In This Article:
Release Date: April 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Rocky Brands Inc (NASDAQ:RCKY) reported a 20% top line growth in their retail segment, indicating strong demand.
-
The company achieved record first-quarter gross margins, marking their second-highest gross margin ever.
-
Adjusted debt income increased by 78% year over year, aided by a significant reduction in interest expense.
-
The Extra Tough brand experienced double-digit growth and expanded its reach into new regions and demographics.
-
Rocky Brands Inc (NASDAQ:RCKY) successfully launched new styles and collaborations, including a partnership with the US rowing team.
Negative Points
-
Higher tariffs imposed by the US, particularly on China, present a significant challenge and uncertainty.
-
Wholesale sales were down by $5 million or 6.3%, with a notable decrease in commercial military sales.
-
Operating expenses increased, driven by higher selling and logistics costs associated with direct consumer sales.
-
The Georgia Boot brand experienced a slowdown in March due to economic uncertainty and delayed orders.
-
The company anticipates pressure on consumer demand due to planned price increases in response to tariffs.
Q & A Highlights
Q: Can you elaborate on how Rocky Brands is managing the impact of tariffs and the shift in sourcing from China? A: (Tom Robertson, CFO) We are in a strong inventory position, allowing us to buffer against tariff impacts while transitioning sourcing to Vietnam, India, Cambodia, and our facilities in the Dominican Republic and Puerto Rico. We expect to reduce our reliance on China to less than 20% by year-end. We are also planning price increases to offset tariff costs, with announcements expected soon.
Q: How are wholesale partners reacting to potential price increases, and what is the consumer sentiment? A: (Jason Brooks, CEO) Our wholesale bookings remain strong, and we haven't seen significant pushback from partners or consumers regarding price increases. Retailers are managing the situation cautiously, and there is no panic among consumers. We are monitoring peers and market conditions closely.
Q: Can you clarify the guidance for the year regarding revenue and gross profit? A: (Tom Robertson, CFO) We plan to implement price increases, which will slightly boost top-line growth. However, we anticipate some volume uncertainty, aiming to maintain gross profit dollars, resulting in a lower gross profit percentage. Our EPS guidance remains just below last year's adjusted EPS.