Second quarter net sales of the company were $58.5 million compared to $62.6 million in the second quarter of 2016. The company reported second quarter net income of $1.5 million, or $0.20 per diluted share compared to a net loss of $1.8 million, or ($0.23) per diluted share in the second quarter of 2016.
“The significant increase in second quarter profitability year-over-year reflects the work we have done to create a more efficient company. Through enhancements to our production facility in Puerto Rico along with a number of organisational changes aimed at reducing our expense structure we were able to improve operating profit by nearly $4.8 million. Equally important, we continued to see signs of stabilisation in our branded wholesale business,” said Jason Brooks, president and chief executive officer of Rocky Brands.
“Although wholesale sales decreased in the quarter, in part due to the discontinuation of a low margin private label programme, we achieved higher gross margins due to less promotional sales as well as the discontinuation of the private label programme. We are continuing to focus on designing and delivering high quality branded products which support higher gross margins,” added Brooks.
Net sales for the second quarter decreased 6.6 per cent to $58.5 million compared to $62.6 million a year ago. Wholesale sales for the second quarter decreased 10.5 per cent to $37.1 million compared to $41.5 million for the same period in 2016. Retail sales for the second quarter increased 5.8 per cent to $11 million compared to $10.4 million for the same period last year. Military segment sales for the second quarter were $10.3 million compared to $10.7 million in the second quarter of 2016.
Gross margin in the second quarter of 2017 increased to $18.2 million, or 31.1 per cent of sales, compared to $16.3 million, or 26 per cent of sales, for the same period last year. The 510 basis point increase was driven by a significant improvement in both wholesale segment and military segment margins.
Selling, general and administrative (SG&A) expenses decreased to $15.9 million, or 27.2 per cent of net sales, for the second quarter of 2017 compared to $18.8 million, or 30.1 per cent of net sales, a year ago. The $2.9 million decrease in SG&A expenses was primarily related to lower compensation expense following the workforce reductions in the second half of 2016.
Income from operations was $2.3 million, or 3.9 per cent of net sales compared to a loss from operations of $2.5 million a year ago, said the company in a press release.
Interest expense was $80,000 for the second quarter of 2017, versus $142,000 for the same period last year.
The company’s funded debt decreased $14.9 million, or 63.3 per cent to $8.6 million at June 30, 2017 versus $23.5 million at June 30, 2016.
Inventory at June 30, 2017 decreased 12.8 per cent to $76.3 million compared to $87.6 million on the same date a year ago.
“Looking ahead, I am encouraged by the outlook for Rocky Brands. With Rocky, Georgia Boot and Durango, we have a great portfolio of brands that hold leadership positions in their respective categories and provide compelling growth opportunities for our wholesale segment. At the same time, our retail model is uniquely situated to directly and efficiently serve the footwear needs of America’s manufacturing and labor based businesses.,” said Brooks.
Finally, the expansion of our domestic manufacturing capabilities is allowing us to bid on and win an increasing amount of military contracts and produce footwear at better margins. The entire organization is committed to executing our growth and profit improvement strategies and delivering greater value to shareholders over the long-term,” continued Brooks. (KD)
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