“While cautious consumer spending outside of peak shopping periods and warm, dry weather acted as headwinds this quarter, the underlying strength of our business remains intact… The benefits of our multi-brand, multi-channel model were evident in the third quarter as double-digit sales growth in both our Durango brand and our Lehigh CustomFit safety footwear platform partially offset wholesale declines primarily within our work, outdoor and commercial military categories”, commented Jason Brooks, Chairman, President and Chief Executive Officer at Rocky Brands.

Rocky Brands reported an 8.8% decline in net sales in the third quarter of 2024, totalling 114.6 million US dollars, as compared to 125.6 million US dollars in the same period of 2023. Excluding non-recurring sales related to discontinued Servus manufacturing, a new distributor model in Canada and unique commercial military sales from 2023, the adjusted year-over-year decrease in net sales was 2.4%.

Third quarter wholesale sales were down by 15.7% year-on-year at 84 million US dollars. In contrast, retail sales climbed by 9.2% on a comparable basis to reach 26.8 million US dollars. The contract manufacturing segment also performed well, generating 3.8 million US dollars, as compared to 1.4 million US dollars in the third quarter of 2023.

The company’s gross margin rose to 38.1% of net sales, as compared with 37.0% in the same period in the previous year. The margin improvement was primarily due to a higher proportion of sales from the retail segment, which offers a more favourable margin profile than the wholesale and contract manufacturing segments. This shift in sales mix boosted overall profitability despite decreased net sales.

In this period, operating expenses were 33.6 million US dollars or 29.3% of net sales. Adjusted for acquisition-related amortisation and prior restructuring costs, operating expenses rose to 32.9 million from 30.7 million US dollars last year. This increase reflects Rocky Brands’ continued investment in brand-building and advertising to support future growth.

In the third quarter of the current year, Rocky Brands' income from operations was 10.1 million US dollars, down from 14.3 million US dollars in the previous year, translating to an 8.8% operating margin compared to 11.4% in the third quarter of 2023. Adjusted operating income, excluding acquisition and restructuring costs, was 10.8 million US dollars, or 9.4% of net sales.

Interest expenses decreased, falling to 3.3 million from 5.8 million US dollars in the same period of 2023, largely due to lower debt levels and refinancing achieved earlier in 2024.

Rocky Brands’ net income in the third quarter was 5.3 million US dollars, or 0.70 US dollars per diluted share, on a comparable basis to 6.8 million US dollars, or 0.93 US dollars per diluted share, in the same period of last year. On an adjusted basis, net income was 5.8 million US dollars, or 0.77 US dollars per diluted share, as compared to 8.0 million US dollars, or 1.09 US dollars per diluted share, in the third quarter of 2023.

Brooks also shared his perspective on the company’s short-term future: “Based on our current order book for 2025, we believe this softness is transitory and that recent brand and marketing investments, along with our improved capital structure, have the company well-positioned to drive sustainable, profitable growth and long-term shareholder value”.