Rocky Brands, Inc. reported solid earnings improvement with a boost from better full-price selling on a modest increase in sales. The owner of several outdoor, western and hunt footwear brands said it expects to implement price increases on most of its footwear styles later in the second quarter to offset the impact of tariffs.

First Quarter 2025 Overview

  • Net sales increased 1.1 percent to $114.1 million versus the year-ago quarter
  • Gross margin increased 210 basis points to 41.2 percent of net sales compared to 39.1 percent of net sales in the year-ago quarter
  • Income from operations increased 8.8 percent to $8.7 million compared to $8.0 million in the year-ago quarter
  • Net income increased 88.5 percent to $4.9 million, or $0.66 per diluted share, as compared to $2.6 million, or $0.34 per diluted share, in the year-ago quarter
  • Adjusted net income increased 77.9 percent to $5.5 million, or $0.73 per diluted share, as compared to $3.1 million or $0.41 per diluted share, in the year-ago quarter
  • Inventories as of March 31, 2025 increased 6.3 percent compared to March 31, 2024
  • Total debt as of March 31, 2025, was down 17.5 percent compared with March 31, 2024

“We experienced healthy demand across our brand portfolio and throughout our distribution channels to start the new year,” said Jason Brooks, chairman, president and chief executive officer. “Our first quarter performance was highlighted by 20 percent top-line growth in our retail segment fueled by strong gains in both direct-to-consumer sales and our Lehigh safety shoe business. We also experienced solid sell-through for several of our leading brands with key wholesale accounts, which is driving an acceleration in bookings for the remainder of 2025. Better full-priced selling and a higher proportion of retail sales led to a 210-basis point increase in gross margin, which combined with a meaningful reduction in interest expense, and resulted in a 77.9 percent increase in Q1 2025 adjusted net income.”

Brooks continued, “We’ve been working quickly to mitigate the impact of higher tariffs recently imposed by the U.S. and believe we have a sound plan in place to protect profitability. Later in the second quarter, we expect to implement price increases on most of our footwear styles. At the same time, we are moving faster to reduce the amount of product that we source from China. While we expect that higher price points will put some pressure on consumer demand, we believe the strength and desirability of our brands and products along with our diversified sourcing structure that includes our own manufacturing facilities in the Dominican Republic and Puerto Rico will allow us to achieve our financial targets for the year.”

First Quarter 2025 Review
First quarter net sales increased 1.1 percent to $114.1 million compared with $112.9 million in the first quarter of 2024. Wholesale sales for the first quarter decreased 6.3 percent to $74.8 million compared to $79.8 million in the first quarter of 2024. Retail sales for the first quarter increased 20.4 percent to $36.6 million compared to $30.4 million in the first quarter of 2024. Contract Manufacturing sales remained flat at $2.7 million in the first quarter of 2025 and 2024.

Gross margin in the first quarter of 2025 was $47.0 million, or 41.2 percent of net sales, compared to $44.1 million, or 39.1 percent of net sales, for the same period last year. The increase in gross margin as a percentage of net sales was attributable to increased Wholesale margins as well as increased Retail sales, which carry a higher gross margin than the Wholesale and Contract Manufacturing segments.

Operating expenses were $38.3 million, or 33.6 percent of net sales, for the first quarter of 2025 compared to $36.2 million, or 32.0 percent of net sales, for the same period a year ago. Excluding $0.7 million of acquisition-related amortization in the first quarter of 2025 and 2024, adjusted operating expenses were $37.6 million in the current year period and $35.5 million in the year ago period. As a percentage of net sales, adjusted operating expenses were 33.0 percent in the first quarter of 2025 compared with 31.4 percent in the year ago period. The increase in operating expenses was driven primarily by higher selling and logistics costs associated with the increase in our direct-to-consumer business compared with the year ago period.

Income from operations for the first quarter of 2025 was $8.7 million, or 7.6 percent of net sales, compared to $8.0 million, or 7.1 percent of net sales, for the same period a year ago. Adjusted income from operations for the first quarter of 2025 was $9.4 million, or 8.2 percent of net sales, compared to adjusted income from operations of $8.7 million, or 7.7 percent of net sales, a year ago.

Interest expense for the first quarter of 2025 was $2.4 million compared with $4.5 million for the prior year period. The decrease was driven by lower interest rates as a result of the debt refinancing completed in April 2024 as well as lower debt levels.

The company reported first quarter net income of $4.9 million, or $0.66 per diluted share compared to $2.6 million, or $0.34 per diluted share in the first quarter of 2024. Adjusted net income for the first quarter of 2025 was $5.5 million, or $0.73 per diluted share, compared to $3.1 million, or $0.41 per diluted share in the year ago period.

Balance Sheet Review
Cash and cash equivalents were $2.6 million as of March 31, 2025, compared to $3.1 million on the same date a year ago.

As of March 31, 2025, total debt, net of unamortized debt issuance costs of $2.1 million, was $128.6 million consisting of a $33.0 million senior term loan and $97.7 million of borrowings under the company’s senior secured asset-backed credit facility. As of March 31, 2025, total debt, net of unamortized debt issuance costs was down 17.5 percent from March 31, 2024 and was flat compared to December 31, 2024.

Inventories as of March 31, 2025, were $175.5 million, up 6.3 percent compared to $165.1 million on the same date a year ago and up 5.3 percent compared to $166.7 million as of December 31, 2024.

The company’s brand portfolio includes Rocky, Georgia Boot, Durango, Lehigh, The Original Muck Boot company, Xtratuf, and Ranger.

Image courtesy Durango