FORWARD-LOOKING STATEMENTS


This report contains certain forward-looking statements with respect to the
Company's outlook for the future.  These statements represent the Company's
reasonable judgment with respect to future events and are subject to risks and
uncertainties that could cause actual results to differ materially. Such
statements can be identified by the use of words such as "anticipates,"
"believes," "estimates," "expects," "forecasts," "intends," "is likely,"
"plans," "predicts," "projects," "should," "will," or variations of such words,
and similar expressions. Forward-looking statements, by their nature, address
matters that are, to varying degrees, uncertain. Therefore, the reader is
cautioned that these forward-looking statements are subject to a number of
risks, uncertainties or other factors that may cause actual results to differ
materially from those described in the forward-looking statements. These risks
and uncertainties include, but are not limited to, the risk factors described
under Item 1A, "Risk Factors," of the Company's Annual Report on Form 10-K for
the year-ended December 31, 2019, and Part II, Item 1A, "Risk Factors," of this
Quarterly Report on Form 10-Q.

GENERAL


The Company designs and markets quality and innovative footwear principally for
men, but also for women and children, under a portfolio of well-recognized brand
names including: Florsheim, Nunn Bush, Stacy Adams, BOGS, and Rafters. Inventory
is purchased from third-party overseas manufacturers. The majority of
foreign-sourced purchases are denominated in U.S. dollars.

The Company has two reportable segments, North American wholesale operations
("Wholesale") and North American retail operations ("Retail").  In the wholesale
segment, the Company's products are sold to leading footwear, department, and
specialty stores, as well as e-commerce retailers, primarily in the United
States and Canada.  The Company also has licensing agreements with third parties
who sell its branded apparel, accessories and specialty footwear in the United
States, as well as its footwear in Mexico and certain markets overseas.

Licensing revenues are included in the Company's wholesale segment. The Company's retail segment consisted of 8 brick and mortar retail stores and e-commerce businesses in the United States as of June 30, 2020. Sales in retail outlets are made directly to consumers by Company employees.


The Company's "other" operations include the Company's wholesale and retail
businesses in Australia, South Africa, Asia Pacific (collectively, "Florsheim
Australia") and Europe ("Florsheim Europe").  The majority of the Company's
operations are in the United States, and its results are primarily affected by
the economic conditions and retail environment in the United States.

EXECUTIVE OVERVIEW



The COVID-19 pandemic significantly impacted the Company's second quarter and
year-to-date results. Government-mandated shutdowns of non-essential businesses
resulted in the majority of retailers temporarily closing their stores in
mid-March 2020. The majority of retailers, including the Company's retail
stores, remained closed for a majority of the second quarter due to government
orders, and business recovery has been slow. As a result, the Company
experienced significant sales volume losses to date in 2020, which led to
substantially lower second quarter and year-to-date earnings. Additionally, as
previously announced, J.C. Penney Company, Inc. and affiliated entities ("JCP")
filed for bankruptcy in May 2020, causing the Company to write-off approximately
$3.3 million in receivables during the second quarter.

The Company's order backlog is down for Fall 2020, because its selling season
was interrupted by retail shutdowns, and it received many cancellations for both
Spring 2020 and Fall 2020 orders from retailers. Management is currently in the
process of meeting with its customers virtually in an attempt to solidify Fall
orders.

Over the past several seasons, the Company's legacy brands (Stacy Adams, Nunn
Bush and Florsheim) have evolved with more casual product offerings. The Company
has made strides in this area, but both Florsheim and Stacy Adams still sell a
high percentage of shoes that are typically worn in an office setting. The dress
and dress-casual footwear market is currently seeing significantly lower demand
because many people have not yet returned to offices, and other more formal
functions, such as weddings, are being cancelled or postponed as a result of the
pandemic. Nunn Bush has performed better than our other brands during the
pandemic because of its more casual product offering.

The Company expects that its 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 unknown at this time. Many of the new shoes and boots that
the Company is delivering this Fall are more casual, and the majority of its
Spring 2021 line is also geared toward a relaxed lifestyle. The transformation
to more casual footwear and apparel was a strong trend prior to COVID-19, but
has been greatly accelerated by stay-at-home mandates.

