US' Rocky Brands to hike prices in Q2, cut China sourcing amid tariffs
Jason Brooks, chairman, president and chief executive officer (CEO) , said, 'We have been working quickly to mitigate the impact of higher tariffs recently imposed by the US and believe we have a sound plan in place to protect profitability. Later in the second quarter, we expect to implement price increases on most of our footwear styles. At the same time, we are moving faster to reduce the amount of product that we source from China. While we expect that higher price points will put some pressure on consumer demand, we believe the strength and desirability of our brands and products along with our diversified sourcing structure that includes our own manufacturing facilities in the Dominican Republic and Puerto Rico will allow us to achieve our financial targets for the year.'
Rocky Brands plans to raise footwear prices in Q2 to offset new US tariffs and is accelerating its shift from Chinese sourcing to facilities in Dominican Republic and Puerto Rico. Q1 net sales rose 1.1 per cent YoY to $114.1 million, with retail sales up 20.4 per cent. Net income more than doubled to $4.9 million. Gross margin rose to 41.2 per cent, driven by stronger wholesale and retail performance.
The company has recorded net sales of $114.1 million in the first quarter (Q1) of 2025, ended March 31, an increase of 1.1 per cent year-over-year (YoY). The gross margin increased by 210 basis points (bps) to 41.2 per cent of net sales compared to 39.1 per cent of net sales in Q1 2024. The increase in gross margin as a percentage of net sales was attributable to increased wholesale margins as well as increased retail sales.
The wholesale sales in Q1 decreased by 6.3 per cent YoY to $74.8 million and retail sales increased 20.4 per cent to $36.6 million. Contract manufacturing sales remained flat at $2.7 million in Q1 of 2025.
Operating expenses were $38.3 million, or 33.6 per cent of net sales, in Q1 2025. As a percentage of net sales, adjusted operating expenses were 33.0 per cent in Q1 2025. The increase in operating expenses was driven primarily by higher selling and logistics costs associated with the increase in the direct-to-consumer (DTC) business compared with the year ago period, Rocky Brand said in a press release.
The income from operations in Q1 2025 was $8.7 million, or 7.6 per cent of net sales, compared to $8.0 million, or 7.1 per cent of net sales, for the same period a year ago.
The company reported net income of $4.9 million, or $0.66 per diluted share compared to $2.6 million, or $0.34 per diluted share in Q1 2024. Adjusted net income for Q1 2025 was $5.5 million, or $0.73 per diluted share, compared to $3.1 million, or $0.41 per diluted share in the year ago period.
The inventories increased by 6.3 per cent YoY and total debt as of March 31, 2025, was down 17.5 per cent YoY.
'We experienced healthy demand across our brand portfolio and throughout our distribution channels to start the new year. Our first quarter performance was highlighted by 20 per cent top-line growth in our retail segment fuelled by strong gains in both direct-to-consumer sales and our Lehigh safety shoe business,' added Brooks.
Fibre2Fashion News Desk (SG)
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