As the wholesale channel bounced back after a decline in the second quarter, Rocky Brands’ net income rose by 36.0 percent to $7.6 million in the third quarter, on revenues that progressed by 15.8 percent from the year-ago quarter to $77.8 million.
The management highlighted strong demand for its product lines, which drove increased full priced selling in stores and online. These top-line dynamics contributed to meaningful gains in gross margins and operating expense leverage, resulting in a strong increase in profitability.
In the wholesale segment, sales improved by 19.3 percent to $56.3 million, with all of wholesale doors open during the quarter and many resuming normalized hours and operations. With many of the group’s retailers reducing inventory levels and canceling receipts early in the pandemic, there was pent-up demand for product as consumers started to return to stores in greater numbers.
Retail sales increased by 11.4 percent to $16.1 million, with strong growth in the e-commerce channel. Total web sales were up by 50 percent, with Georgia, Rocky and Durango all increasing by high double digits. Meanwhile, military segment sales for the third quarter were $5.3 million, down from $5.4 million last year.
In terms of category and brand performance, Work, the largest category, was up by 20 percent, led by Georgia Boot’s new collections. There was also an interest spike in several of Georgia’s core items such as the Romeo and the Giant, driven by more casual work from home policies that are still in effect in many parts of the country.
The Western category experienced a significant turnaround from the second quarter, climbing by 27 percent year-on-year, as consumer shopping in stores and online responded favorably to the Durango brand’s new series like the Rebel Pro and the Maverick. Kids’ products also performed well.
The Rocky brand had another solid quarter. The outdoor business has held up well as travel restrictions have kept people closer to home and social distancing requirements have benefited outdoor activities. Sales were also helped by several new products introduced this year, particularly with the Rubber Boot category.
In Rocky’s Commercial Military division, the business posted a substantial year-over-year increase, boosted by its partnership with Atlantic Diving Supply. It supplied military footwear forces of several bases around the world with its insulated waterproof S2V boots.
Overall, the group’s gross margin expanded by 1.2 percentage points to 38.4 percent, driven by higher wholesale margins due to increased full priced selling along with higher retail margins, partially offset by lower military margins compared to 2019.
In the fourth quarter, Rocky Brands forecasts solid gains in both the wholesale and retail segments, although it expects trends to moderate from third quarter levels as the pent-up demand it experienced early in the store reopening process continues to fade.