Rocky Brands Inc. announced financial results for its second quarter ended June 30, 2012.
Second quarter 2012 net income was $0.2 million compared with $2.3 million in the second quarter of 2011 and diluted earnings per share were $0.03 compared to $0.30 during the same period last year. Second quarter net sales were $44.4 million versus net sales of $52.3 million a year ago.
On June 29, 2012, severe storms knocked out power to more than 660,000 homes and businesses in Ohio including Rocky Brand’s distribution center in Logan, OH. As a result of this power outage, Rocky Brands’ shipping capabilities were temporarily suspended which caused approximately $2.5 million of shipments to move from the second quarter into the third quarter. This had a negative impact of approximately $0.06 per share in the second quarter of 2012.
David Sharp, President and Chief Executive Officer, commented, “We faced a significant challenge at the end of the quarter with the shutdown of our distribution center. Our teams did a great job to ensure that all orders were shipped as soon as possible once power was restored early in July. This disruption, our business for the most part performed in-line with expectations however we excluding the impact from did experience some softness in our hunting category.
“We believe this was primarily attributable to retailers buying closer to season and operating with leaner inventory positions compared with past years. Our work, western, and commercial military product lines continue to gain traction with the key retailers in their respective channels as new product introductions are resonating with our target consumers. Equally important, our balance sheet is in good shape with clean inventory levels and funded debt down 24% from a year ago.”
Second Quarter Review
Wholesale sales for the second quarter were $34.7 million compared to $40.8 million for the same period in 2011. The decrease is primarily the result of a reduction in sales in the hunting category as well as the temporary impact from the aforementioned power outage.
The decrease in the hunting category is due to retailers buying closer to the season. Retail sales for the second quarter were $9.1 million compared to $10.9 million for the same period last year. Military segment sales for the second quarter were $0.6 million for both the second quarter of 2012 and 2011.
Gross margin in the second quarter of 2012 was $15.4 million, or 34.6% of sales compared to $20.6 million, or 39.4% for the same period last year. The decrease in gross margin was primarily due to an increase in product costs as a result of manufacturing variances in the Company’s production facility.
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