Rocky Brands Sinks into the Red in Q4…

Hurt by a slowdown in its western boot business, Rocky Brands Inc. reported a loss of $100,000 against a profit of $2.6 million, or 46 cents per share, a year ago. Revenues fell 5.7% to $70.6 million from $74.9 million.

On a conference call with analysts, Rocky officials said western boot sales declined to $11.5 million from $12.4 million a year ago, reflecting a fashion shift away from those styles. Outdoor footwear sales increased 19.4% to $8.6 million, representing the first quarter of positive growth in 2006 for this business. For the full year, however, sales were down 15.1% to $35.4 million.

In its biggest segment, sales of work boots, including Dickies and Rocky, rose to $25.6 million from $25.3 million. The military boot business had no sales in Q4 versus $8.7 million a year ago.

Gross margins improved to 40% of sales from 36.3% last year primarily due to the decrease in shipments to the U.S. military boots, which are sold at lower gross margins than branded products. But SG&A expenses increased to 35.7% of sales from 28.3% a year ago, primarily due to higher payroll and healthcare costs, licensing fees, trade show expenses, distribution expenses and the write-down of intangible assets related to the Gates trademark.

Based on current information, Rocky expects fiscal 2007 revenues to increase approximately 5% over 2006 levels and diluted earnings per share to increase approximately 35% over 2006 levels.