Aug 4, 2022
Rocky Brands reports $162m net sales in Q2
Aug 4, 2022
Rocky Brands, a designer, manufacturer and marketer of footwear and apparel, has announced financial results for its second quarter (Q2) ended June 30, 2022. The company’s net sales increased 23.1 per cent to $162 million in Q2 2022 compared with $131.6 million in Q2 2021. Wholesale sales for Q2 increased 29.7 per cent to $131.2 million compared to $101.1 million for the same period in 2021.
Retail sales for the second quarter increased 16.4 per cent to $26 million compared to $22.3 million for the same period last year. Contract Manufacturing segment sales, which include contract military sales and private label programmes, were $4.9 million in Q2 2022 compared to $8.1 million in the prior year. The decrease in Contract Manufacturing sales was due to expiring contracts with US Military, the company said in a press release.
Gross margin in Q2 2022 was $53.8 million, or 33.2 per cent of net sales, compared to $49.2 million, or 37.4 per cent of net sales, for the same period last year.
Adjusted gross margin in Q2 2021, which excluded a $2.3 million inventory purchase accounting adjustment, was $51.4 million, or 39.1 per cent of net sales. The decrease in gross margin was mainly attributable to increases in product costs, inbound freight costs and other shipping and logistics costs compared with the year ago period.
Operating expenses were $48.2 million for Q2 2022 compared to $40.7 million for the same period a year ago. Excluding $2.1 million of acquisition-related amortisation, integration expenses and restructuring costs in Q2 2022 and $2.3 million of acquisition related expenses in Q2 2021, adjusted operating expenses were $46 million in the current year period and $38.5 million in the year ago period.
The increase in operating expenses was driven primarily by higher outbound freight expense and higher variable expenses associated with the increase in sales. As a percentage of net sales, adjusted operating expense improved 80-basis points to 28.4 per cent in Q2 2022 compared with 29.2 per cent in the year ago period.
Income from operations for Q2 2022 was $5.6 million, or 3.5 per cent of net sales compared to $8.4 million, or 6.4 per cent of net sales, for the same period a year ago. Adjusted operating income for Q2 2022 was $7.7 million, or 4.8 per cent of net sales compared to adjusted operating income of $13 million, or 9.9 per cent of net sales a year ago.
Interest expense for Q2 2022 was $4.3 million compared with $3.4 million a year ago.
The company reported Q2 2022 net income of $0.9 million, or $0.12 per diluted share compared to net income of $3.9 million, or $0.52 per diluted share in Q2 2021. Adjusted net income for Q2 2022, was $2.5 million, or $0.34 per diluted share compared to adjusted net income of $7.4 million, or $0.99 per diluted share in Q2 2021.
“We continued to experience solid demand for our portfolio of leading brands during the second quarter,” said Jason Brooks, chairman, president and chief executive officer. “Our focus on developing innovative, functional footwear at accessible price points is driving share gains across multiple markets led by work, western and outdoor.
"While we didn’t experience any noticeable sales slowdown due to growing inflation and general economic uncertainty during the first half of 2022, our results were negatively impacted by higher than expected costs throughout our supply chain. We took actions early in the year to address certain cost pressures, and recently enacted price increases to help offset additional margin headwinds that emerged over the past couple of months.”
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