Rocky Brands has sold its casual footwear brand, Creative Recreation, to a private equity firm, the Global Investment Group, at undisclosed conditions.
Rocky had bought the brand in 2013 for $11 million in an effort to diversify beyond the outdoor, work and military boot businesses. It has now decided to concentrate on its other brands including Rocky, Georgia Boot, Durango, Lehigh and a line of shoes licensed from France's Michelin.
Following a strong first half that marked its return to profitability, Rocky Brands posted a mixed third quarter, with significantly higher profits but lower wholesale revenues. Total revenues fell by 11.7 percent from the year-ago quarter to $64.7million, with each of the company's brands falling below sales targets, due to lower discounting.
However, the gross margin rose by 3.2 percentage points to 30.2 percent, thanks to significant improvements in both the wholesale and military segments, lifted by a combination of less discounting and the discontinuation of a low-margin private label program.
The management said it also added about $1.7m of military footwear shipments shifted from the third quarter to the fourth quarter, due to the temporary shutdown of the company's Puerto Rico facility in the wake of Hurricane Maria. Excluding these expenses, the adjusted gross margin was 31.7 percent.
Wholesale revenues decreased by 12.9 percent to $46 million, weighed down by the discontinuation of the private label program. Retail sales increased by 7.8 percent to $11.1 million, while sales in the military segment fell by 24.7 percent to $7.6 million.
The quarterly net income jumped by a whopping 400 percent to $2.23 million, which the company partly attributed to an improved operating structure and a focus on rising margins.
Looking ahead, the company said it remains cautiously optimistic about its growth prospects as wholesale trends have recently accelerated and the manufacturing of military products returned to normal levels.