Net sales at Rocky Brands inch up in Q1

23 Apr '12

4 min read

Rocky Brands Inc. announced financial results for its first quarter ended March 31, 2012.

First quarter 2012 net income increased $0.2 million to $0.7 million compared with $0.5 million in the first quarter of 2011 and diluted earnings per share increased 42.9% to $0.10 from $0.07 during the same period last year. First quarter net sales improved to $53.3 million versus net sales of $52.3 million a year ago.

David Sharp, President and Chief Executive Officer, commented, "We are pleased with our first quarter results as we continued to realize solid progress against our strategic initiatives. Our top-line performance was again driven by our wholesale division highlighted by gains in our work and western segments and the expansion of our fast growing commercial military business.

“New product introductions continue to fuel growth and are leading to additional distribution with both new and existing accounts. Sell-in during the first quarter included a rollout to all locations of one of our largest national accounts that included price concessions which had a temporary impact on gross margins.

“We were able to fully offset the decline through expense management and deliver a marked improvement in earnings compared to a year ago. This was especially true in our retail division where the profit contribution was up dramatically even on lower sales. We are encouraged by the current pace of our business and based on our fall order book we expect our sales momentum to carry through the remainder of the year."

First Quarter Review

Wholesale sales for the first quarter increased 6.5% to $42.4 million compared to $39.8 million for the same period in 2011. Retail sales for the first quarter were $10.5 million compared to $11.7 million for the same period last year. Military segment sales for the first quarter were $0.4 million compared to $0.8 million in the same period in 2011. As a result, net sales for the first quarter increased 1.9% to $53.3 million compared to $52.3 million a year ago.

Gross margin in the first quarter of 2012 was $18.0 million, or 33.8% of sales compared to $19.3 million, or 36.8% for the same period last year. The decrease in gross margin was primarily driven by lower initial mark ups associated with the rollout to all locations of one of our largest national accounts.

Selling, general and administrative (SG&A) expenses decreased 8.2% to $16.7 million or 31.4% of net sales, for the first quarter of 2012 compared to $18.2 million, or 34.9% of net sales a year ago. The $1.5 million decrease is primarily due to lower compensation expense and operating costs of our retail business.

Income from operations was $1.3 million, or 2.4% of net sales, compared to $1.0 million, or 2.0% of net sales, in the prior year period.

Interest expense decreased to $0.1 million for the first quarter of 2012 versus $0.2 million due to lower borrowings versus the same period a year ago.

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