                                       13



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. As a result, the Company experienced
solid increases in BOGS online business during the second quarter of 2020. As
the Company moves into BOGS' busy season in the second half of the year,
management is optimistic that BOGS may have new opportunities to grow and
potentially increase market share.

The Company's distribution center and supply chain are fully operational, which
enables it to fulfill wholesale and e-commerce orders on a timely basis. The
Company believes it has the infrastructure and technology systems in place that
will allow it to adapt to the future consumer landscape. The Company believes it
is well-positioned to respond to changes in customer demand during these
volatile times.

In 2019, the Company built its inventory levels of core product in anticipation
of the imposition of the China tariff. When the pandemic hit the U.S. in March
of this year, the Company adjusted its 2020 buys downward accordingly. At June
30, 2020, the Company has $81.4 million of inventory versus $82.8 million at the
same time last year. Management believes its current level of inventory is
higher than optimal given decreased demand. Management reviewed inventories as
of June 30, 2020 and, with the exception of certain obsolete inventory that was
written off in Asia this quarter, we believe the Company's inventory is solid,
with a good base of core product. However, given the uncertainty in the
marketplace, management will continue to review and monitor season and
discontinued products throughout the rest of the year, which might result in
additional inventory write-downs.

Cost management and liquidity remain top priorities of the Company during this
challenging time. Expenses across the organization are being evaluated and
right-sized so that it can efficiently operate during this period of lower sales
volumes. The Company has adjusted its advertising spending in light of decreased
demand. In addition, the Company qualified for $1.5 million in government wage
subsidies in the U.S. and Canada during the second quarter, and received
additional rent and wage subsidies outside of the U.S. totaling $1.3 million.
The Company is continuing to pursue additional subsidies and other cost savings
at this time.

The Company's balance sheet and associated liquidity remain highlights in its
current financial position. With nearly $26 million in cash and short-term
marketable securities and the full $60 million available on its line of credit,
management believes the Company is in a strong cash position, and has the
ability to withstand the economic effects of the current pandemic situation.
Collection of accounts receivable has slowed, and the Company expect that trend
to continue over the coming months. The Company is continuing to actively manage
its receivables to secure payments and mitigate risk. Management is also closely
monitoring the financial health of its customers. As noted above, the bankruptcy
of JCP led to a write-down of receivables, and future bankruptcies of customers
as a result of the pandemic or otherwise may lead to write-downs as well.

Second Quarter Highlights



Consolidated net sales for the second quarter of 2020 were $16.7 million down
72% compared to last year's second quarter net sales of $60.5 million.
Consolidated operating losses totaled $13.0 million for the quarter, down from
operating earnings of $1.9 million in the second quarter of 2019.  The Company's
net loss was $8.9 million for the quarter, compared to net earnings of $1.5
million in last year's second quarter. Diluted loss per share was $0.91 in the
second quarter of 2020, compared to diluted earnings per share of $0.15 in

the
second quarter of 2019.

Year-to-Date Highlights


Consolidated net sales for the first half of 2020 were $80.2 million, down 40%
from net sales of $134.6 million in the first half of 2019. Consolidated
operating losses totaled $11.7 million in the first six months of 2020, down
from operating earnings of $7.0 million in the first six months of 2019. The
Company's net loss was $7.7 million in the first half of 2020 versus net
earnings of $5.5 million in the same period last year. Diluted loss per share to
date in 2020 was $0.79, compared to diluted earnings per share of $0.55 in

the
same period of 2019.

Financial Position Highlights


At June 30, 2020, cash and marketable securities totaled $25.9 million and there
was no debt outstanding on the Company's revolving line of credit. During the
first six months of 2020, the Company generated $12.6 million of cash from
operations. The Company paid dividends of $7.0 million, paid down $7.0 million
on its line of credit, and repurchased $1.3 million of Company stock. The
Company also had $2.7 million of capital expenditures.

