United States Of America : Rocky Brands Q1'14 net sales ascend 22.5%

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Rocky Brands Q1'14 net sales ascend 22.5%

24
Apr '14

Gross margin in the first quarter of 2014 was $21.9 million, or 33.2% of sales, compared to $18.7 million, or 34.8% of sales, for the same period last year. The 160 basis point decrease was driven by the combination of lower wholesale margins due primarily to costs associated with the aforementioned seeding program, the increase in military segment sales which carry lower gross margins than our wholesale and retail segments, and lower retail gross margin than a year ago resulting from the completed transition to a web based retailplatform which carries lower gross margin and lower operating expenses compared to the previous mobile store structure.

Selling, general and administrative (SG&A) expenses were $20.5 million, or 31.2% of net sales, for the first quarter of 2014 compared to $17.2 million, or 32.0% of net sales, a year ago. The $3.3 million increase in SG&A expenses was primarily related to the additional expenses associated with the Creative Recreation brand, which was acquired in December 2013, higher variable selling expenses related to the increase in sales, and higher advertising expenses to market and promote our brands. The 80 basis point improvement in SG&A as a percent of net sales was driven by leveraging expenses on higher sales.

Income from operations was $1.3 million, or 2.0% of net sales, compared to $1.5 million, or 2.8% of net sales, a year ago.

Interest expense was $0.2 million for the first quarter of 2014, versus $0.1 million for the same period last year.

The Company’s funded debt was $36.6 million at March 31, 2014 versus $20.3 million at March 31, 2013. The majority of the increase was related to additional borrowings to fund the acquisition of Creative Recreation in the fourth quarter of 2013.

Inventory increased 14.7%, or $10.1 million, to $78.3 million at March 31, 2014 compared with $68.3 million on the same date a year ago. Inventory at March 31, 2014 included approximately $2.5 million associated with the acquisition of Creative Recreation. Based on current sales trends and the fall order book, the Company remains comfortable with its current inventory position.

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