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Rocky Brands Inc. Reports Operating Results (10-Q)

July 27, 2012 | About:
10qk

10qk

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Rocky Brands Inc. (RCKY) filed Quarterly Report for the period ended 2012-06-30.

Rocky Brands, Inc. has a market cap of $105.1 million; its shares were traded at around $11.7 with a P/E ratio of 8.6 and P/S ratio of 0.4. Rocky Brands, Inc. had an annual average earning growth of 2.8% over the past 10 years.

Highlight of Business Operations:

Net sales. Net sales for the three months ended June 30, 2012 were $44.4 million compared to $52.3 million for the same period in 2011. Wholesale sales for the three months ended June 30, 2012 were $34.7 million compared to $40.8 million for the same period in 2011. The $6.1 million decrease in wholesale sales was the result of a $3.0 million or 51.4% decrease in our hunting footwear category, a $2.0 million or 11.2% decrease in our work footwear category, a $0.7 million or 36.3% decrease in our apparel category, a $0.4 million or 8.6% decrease in our commercial military footwear category, a $0.2 million or 8.2% decrease in our duty footwear category and a $0.3 million decline in other, which was partially offset by a $0.5 million or 8.4% increase in our western footwear category. On June 29, 2012, severe storms eliminated power to more than 660,000 homes and businesses in Ohio including our distribution center in Logan, Ohio. As a result of this power outage, our shipping capabilities were temporarily suspended which caused approximately $2.5 million of shipments to move from the second quarter into the third quarter. In addition to the power outage, the decrease to the hunting category is due to retailers buying closer to the season than in the prior year period. Retail sales for the three months ended June 30, 2012 were $9.1 million compared to $10.9 million for the same period in 2011. The $1.8 million decrease in retail sales resulted from our ongoing transition to more internet driven transactions and the decision to remove a portion of our Lehigh mobile stores from operations to help lower operating expenses. Military segment sales for the three months ended June 30, 2012, were $0.6 million, compared to $0.6 million in the same period in 2011. From time to time, we bid on military contracts when they become available. Our sales under such contracts are dependent on us winning the bids for these contracts.

Gross margin. Gross margin for the three months ended June 30, 2012 was $15.4 million, or 34.6% of net sales, compared to $20.6 million, or 39.4% of net sales, in the same period last year. Wholesale gross margin for the three months ended June 30, 2012 was $11.1 million, or 31.9% of net sales, compared to $15.5 million, or 37.9% of net sales, in the same period last year. The 600 basis point decrease is primarily the result of an increase in product costs as a result of manufacturing variances in our production facility. Retail gross margin for the three months ended June 30, 2012 was $4.3 million, or 46.7% of net sales, compared to $5.1 million, or 46.7% of net sales, for the same period in 2011. Military gross margin for the three months ended June 30, 2012 was less than $0.1 million, or 4.5% of net sales, compared to $0.1 million, or 13.0% of net sales, for the same period in 2011.

SG&A expenses. SG&A expenses were $14.9 million, or 33.5% of net sales, for the three months ended June 30, 2012, compared to $16.9 million, or 32.2% of net sales for the same period in 2011. The net change primarily reflects decreases in compensation and benefits expense of $0.6 million, lower advertising expenses of $0.6 million and decreased operating expenses of $0.5 million for our retail operations due to the continued closing of mobile stores.

Net sales. Net sales for the six months ended June 30, 2012 were $97.7 million compared to $104.6 million for the same period in 2011. Wholesale sales for the six months ended June 30, 2012 were $77.1 million compared to $80.6 million for the same period in 2011. The $3.5 million decrease in wholesale sales was the result of a $2.8 million or 32.9% decrease in our hunting footwear category, a $1.0 million or 15.0% decrease in our duty footwear category, a $0.7 million or 29.3% decrease in our apparel category, a $0.2 million or 0.7% decrease in our work footwear category and a $1.6 million decline in other, which was partially offset by a $2.0 million or 15.2% increase in our western footwear category and a $0.8 million or 8.1% increase in our commercial military footwear category. As a result of the previously mentioned power outage, our shipping capabilities were temporarily suspended which caused approximately $2.5 million of shipments to move from the second quarter into the third quarter. In addition to the power outage, the decrease to the hunting category is due to retailers buying closer to the season than in the prior year. Retail sales for the six months ended June 30, 2012 were $19.6 million compared to $22.6 million for the same period in 2011. The $3.0 million decrease in retail sales resulted from our ongoing transition to more internet driven transactions and the decision to remove a portion of our Lehigh mobile stores from operations to help lower operating expenses. Military segment sales for the six months ended June 30, 2012, were $1.0 million, compared to $1.4 million in the same period in 2011. From time to time, we bid on military contracts when they become available. Our sales under such contracts are dependent on us winning the bids for these contracts.

Gross margin. Gross margin for the six months ended June 30, 2012 was $33.4 million, or 34.1% of net sales, compared to $39.9 million, or 38.1% of net sales, in the same period last year. Wholesale gross margin for the six months ended June 30, 2012 was $24.0 million, or 31.1% of net sales, compared to $28.8 million, or 35.7% of net sales, in the same period last year. The 460 basis point decrease is primarily the result of an increase in product costs as a result of manufacturing variances in our production facility and a rollout to all stores for one of our largest accounts in the first quarter of 2012 that negatively impacted gross margins due to temporary price concessions. Retail gross margin for the six months ended June 30, 2012 was $9.3 million, or 47.6% of net sales, compared to $10.9 million, or 48.2% of net sales, for the same period in 2011. The 60 basis point decrease is primarily the result of lower average selling prices, primarily in the first quarter of 2012. Military gross margin for the six months ended June 30, 2012 was less than $0.1 million, or 4.2% of net sales, compared to $0.2 million, or 13.1% of net sales, for the same period in 2011.

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