                                       14



SEGMENT ANALYSIS

Net sales and earnings (loss) from operations for the Company's segments in the three and six months ended June 30, 2020 and 2019, were as follows:






                                Three Months Ended June 30,         %           Six Months Ended June 30,        %
                                   2020               2019        Change           2020             2019       Change

                                        (Dollars in thousands)
Net Sales
North American Wholesale      $         9,318     $     46,052      (80) % 
$       62,007     $  105,533      (41) %
North American Retail                   3,640            5,395      (33) %             8,401         10,966      (23) %
Other                                   3,688            9,029      (59) %             9,822         18,105      (46) %
Total                         $        16,646     $     60,476      (72) %    $       80,230     $  134,604      (40) %

Earnings (Loss) from
Operations
North American Wholesale      $      (10,176)     $      2,212     (560) %    $      (7,416)     $    7,418     (200) %
North American Retail                   (856)              401     (313) %             (945)            884     (207) %
Other                                 (1,981)            (749)     (164)             (3,311)        (1,292)     (156)
Total                         $      (13,013)     $      1,864     (798) %    $     (11,672)     $    7,010     (267) %

North American Wholesale Segment

Net Sales

Net sales in the Company's North American wholesale segment for the three and six months ended June 30, 2020 and 2019, were as follows:







                                Three Months Ended June 30,         %        Six Months Ended June 30,         %
                                  2020               2019         Change        2020              2019       Change

                                   (Dollars in thousands)                      (Dollars in thousands)
North American Wholesale
Segment Net Sales
Stacy Adams                   $      1,592      $       14,685      (89) %    $     17,762     $   35,653      (50) %
Nunn Bush                            2,912               9,160      (68) %          13,531         20,754      (35) %
Florsheim                            1,694              17,293      (90) %          21,336         36,109      (41) %
BOGS/Rafters                         2,979               4,267      (30) %           8,776         11,658      (25) %
Other                                    -                  11     (100) %               -             16     (100) %
Total North American
Wholesale                     $      9,177      $       45,416      (80) %    $     61,405     $  104,190      (41) %
Licensing                              141                 636      (78) %             602          1,343      (55) %
Total North American
Wholesale Segment             $      9,318      $       46,052      (80) %    $     62,007     $  105,533      (41) %




                                       15




As discussed in "Executive Overview" above, second quarter and year-to-date net
sales across all of the Company's brands were down significantly in all major
categories as a result of retail shutdowns caused by the COVID-19 pandemic.

Licensing revenues consist of royalties earned on the sales of branded apparel,
accessories and specialty footwear in the United States and on branded footwear
in Mexico and certain overseas markets. Licensing revenues were down for the
quarter and first six months of 2020, as compared to the same periods in 2019,
in line with reductions in licensees' sales of branded products.

Earnings from Operations



Gross earnings for the North American wholesale segment were 34.7% of net sales
in the second quarter of 2020, compared to 35.1% of net sales in last year's
second quarter. For the six months ended June 30, 2020, wholesale gross earnings
were 32.3% of net sales, as compared to 34.6% of net sales in 2019.  The
decrease in gross margins for the year-to-date period was largely due to the
additional costs related to the tariff on certain footwear imported from China.
The tariff of 15% took effect on September 1, 2019 and was subsequently reduced
to 7.5% on February 14, 2020. The Company purchased a limited amount of
inventory at the higher tariff rate, and expects the tariff's negative impact on
gross margins will lessen as it sells through its current inventory.

North American wholesale segment selling and administrative expenses include,
and are primarily related to, distribution costs, salaries and commissions,
advertising costs, employee benefit costs, and depreciation. Wholesale selling
and administrative expenses were $13.4 million, or 144% of net sales, in the
second quarter of 2020, compared to $13.9 million, or 30% of net sales, in the
second quarter of 2019. Second quarter 2020 expenses included the write-off of
approximately $3.3 million in receivables as a result of JCP's bankruptcy filing
in May 2020, partially offset by $1.4 million of income from U.S. and Canada
government wage subsidies. Additionally, the Company adjusted its advertising
spending, which reduced second quarter selling and administrative expenses by
$1.1 million as compared to last year's second quarter.

