Rocky Brands Inc. announced financial results for its third quarter ended September 30, 2012.
Third quarter 2012 net income was $5.4 million compared with $5.2 million in the third quarter of 2011, and diluted earnings per share were $0.72 compared to $0.70 during the same period last year. Third quarter net sales were $72.5 million versus net sales of $71.0 million a year ago.
David Sharp, President and Chief Executive Officer, commented, “We are pleased that several of our more recently launched footwear initiatives once again delivered strong results. Double digit percentage gains in our western, commercial military and lifestyle categories, which include our new Durango City line of more fashion forward boots, fueled a 9% increase in footwear sales for the third quarter.
“As apparel sales to one of our customers continue to decline and growth projections for the overall work and hunting footwear markets remain modest, we are encouraged by our ability to successfully develop new growth vehicles for the future. We are also pleased with our continued progress towards improving our balance sheet. With funded debt down 30% from a year ago, the Company is now better positioned to capitalize on the long-term growth opportunities that lie ahead.”
Third Quarter Review
Wholesale sales for the third quarter increased 4.5% to $62.9 million compared to $60.2 million for the same period in 2011. The increase in wholesale sales was driven by a 9% increase in footwear sales, which was offset by a decline in apparel sales. Retail sales for the third quarter were $9.6 million compared to $10.3 million last year. There were no military segment sales for the third quarter compared to $0.4 million in the third quarter of 2011.
Gross margin in the third quarter of 2012 was $26.2 million, or 36.1% of sales compared to $25.6 million, or 36.0% for the same period last year.
Selling, general and administrative (SG&A) expenses increased 1.2% to $18.2 million or 25.2% of net sales, for the third quarter of 2012 compared to $18.0 million, or 25.4% of net sales a year ago. The $0.2 million increase is primarily due to higher advertising expenses partially offset by a decrease in compensation expense.
Income from operations was $7.9 million, or 10.9% of net sales, compared to $7.6 million, or 10.7% of net sales, in the prior year period.
Interest expense decreased to $0.2 million for the third quarter of 2012 versus $0.3 million due to lower borrowings versus the same period a year ago.
The Company’s funded debt decreased 30.3% or $18.2 million to $41.9 million at September 30, 2012 versus $60.1 million at September 30, 2011.
Inventory at September 30, 2012 decreased 7.4% or $5.9 million to $73.0 million compared with $78.9 million on the September 30, 2011.
Rocky Brands, Inc. is a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names including Rocky, Georgia Boot, Durango and Lehigh and the licensed brands Michelin and Mossy Oak. Rocky Brands is proud to supply footwear to the United States military.