US' Rocky Brands' Q3 net sales up 17.5 per cent to $147.5 mn

Wholesale sales for the third quarter increased 25.8 per cent to $120.7 million compared to $96 million for the same period in 2021. Retail sales for the third quarter increased 7.3 per cent to $23.4 million compared to $21.8 million for the same period last year. Contract manufacturing sales, which include contract military sales and private label programmes, were $3.3 million in the third quarter of 2022 compared to $7.7 million in the prior year. The decrease in contract manufacturing sales was due to the expiration of certain contracts with the US Military, the company said in a media release.

“The third quarter was highlighted by strong sales growth compared to the year ago period even as the macroeconomic headwinds pressuring consumer discretionary spending intensified,” said Jason Brooks, chairman, president and chief executive officer. “Our top line performance underscores the strength of our brand portfolio, the desirability of our innovative, functional footwear, and the important relationships we’ve established with our consumers and retail partners. These important aspects of our business, combined with actions we’ve already taken to address cost pressures and reduce expenses, have the company in a good position to weather this challenging operating environment. While projecting near-term demand trends is currently more difficult than usual, we are confident that our growth strategies will continue to drive sustained market share gains and increase shareholder value.”

Gross margin in the third quarter of 2022 was $51.9 million, or 35.2 per cent of net sales, compared to $47 million, or 37.4 per cent of net sales, for the same period last year. Excluding the cost of goods sold related to the NEOS brand inventory sold during the quarter, adjusted gross margin for the third quarter 2022 was $50.8 million, or 35.3 per cent of adjusted net sales.

Adjusted gross margin for the third quarter 2021, which excluded a $0.9 million inventory purchase accounting adjustment, was $47.8 million, or 38.1 per cent of net sales. The decrease in gross margin as a percentage of adjusted net sales was mainly attributable to increases in product costs, inbound freight costs and other shipping and logistics costs compared with the year ago period.

Operating expenses were $40.3 million, or 27.3 per cent of net sales, for the third quarter of 2022 compared to $44.2 million, or 35.2 per cent of net sales, for the same period a year ago. Excluding $0.9 million of acquisition-related amortisation and disposition of assets in the third quarter of 2022 and $2.9 million in acquisition-related amortization and integration expenses in the third quarter of 2021, adjusted operating expenses were $39.5 million in the current year period and $41.3 million in the year ago period.

The decrease in operating expenses was driven primarily by a decrease in discretionary spending and improved distribution centre efficiencies compared with the year ago period. As a percentage of adjusted net sales, adjusted operating expense improved 549-basis points to 27.4 per cent in the third quarter 2022 compared with 32.9 per cent in the year ago period, the release added.

Income from operations for the third quarter of 2022 was $11.6 million, or 7.9 per cent of net sales compared to $2.8 million or 2.2 per cent of net sales for the same period a year ago. Adjusted operating income for the third quarter of 2022 was $11.3 million, or 7.9 per cent of net sales compared to adjusted operating income of $6.5 million, or 5.2 per cent of net sales a year ago.

Interest expense for the third quarter of 2022 was $4.2 million compared with $3.2 million a year ago.

The company reported third quarter net income of $5.7 million, or $0.77 per diluted share compared to a net loss of ($0.4) million, or $(0.05) per diluted share in the third quarter of 2021. Adjusted net income for the third quarter of 2022 was $5.5 million, or $0.74 per diluted share, compared to adjusted net income of $2.5 million, or $0.34 per diluted share in the year ago period.

Fibre2Fashion News Desk (KD)