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Rocky Brands Q4'08 operating results in-line with expectations
20 Feb '09
6 min read
Fourth Quarter Review:
Net sales for the fourth quarter were $66.0 million compared to $72.5 million a year ago. Wholesale sales for the fourth quarter were $49.4 million compared to $52.0 million for the same period in 2007. The decline in wholesale sales was primarily the result of supply chain disruptions caused by a dispute with a former vendor combined with the difficult economic conditions.
Retail sales for the fourth quarter were $15.4 million compared to $19.0 million for the same period in 2007. Retail sales were negatively impacted by customer decisions to close plants, reduce headcount, and defer safety shoe purchases as the result of the challenging economy. Military segment sales for the fourth quarter were $1.2 million, versus $1.5 million in the same period of 2007.
Gross margin in the fourth quarter was $24.8 million, or 37.6% of sales, compared to $28.7 million or 39.6% of sales, for the same period last year. Wholesale gross margin for the fourth quarter was $16.8 million, or 34.0% of net sales, compared to $19.1 million, or 36.8% of net sales, in the same period last year. Retail gross margin for the fourth quarter was $7.9 million, or 51.0% of net sales, compared to $9.5 million, or 49.9% of net sales, for the same period in 2007. Military gross margin for the fourth quarter was $0.1 million, or 9.5% of net sales, versus $0.1 million, or 8.0% of sales in the fourth quarter a year ago.
Selling, general and administrative (SG&A) expenses decreased 17.5% or $4.6 million to $21.6 million, or 32.7% of sales, for the fourth quarter of 2008 compared to $26.2 million, or 36.1% of sales, a year ago. The decrease in SG&A expenses was primarily the result of reductions in compensation, tradeshow and distribution expenses.
Income from operations, excluding the non-cash intangible impairment charge, was $3.2 million, or 4.9% of net sales for the fourth quarter of 2008, compared to income from operations, excluding the impairment loss on the carrying value goodwill, of $2.5 million or 3.5% of net sales for the fourth quarter of 2007.
The Company's funded debt decreased $15.8 million, or 15.3% to $87.7 million at December 31, 2008 versus $103.5 million at December 31, 2007. Interest expense decreased to $2.2 million for the fourth quarter of 2008 versus $2.9 million for the same period last year. The decrease in interest expense was due to reduced borrowings under the Company's line of credit as well as lower interest rates compared to the same period last year.
Inventory decreased $5.1 million, or 6.8% to $70.3 million at December 31, 2008 compared with $75.4 million on the same date a year ago.
Mr. Brooks concluded, “The current financial crisis has obviously created some near-term challenges for the entire consumer industry however we believe our strong portfolio of brands and diverse channels of distribution have us well positioned for long-term success. Importantly, the supply chain disruptions we experienced last year are now behind us and we move forward confident in our ability to better service our accounts and meet demand for our entire product line. At the same time, we are focused on further reducing costs in our retail operations by shifting a greater percentage of that business to our higher operating margin e-commerce platform. We begin 2009 committed to executing our strategy and building on our recent successes in order to return greater value to our shareholders.”
Net sales for the fourth quarter were $66.0 million compared to $72.5 million a year ago. Wholesale sales for the fourth quarter were $49.4 million compared to $52.0 million for the same period in 2007. The decline in wholesale sales was primarily the result of supply chain disruptions caused by a dispute with a former vendor combined with the difficult economic conditions.
Retail sales for the fourth quarter were $15.4 million compared to $19.0 million for the same period in 2007. Retail sales were negatively impacted by customer decisions to close plants, reduce headcount, and defer safety shoe purchases as the result of the challenging economy. Military segment sales for the fourth quarter were $1.2 million, versus $1.5 million in the same period of 2007.
Gross margin in the fourth quarter was $24.8 million, or 37.6% of sales, compared to $28.7 million or 39.6% of sales, for the same period last year. Wholesale gross margin for the fourth quarter was $16.8 million, or 34.0% of net sales, compared to $19.1 million, or 36.8% of net sales, in the same period last year. Retail gross margin for the fourth quarter was $7.9 million, or 51.0% of net sales, compared to $9.5 million, or 49.9% of net sales, for the same period in 2007. Military gross margin for the fourth quarter was $0.1 million, or 9.5% of net sales, versus $0.1 million, or 8.0% of sales in the fourth quarter a year ago.
Selling, general and administrative (SG&A) expenses decreased 17.5% or $4.6 million to $21.6 million, or 32.7% of sales, for the fourth quarter of 2008 compared to $26.2 million, or 36.1% of sales, a year ago. The decrease in SG&A expenses was primarily the result of reductions in compensation, tradeshow and distribution expenses.
Income from operations, excluding the non-cash intangible impairment charge, was $3.2 million, or 4.9% of net sales for the fourth quarter of 2008, compared to income from operations, excluding the impairment loss on the carrying value goodwill, of $2.5 million or 3.5% of net sales for the fourth quarter of 2007.
The Company's funded debt decreased $15.8 million, or 15.3% to $87.7 million at December 31, 2008 versus $103.5 million at December 31, 2007. Interest expense decreased to $2.2 million for the fourth quarter of 2008 versus $2.9 million for the same period last year. The decrease in interest expense was due to reduced borrowings under the Company's line of credit as well as lower interest rates compared to the same period last year.
Inventory decreased $5.1 million, or 6.8% to $70.3 million at December 31, 2008 compared with $75.4 million on the same date a year ago.
Mr. Brooks concluded, “The current financial crisis has obviously created some near-term challenges for the entire consumer industry however we believe our strong portfolio of brands and diverse channels of distribution have us well positioned for long-term success. Importantly, the supply chain disruptions we experienced last year are now behind us and we move forward confident in our ability to better service our accounts and meet demand for our entire product line. At the same time, we are focused on further reducing costs in our retail operations by shifting a greater percentage of that business to our higher operating margin e-commerce platform. We begin 2009 committed to executing our strategy and building on our recent successes in order to return greater value to our shareholders.”
Rocky Brands Inc
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