By David Clucas
Last year’s warm winter, coupled with an economic downturn in the oil-patch regions of the country, hasn’t boded well for outdoor boot makers.
That is, unless they invested heavily in the lifestyle side of the market.
While the above factors sank sales for traditional outdoor and work boots, lifestyle boots — which flourished as a fashion trend — have generally sold well.
Bootmaker Rocky Brands Inc. (NYSE:RCKY) admitted to investors August 17 that it was off the mark this past winter, and said that it is working with third-party advisors to restructure the company, including reducing expenses, reorganizing and refocusing its sales efforts and increasing operating efficiencies.
The company, whose brands include Rocky, Georgia Boot, Durango, Lehigh, Creative Recreation and the licensed brand Michelin, said part of the changes will include shifting more resources to support its lifestyle segment growth prospects, which officials believe will help reduce its dependence on weather and improve profits.
The restructuring also included layoffs, which are expected to result in approximately $3 million in reduced annualized operating expenses once the plan is fully implemented, officials said. Local media in Rocky Brands’ hometown of Nelsonville, OH reported at least 20 layoffs at the company’s headquarters, retail stores and distribution centers.
“Similar to many of its direct competitors, including the North American operations of the Heritage Group of Wolverine Worldwide and Timberland Pro Group of VF Corporation, the company’s net sales in the first half of 2016 were affected by unusually warm weather, retailer strategies to lower their inventory levels, increased e-commerce sales, volatility in the oil and gas markets and lower consumer spending for soft goods generally, including footwear,” officials said.
The company’s profitability in the first half of 2016 was also impacted by additional costs to significantly increase production of contract military boots at its Puerto Rico factory, officials said, noting that Rocky Brands will continue to make investments in its internal manufacturing capabilities to take advantage of the current strong demand.
Rocky Brands plans to continue returning capital to shareholders through its quarterly dividend of 11 cents per share, or approximately $3.3 million annually, and through its $7.5 million share buyback program ($1.24 million purchased to date) authorized by the board in March 2016 and in effect through February 2017.
Lead photo courtesy Rocky Brands
