Rocky Brands, Inc. management said they expected first quarter sales and earnings to be down versus the comp period last year as they were unable to anniversary “tough comparisons” in their Retail division and “higher-than-normal” gross margins.  The top line was also hurt by “lower-than-anticipated” wholesale sales, primarily in the company’s Work and Western segments. 


On a conference call with analysts, company Chairman and CEO Mike Brooks said that more and more of their retail partners have “cut back on the size and frequency of their orders and choosing to operate with leaner in-stock positions until the market condition improves.”  Still, Brooks said there are a few factors specific to the business that have them “cautiously optimistic” about their prospects in the back half of this year.

Revenues for the first quarter decreased 17.2% to $50.1 million from $60.5 million in the year-ago period. The company reported a net loss of $1.1 million, or 20 cents per diluted share, for the period, compared to a net income of $0.3 million, or 5 cents per diluted share in the year-ago period.

In anticipation of lagging sales, the company implemented several “damage control” applications to cut various expenses from the budget. SG&A expenses, which were 39.8% of sales compared to 38.1% of sales a year ago,  were cut by 13.5% through reductions in salaries and benefits, advertising expenses, sales commissions and ongoing efforts to drive more of the company’s Lehigh Safety shoe business to the Web.  The downsizing of the Lehigh mobile fleet operations was said to have contributed to the reduction “significantly.”  RCKY is now operating with about 65 trucks, down about 20 from December of last year.


Sports Executive Weekly has learned that Bob Rutter, the company’s former SVP of Sales & Marketing, has left the company. 
Revenues in the company’s Work category, which includes the Georgia Boot, Rocky, Dickies and Michelin brands, fell 15.9% to $18.5 million from $22.0 million in the year-ago period. Management attributed the decline to actions by retailers to reduce their inventory models in the first quarter.

The company’s Western category saw sales fall 10% to $7.2 million from $8.0 million a year ago, while sales of Duty footwear were up nearly 40% to $5.3 million in the first quarter from $3.8 million in the year-ago period.

Retail sales, which management said suffered due to “customers defer(ring) their purchases due to cutback of their facilities,” fell 28.6% to $13.7 million from $18.9 million in the year-ago period.  However, the company also saw customers open 1,300 Web sites in the quarter.
Wholesale sales fell 9.3% to $36.0 million from $39.7 million a year ago.


Brooks sees RCKY’s year-over-year comparisons moderating beginning with the third quarter and the company  has started to see a shift in their sales back to more of a back-half time frame. He said the shift in retail buying patterns indicates that a greater percentage of their overall business will now occur between approximately June and November.  He also said they have seen a “very nice response” to the new hunting and work footwear, particularly from several major accounts, and this is reflected in “a solid increase” in backlog for fall.  The company also recently signed a distribution agreement for Rocky hunting footwear and apparel with Garlands, who Brooks described as “one of the premiere hunting distributors in the U.K.”   Lastly, Brooks said they would expect to gain some incremental business as a result of the multiple spending programs recently announced by the federal government which is expected to put people to work on construction programs.