Thank you for standing by. At this time, I would like to welcome everyone to Weyco Group, Inc. Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Judy Anderson, Chief Financial Officer. You may begin.

Thank you. Good morning, and welcome to Weyco Group's conference call to discuss third quarter 2025 results. On the 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 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 U.S. trade and tariff policies, which remain highly dynamic and unpredictable, the impact of inflation on our costs and consumer demand for our products, increased interest rates and other macroeconomic factors that may cause slowdown or contraction in the U.S. or Australian economy. Overall net sales for the third quarter of 2025 were $73.1 million, down 2% compared to $74.3 million in the third quarter of 2024. Consolidated gross earnings were 40.7% of net sales compared to 44.3% of net sales in last year's third quarter. Earnings from operations were $8.1 million for the quarter, down 21% from $10.2 million in the third quarter of 2024. Net earnings totaled $6.6 million for the quarter, down 18% from $8.1 million last year. Diluted earnings per share were $0.69 per share in the third quarter of 2025 and $0.84 per share in last year's third…

Thanks, Judy, and good morning, everyone. Overall company wholesale sales were down 2% in dollars and 7% in unit volume during the third quarter. We raised prices by 10% on July 1 to offset tariff increases. While shipments were down slightly, we were encouraged by the relative strength of our brands at retail following those price increases. In what remains a difficult market, our brands, especially our legacy business performed well. Even so, the unsettled tariff environment, along with weak consumer sentiment and the cautious approach retailers are taking toward inventory investment continues to create midterm challenges. We continue to diversify our factory base to reduce our manufacturing concentration in China while maintaining strong relationships with our long-standing partners there who have been instrumental to Weyco's reputation for quality and value. Expanding our factory base isn't a quick process, and we're very deliberate about partnering only with factories that share a commitment to quality and on-time delivery. As we navigate the uncertainties in this economic environment, we remain confident in the strength of our brands and the resilience of our business model. Sales of our combined legacy business were up 3% despite a 3% decline in unit volume. Florsheim was a standout brand, with sales up 8% for the quarter. Florsheim continues to be a bright spot in men's nonathletic footwear for 2 reasons. First, it's become the go-to brand for traditional dress and dress casual footwear priced under $150. While this segment has shrunk with the trend toward more casual lifestyles, it remains an important part of the market that retailers rely on to meet consumer demand for work in occasion-based styles. Florsheim is gaining shelf space as a bridge brand that offers premium quality at a reasonable price. Second, the brand has expanded its presence in hybrid footwear…

[Operator Instructions] Your first question comes from the line of David Wright with Henry Investment Trust.

Can you hear me?

Yes, we can.

No, we hear you.

Okay. Thanks for the special dividend. That's excellent. And I applaud the continued efforts at capital management. Tom, do you have any sense on in the last quarter, how much of the margin deterioration is attributable to tariffs? Do you try to look at it that way?

Yes. I would say -- and I'm going to have Judy voice in on this as well. It's 100% basically of our margin erosion. I mean we raised prices 10%. But the incremental duties out of China have been at 30%. And so it doesn't cover -- we didn't raise prices enough, I guess, to cover the cost of the incremental tariffs. We did that intentionally because as we mentioned, we really want to maintain market share, and we don't want to go too fast with price increases until we see where all these tariffs are going to land. India started out -- now the tariffs changed off, but I can't remember where they started out 10% or 20%. And then the administration added an extra 50%. And we have been moving product to India from China. And so it's been -- David, it's been a pretty crazy 6 months. And we're pleased with our results with how this is going on, and we think that we're doing the right things for the long-term health of the business as far as maintaining market share. And reasonable profitability. We know that with the margin erosion, we're not going to be as profitable as we've been in the last couple of years, but we think that we're better off kind of taking time and seeing where everything lands.

Okay. There's been an increasing commentary in the general business press lately about the upper end of the consumer caring the economy and the lower end cutting back. And I don't know, if you dice your customer base to that extent. But if you do, do you have any sense of -- do you see one region or one wholesale customer, one demographic remaining stronger relative to another?

This is John. It's hard to parse it. I mean, we see certain retailers that have more customers from the lower middle income strata. And I think those customers are challenged right now just in terms of seeing their performance. When you look at our brands, I think the Florsheim attracts a slightly higher income customer. So we're -- and our business with Florsheim is very strong right now. Stacy Adams and Nunn Bush are more of a value customer. And that's -- and I think we're seeing a bit of that drag on those 2 brands.

Okay. So you're kind of seeing the same thing that other companies are commenting on, and I appreciate the answer there. Okay. Great. Well, those are my questions. I commend you for the continued great quarterly call, the comprehensive review that Judy gives. It's all good.

[Operator Instructions] Seeing no further questions at this time, ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.