Rocky Shoes & Boots benefited not only from their latest military deal, but also from the companys focused expansion of products in footwear, apparel and Gates gloves throughout the quarter. Overall, Rocky posted a 25.5% sales increase to $27.4 million compared to 2003 Q2 sales of $21.9 million.
In a conference call with analysts, David Sharp, Rockys EVP & COO, said that military sales for the second quarter were $2.8 million. A $16.4 million contract calls for $1.6 million of product to be shipped every 30-day period. Without the benefit of the Military orders in Q2, Rocky sales still increased 12.3%. Outdoor sales were said to be “down slightly” but bookings are up substantially.
Much of the increase in sales was attributed to Rocky brand product line extension, and the additional sales from the acquired Gates business, which contributed $4.8 million in Q2 of 2004 compared to $2.1 million last year. Rocky has also launched a new merchandising initiative which has installed 100-200 square foot store-in-store fixtures in around 150 retail doors.
Gross margin declined 250 basis points to 28.3% for the second quarter versus 30.8% a year ago due to shipments of boots for delivery to the U.S. military and related start-up costs for these boots. Net income rose 32.1% to $1.4 million for the second quarter of 2004 from $1.1 million in the second quarter of 2003. Net income per diluted share increased 16.0% to 29 cents a share in Q2 from 25 cents a share in Q2 last year.
Management said that fall bookings were “on track to meet forecast.” Including military, backlog was up 46.9% to $94 million versus $64 million last year. Branded backlog was $50 million, up 6.4% from $47 million last year.
Rocky has also taken the first step towards what might turn into a Rocky branded retail chain. Two Green Bay businessmen, Matt Olson and Tony Wied, have launched the first Rocky Outdoor Gear store. Rocky Shoes & Boots does not own or operate the store, but according to Sharp, 100% of the merchandise is Rocky or Gates. The plan is only to watch this one store as a test for a potential future roll-out. Sharp said they had not run the idea past existing customers yet, since it was too early in the planning period, and no decision has been made about more stores in the future.