“Our quarterly performance saw meaningful improvement on a sequential basis as demand for our product improved, resulting in further reduced channel inventory levels and an acceleration in at-once orders from many of our key wholesale partners. Despite the difficult start to 2023, we were confident that our results for the first half of 2023 reflected macroeconomic headwinds and industry dynamics more than the strength and desirability of our brand portfolio. While current market conditions remain challenging, the pace of our sales picked up in the third quarter driven by improved retailer inventory positions and ongoing consumer demand for our durable, innovative and accessibly priced work, western and outdoor footwear”, commented Jason Brooks, Chairman, President and Chief Executive Officer.

Third Quarter Results

In the third quarter of the current fiscal year, the company’s total net sales were down by 14.8%, as compared to the same period of last year, totalling 125.6 million US dollars.

The wholesale segment recorded a net sales decrease of 17.4% in this period to 99.7 million US dollars, while the retail segment saw its sales decline only by 4.7% to 24.5 million US dollars, on a comparable basis to the third quarter of 2022. The contract manufacturing segment's third quarter sales amounted to 1.4 million US dollars, as compared to 3.3 million US dollars in the same period a year ago, “due to the expiration of certain contracts with the US Military”.

In the third quarter of 2023, Rocky Brands’ gross margin improved to 37.0% from 35.2% in the same quarter of the previous year, and the adjusted gross margin expanded by 170 basis points to 35.3%, “driven by higher Wholesale segment gross margins from the realization of pricing actions taken in the second half of 2022, as well as decreases in inbound logistics costs, and a higher mix of Retail segment sales”.

In the three months to the 30^th of September, the company’s net income was 6.8 million US dollars, or 0.93 US dollars per diluted share, on a comparable basis to a net income of 5.7 million US dollars, or 0.77 US dollars per diluted share. Moreover, its adjusted net income totalled 8.0 million US dollars, or 1.09 US dollars per diluted share, as compared to the adjusted net income of 5.5 million US dollars, or 0.74 US dollars per diluted share, recorded in a similar period a year ago.