After several quarters of good results, Rocky Brands ended the year on a high, scoring a net income increase of 41.0 percent for the fourth quarter to $5.1 million, on revenues that went up by 12.1 percent to $75.3 million, both exceeding analysts’ forecasts.
The management attributed the significant improvement in earnings to continued progress in enhancing gross margins through a better segment mix, increased manufacturing efficiencies and higher sales at full prices, which has enabled Rocky to make additional investments in people, resources and marketing programs to support sustained growth in the turnover.
The company also pointed to a strong momentum in the Rocky, Georgia Boot and Durango brands and robust growth in the retail segment. Retail sales in the quarter jumped by 26.0 percent to $20.8 million, driven by both the Lehigh CustomFit safety shoe program and the direct-to-consumer channel. The division delivered its third consecutive quarter of growth above 20 percent. The addition of new styles from Rocky, Georgia, New Balance and Skechers as well as the implementation of new social marketing initiatives and promotional placements help improve engagement and sell-through.
In the wholesale segment, sales improved by 7.3 percent to $49.3 million, led by strong gains in the work, western and commercial military categories. Georgia grew by high-single digits, thanks to continued success at key retailers like Tractor Supply, Boot Barn and Amazon. Durango’s sales were up by mid-teens, fueled by the continued growth of legacy items including the brand’s popular flag boots, combined with the successful introduction of the PX premium boots and others. For the Rocky brand, sales were up by low to mid-single digits, with a strong increase in the commercial military bases, partially offset by some softness in outdoor.
Military segment sales increased by 10.4 percent to $5.3 million. The company recently started delivering its general safety boots under a U.S. Navy contract that it received from the Defense Logistics Agency in May, which it said will provide some relief in 2020.
Overall, the gross margin expanded by 1.6 percentage points to 37.5 percent, driven by a higher percentage of retail sales, which carry higher gross margins than wholesale and military sales, and improved wholesale, retail and military segment margins versus the same period of last year.
For the full financial year, the group’s revenues gained 7.0 percent to €270.4 million. Retail sales increased by 21.8 percent to $64.8 million, while wholesale was up by 3.7 percent to $179.5 million. Military segment sales declined by 1.1 percent to $26.1 million. The gross margin improved by 1.70 percentage points to 36.1 percent of sales, and net income rose by 20.0 percent to $17.5 million.
Looking ahead, the group said it has received a purchase agreement from the Defense Logistics Agency to produce general-purpose safety boots for the U.S. Navy. Under the terms of this agreement, the agency has the right to purchase about 27 million of these boots up to May 2022.