For the six months ended June 30, wholesale segment selling and administrative
expenses were $27.4 million, or 44% of net sales, in 2020 versus $29.1 million,
or 28% of net sales, in 2019. Expenses in the first half of 2020 included the
write-off of approximately $3.3 million in JCP receivables, as noted above,
partially offset by $1.4 million of income from U.S. and Canada government wage
subsidies. Additionally, the Company adjusted its advertising spending, which
reduced year-to-date selling and administrative expenses by $1.7 million, as
compared to the first six months of 2019.

The wholesale segment's operating losses totaled $10.2 million for the three
months ended June 30, 2020, down from operating earnings of $2.2 million in last
year's second quarter, due to the factors discussed above. For the six months
ended June 30, 2020, the wholesale segment had operating losses of $7.4 million,
down from operating earnings of $7.4 million in the same period of 2019, as a
result of the factors discussed above.

The Company's cost of sales does not include distribution costs (e.g.,
receiving, inspection, warehousing, shipping, and handling costs).  Wholesale
distribution costs were $2.8 million for the second quarter of 2020 versus $3.0
million for the same period of 2019.  For the six-month periods ended June 30,
wholesale distribution costs were $6.1 million in both 2020 and 2019. These
costs were included in selling and administrative expenses. The Company's gross
earnings may not be comparable to other companies, as some companies may include
distribution costs in cost of sales.

North American Retail Segment

Net Sales



Net sales in the Company's retail segment were $3.6 million in the second
quarter of 2020, down 33% compared to $5.4 million in the second quarter of
2019.  For the six months ended June 30, retail net sales declined 23% to $8.4
million in 2020, from $11.0 million in 2019. Same store sales, which include
U.S. e-commerce sales, were down 31% and 22% for the quarter and year-to-date
periods, respectively, compared to the same periods last year, primarily due to
retail store closures resulting from the COVID-19 pandemic.

Earnings from Operations



Retail gross earnings were 61.1% of net sales in the second quarter of 2020,
compared to 65.0% of net sales in last year's second quarter. For the six months
ended June 30, 2020, retail gross earnings were 63.5% of net sales, as compared
to 65.1% of net sales in 2019. The retail segment had operating losses totaling
$856,000 for the quarter, down from operating earnings of $401,000 in last
year's second quarter.  For the six months ended June 30, retail operating
losses were $945,000 in 2020, down from operating earnings of $884,000 in 2019.
The decreases for the quarter and first half of 2020 were due to larger
operating losses at brick-and mortar stores as a result of the impact of the
pandemic.

                                       16




Selling and administrative expenses for the retail segment include, and are
primarily related to, rent and occupancy costs, employee costs, advertising
expense and freight.  Retail selling and administrative expenses were $3.1
million in both the second quarters of 2020 and 2019. For the six months ended
June 30, retail selling and administrative expenses were $6.3 million in both
2020 and 2019.  Retail selling and administrative expenses were 85% of net sales
in the second quarter of 2020 versus 58% of net sales in last year's second
quarter. For the six months ended June 30, retail selling and administrative
expenses as a percent of net sales were 75% and 57% in 2020 and 2019,
respectively. The increases in retail expenses as a percent of net sales were
due to the 2020 sales decline, as many retail expenses are fixed in nature.

Other


The Company's other businesses include its wholesale and retail operations of
Florsheim Australia and Florsheim Europe. Net sales of the Company's other
businesses were $3.7 million in the second quarter of 2020, down 59% compared to
$9.0 million in last year's second quarter. For the six months ended June 30,
2020, other net sales were $9.8 million, down 46% from $18.1 million in the same
period last year. The decreases in 2020 were due to lower net sales at both
Florsheim Australia and Florsheim Europe, resulting from worldwide retail
shutdowns caused by the COVID-19 pandemic.

