Rocky Brands’ net income surged by 91.1 percent in the fourth quarter to $9.7 million, which includes $0.7 million related to the pending acquisition of the performance and lifestyle footwear business of the U.S. conglomerate Honeywell International for $230 million. The deal is expected to close by the end of March. The assets acquired are The Original Muck Boot Company, XTRATUF, Servus, NEOS and Ranger brands.
Revenues progressed by 16.3 percent from the year-ago quarter to $87.6 million, led by double-digit gains at wholesale and retail. The gross margin expanded by 3.7 percentage points to 41.2 percent, supported by better product margins in the wholesale and retail channels.
The management said it capitalized on the opportunities that emerged after Covid-related lockdowns, when consumers returned to shopping at brick-and-mortar retail, thanks to the advantages of its internal manufacturing and enhanced fulfillment capabilities. It also highlighted strong demand for its product lines, which drove increased full-priced selling in stores and online.
The wholesale channel was up by 21.7 percent to $59.9 million, while retail grew by 13.1 percent to $23.5 million. However, military sales were off by 21.0 percent to $4.2 million.
By category, the Work segment saw sales progress by 18 percent, led by Georgia Boot as the brand’s new collections performed well. The Western category’s sales surged by 43 percent. Durango had a strong finish to the year, driven by demand for flag boots and other patriotic products.
Meanwhile, the Outdoor business increased by 20 percent, as the lack of snowy weather in the fourth quarter was more than offset by the higher participation in hunting and overall enthusiasm for the outdoors.
For the full year, net income improved by 20.0 percent to $20.9 million, as revenues grew by 2.6 percent to $277.3 million.
In the wholesale segment, sales gained 3.4 percent to $185.6 million, retail sales increased by 12.4 percent to $72.9 million and military segment sales declined by 27.6 percent to $18.9 million.
Overall, the group’s gross margin expanded by 1.7 percentage points to 37.8 percent. Adjusted gross margin, which excludes $2.0 million in expenses related to the temporary closure of the company’s manufacturing facilities due to Covid-19, reached 38.5 percent, an increase of 2.6 percentage points. This was driven by a higher percentage of retail sales, which carry higher gross margins than wholesale and military sales, and higher wholesale and retail segment margins versus the same period last year.
In 2021, the management said it is planning for a solid year of growth, with revenues projected to increase in the mid-single-digit range, led by the retail division, followed by wholesale. Rocky was recently awarded a $3.5 million contract to produce a new safety boot for the U.S. Navy that it expects to start delivering in the third quarter of 2021. It is a one-year contract with the option of an extension for an additional two years. As a result, the group is expecting military segment sales to be flat this year.
The group also believes it can maintain overall gross margins at or slightly above 2020 levels, as it leverages costs on higher volumes and gains efficiencies in factories from increased production.