Rocky Brands, Inc. reported earnings, as expected, declined in the first quarter as escalated sourcing costs tied to tariffs offset healthy full-price selling. Sales grew 9.1 percent on strength in its XTRATUF and Muck brands and strong online growth across its portfolio.

First Quarter 2026 Overview

  • Net sales increased 9.1 percent to $124.4 million versus the year-ago quarter
  • Gross margin decreased 470-basis points to 36.5 percent of net sales compared to 41.2 percent of net sales in the year-ago quarter
  • Income from operations decreased 58.2 percent to $3.6 million compared to $8.7 million in the year-ago quarter
  • Net income decreased 74.5 percent to $1.3 million, or 17 cents per diluted share, as compared to net income of $4.9 million, or 66 cents per diluted share, in the year-ago quarter
  • Adjusted net income decreased 67.1 percent to $1.8 million, or $0.24 per diluted share, as compared to $5.5 million, or $0.73 per diluted share, in the year-ago quarter
  • Inventories as of March 31, 2026 decreased 1.6 percent to $172.6 million compared to $175.5 million at March 31, 2025
  • Total debt as of March 31, 2026 decreased 5.0 percent to $122.2 million compared to $128.6 million at March 31, 2025

“The momentum we experienced in our business last year carried over into 2026, driving net sales growth of approximately 9 percent for the second consecutive quarter,” said Jason Brooks, chairman, president and chief executive officer. “Our first quarter top-line performance was driven by continued strength in XTRATUF and Muck across selling channels, combined with robust demand online for our entire brand portfolio. Profitability was in line with our expectations as we anticipated higher sourcing variances, mainly as a result of increased tariffs of approximately $7.1 million in the first quarter of 2026 compared to the year-ago period. These tariffs were partially offset with strong full-price selling, channel mix, and our mitigation actions last year, namely raising prices and diversifying our sourcing, including leveraging our own manufacturing facilities. Moving forward, the impact from higher tariffs begins to lessen in the second quarter which, along with current top-line trends, provides a clear path back to gross margins in the low 40 percent range and improvement in profitability over the second half of the year.”

First Quarter 2026 Review

First quarter net sales increased 9.1 percent to $124.4 million compared with $114.1 million in the first quarter of 2025. Wholesale segment net sales for the first quarter increased 4.8 percent to $78.4 million compared to $74.8 million in the first quarter of 2025. Retail segment net sales for the first quarter increased 16.5 percent to $42.7 million compared to $36.6 million in the first quarter of 2025. Contract Manufacturing segment net sales for the first quarter increased 25.0 percent to $3.3 million compared to $2.6 million in the first quarter of 2025.

Gross margin in the first quarter of 2026 was $45.4 million, or 36.5 percent of net sales, compared to $47.0 million, or 41.2 percent of net sales, for the same period last year. The decrease in gross margin as a percentage of net sales was attributable to an increase in sourcing variances, mainly tariff-related costs of approximately $7.1 million in the first quarter of 2026 compared to the year-ago quarter.

Operating expenses were $41.8 million, or 33.6 percent of net sales, for the first quarter of 2026 compared to $38.3 million, or 33.6 percent of net sales, for the same period a year ago. Excluding $0.7 million of acquisition-related amortization in the first quarter of 2026 and 2025, adjusted operating expenses were $41.1 million, or 33.0 percent of net sales, in the current year period and $37.6 million, or 33.0 percent of net sales, in the year-ago period.

Income from operations for the first quarter of 2026 was $3.6 million, or 2.9 percent of net sales, compared to $8.7 million, or 7.6 percent of net sales, for the same period a year ago. Adjusted income from operations for the first quarter of 2026 was $4.3 million, or 3.5 percent of net sales, compared to adjusted income from operations of $9.4 million, or 8.2 percent of net sales, a year ago, reflecting the impact of higher tariffs in the first quarter of 2026.

Interest expense for the first quarter of 2026 was $2.1 million compared with $2.4 million for the prior year period. The decrease in interest expense was driven by lower debt levels.

The company reported first quarter of 2026 net income of $1.3 million, or $0.17 per diluted share, compared to $4.9 million, or $0.66 per diluted share, in the first quarter of 2025. Adjusted net income for the first quarter of 2026 was $1.8 million, or $0.24 per diluted share, compared to $5.5 million, or $0.73 per diluted share, in the year-ago period.

Balance Sheet Review

Cash and cash equivalents were $1.7 million as of March 31, 2026 compared to $2.9 million and $2.6 million as of December 31, 2025 and March 31, 2025, respectively.

As of March 31, 2026, total debt, net of unamortized debt issuance costs of $1.6 million, was $122.2 million, consisting of a $99.1 million senior term loan and $24.7 million of borrowings under the company’s senior secured asset-backed credit facility. As of March 31, 2026, total debt, net of unamortized debt issuance costs was down 5.0 percent from March 31, 2025, and was down 0.4 percent compared to December 31, 2025.

Inventories as of March 31, 2026, were $172.6 million, down 1.6 percent compared to $175.5 million on the same date a year ago and down 4.7 percent compared to $181.1 million as of December 31, 2025.

Rocky Brands’ portfolio includes Rocky, Georgia Boot, Durango, Lehigh, The Original Muck Boot Company, XTRATUF and Ranger.

Image courtesy XTRATUF