Collectively, Florsheim Australia and Florsheim Europe had operating losses
totaling $2.0 million in the second quarter of 2020, compared to operating
losses of $749,000 in the second quarter of 2019.  For the six months ended June
30, 2020, Florsheim Australia and Florsheim Europe had operating losses totaling
$3.3 million, compared to operating losses of $1.3 million in the same period
last year. Both the second quarter and year-to-date 2020 operating results were
negatively impacted by retail shutdowns caused by the pandemic. Additionally,
selling and administrative expenses for the three and six months ended June 30,
2020 included the write-down of approximately $1.0 million in obsolete inventory
at Florsheim Asia, offset by $1.3 million of income from rent and wage subsidies
recognized in the second quarter.

Other income and expense



Interest income was $138,000 and $230,000 for the three months ended June 30,
2020 and 2019, respectively. For the six months ended June 30, interest income
was $287,000 in 2020 and $453,000 in 2019.  The decreases for the quarter and
year-to-date periods were primarily due to less interest earned on the lower
investment balances this year.

Interest expense declined $32,000 and $13,000 during the three and six months ended June 30, 2020, compared to the same periods of 2019.



The Company's effective tax rate for the quarter was 32.3%, compared to 21.6%
for the same period of 2019.  For the six months ended June 30, the Company's
effective tax rate was 31.6% in 2020 versus 23.3% in 2019.  The increases in the
Company's effective tax rate in 2020 were primarily driven by the ability to
carry back current year losses to a tax year where the U.S. federal statutory
tax rate was 35%, which is currently permitted under the U.S. Coronavirus Aid,
Relief, and Economic Security Act ("CARES Act").

LIQUIDITY AND CAPITAL RESOURCES



The Company's primary sources of liquidity are its cash, short-term marketable
securities and its revolving line of credit.  The Company generated $12.6
million of cash from operating activities during the first six months of 2020,
compared to $240,000 in the same period of 2019. The increase between years was
primarily due to changes in operating assets and liabilities, principally
accounts receivable and inventory. As previously discussed, collection of
accounts receivable has slowed, and the Company expects that trend to continue
over the coming months. In addition, as previously discussed, the Company wrote
down receivables during the second quarter due to the bankruptcy filing of JCP.
In 2019, the Company built its inventory levels of core product in anticipation
of the imposition of the China tariff, and when the pandemic hit the U.S. in
March 2020, the Company adjusted its 2020 buys downward accordingly. Management
believes its current level of inventory is higher than optimal given decreased
demand and will continue to scrutinize inventories closely throughout the rest
of the year.

                                       17

The Company paid cash dividends of $7.0 million in both the first six months of 2020 and 2019.



The Company has the authority to repurchase its common stock under its share
repurchase program when it believes market conditions are favorable.  During the
first half of 2020, the Company repurchased 59,523 shares for a total cost of
$1.3 million, all of which were repurchased in the first quarter. The Company
did not repurchase any of its shares in the second quarter of 2020. As of June
30, 2020, the Company had the authority to repurchase approximately 383,000
shares under its previously announced stock repurchase program.

Capital expenditures were $2.7 million in the first six months of 2020.

Management estimates that capital expenditures for 2020 will be between $3.0 million and $4.0 million, including the $2.7 million expended to date.


At June 30, 2020, the Company had a $60 million unsecured revolving line of
credit with a bank expiring November 5, 2020. The line of credit bears interest
at LIBOR plus 0.75%. At June 30, 2020, there were no amounts outstanding on the
line of credit. The highest balance on the line of credit during the six months
ended June 30, 2020 was $8.5 million. The Company expects to renew this line of
credit later this year, but cannot provide any assurances.

At June 30, 2020, approximately $2.8 million of cash and cash equivalents was held by the Company's foreign subsidiaries.



The Company will continue to evaluate the best uses for its available liquidity,
including, among other uses, capital expenditures, continued stock repurchases
and additional acquisitions.

The Company believes that available cash and marketable securities, cash
provided by operations, and available borrowing facilities will provide adequate
support for the cash needs of the business for at least one year, although

there
can be no assurances.

COMMITMENTS

Not applicable.

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