Rocky Shoes and Boots used its new apparel, extended footwear line, and the acquisition of Gates Gloves to post a 14.2% increase in sales for the fourth quarter of 2003, from $25.6 million in 2002 to $29.2 million this year. Net income increased 34.1% in the quarter to a new company record of $2.1 million, compared to $1.6 million last year.
Fourth quarter results also benefited from a 13.5% increase in branded sales, led by growth in the Work and Outdoor categories and GATES products. The company also highlighted that $400,000 in boots were manufactured for shipment to the U.S. military this year versus $100,000 for the same period in 2002.
Year-to-date results demonstrated similar growth, with net sales, net income and diluted EPS achieving record levels. Net sales rose 19.3% to $106.2 million for the year compared to $89.0 million the prior year. This sales increase came in spite of a decline of $6.1 million in military sales. The company attributed their success to a 28% increase in branded product sales, primarily attributable, again, to the Work, Outdoor and ROCKY Gear categories as well as the newly acquired GATES products. Rockys stock repurchase plan helped the company increase diluted EPS 113% from 62¢ per share last year to $1.32 this year.
Mike Brooks, Chairman and CEO, said, “The strategic decisions we made two years ago to leverage our brand into apparel and additional footwear categories contributed to the record financial results for 2003. Last April we completed our first acquisition, the GATES brand, which also contributed to our improved performance and offers solid growth opportunities.”
Gross margin improved to 30.9% of net sales, a 460 basis point increase from 26.3% in the prior year. Rocky attributed this performance to a better sales mix and a rise in sourced product sales, which made up 66% of net sales for the year compared to 49% a year ago. Rocky also said that the decrease in military footwear sales boosted margins as well.
SG&A expenses for the year rose 50 basis points to $23.3 million, or 21.9% of net sales, versus $18.7 million, or 21.4% of net sales, the prior year.
Inventory also rose considerably to $38.1 million at the year end compared with $23.2 million on the same date last year. The company said that the increase in inventory is, “primarily to support sales of branded products as well as additional inventory to support sales of GATES branded products.”
Rocky is expecting approximately 15% sales growth for the next year which will come from a continued leveraging of their branded footwear, apparel and GATES products. If the Company achieves the 15% increase in net sales to at least $122 million next year, then net income is anticipated to be approximately $1.54 per diluted share compared to $1.32 for this year.
