tom. Not every company does, and it's great that you do. So thank you, and thanks also for the dividend increase. Appreciate it. A couple of questions that I have are -- on stock buyback, you bought back around $4 million the last couple of years each year. And I noticed here in the first quarter that the stock buyback was de minimis, and I wondered if there was a reason for that.

The reason is really just that we haven't -- we've been out there buying stock, I think, for the majority of the year. And we set a limit on the price, but the limit actually, which I'm not at liberty to say is fairly high. And -- but even given that, there's been enough buyers of our stock that we just haven't been able to get more.

I guess that's a happy problem to have.

I agree. It is a happy problem.

You commented, you've done a great job working the inventory down from very high levels coming out of COVID. And you talked about having to build it back up, $15 million or so by the end of the quarter. What kind of free cash flow are you projecting for the full year?

Judy, do you have idea of that? We don't have an exact number. I don't think it's going to affect our cash much. In fact, when you look at when -- the reason that our inventory is a little bit lower right now is we still make a lot of product in China. And when they're closed for Chinese New Year, we have a dry period and now shoes for far started to come in. So we'll build up the inventories, but we have lower payables than we did a year ago and higher receivables. So I mean, I don't see this as being a big dent in our cash at all.

It's kind of a normal seasonal variation.

Sure, sure. But like, I mean, I just wondered because of the inventory drawdown, your cash flow -- your cash from operations last year was $98 million. It was a huge number. And that's great. The whole business model is just so impressive. And the way that it gets run is actually kind of old school. And it's successful, it's really nice to see. So don't change anything.

Thank you for saying that.

Yes. Well, I mean, you can see it. I know the company goes back a long ways, but you're paying a fair dividend, you're buying stock back, you're running a conservative balance sheet. The business is very profitable. You managed so well through COVID, and coming out of it, by the -- you've been work shows the revenues were down quite a lot in the first quarter, but the margins maintained, which shows a lot of efficiency. So I can't say enough good things.

All right. Well, thank you very much. It's nice to start out the investor call with having some nice comments like that. So thank you.

And then just to close, Tom, a real quick question. The consumer dynamics, sometimes I ask about them. I wonder when you talk about the higher sales from the website, like shoes are sort of like your feet. And I just wondered, like what's sort of the return rates from what I'm going to call mail order shoes because obviously, the people can't try them on in the store.

Yes. My brother John, who runs that area of the business is here, and he's going to answer that question.

Yes. It varies a little bit by brand. But overall, we averaged 12% to 13%. We get a lot of repeat customers buying footwear from our different brands. And that 12% to 13% is very low from an industry standard perspective.

Yes. That surprises me. That is really great. So more good news.

At this time, I am showing no additional questions in the queue. I would now like to turn the call back over to Judy Anderson, Chief Financial Officer, for some closing remarks.

We just wanted to say thank you for listening to our call today, and we hope you all have a great day.

Thank you. This does conclude today's call. You may now disconnect.