Rocky Brands (RCKY) Q1 2025 earnings summary

Executive summary

• Net sales rose 1.1% year-over-year to $114.1 million for Q1 2025, driven by strong retail segment growth and improved gross margin.

• Retail segment grew 20.5% year-over-year, offsetting a 6.3% decline in wholesale sales, with Lehigh and direct-to-consumer channels leading.

• Net income surged 88.5% to $4.9 million ($0.66 per diluted share), and adjusted net income increased 78% to $5.5 million ($0.73 per share).

• Gross margin improved by 210 basis points to a record 41.2%, reflecting favorable product mix and higher retail contribution.

• Inventory increased 6.3% to $175.5 million, positioning for the second half of 2025 and ahead of new tariffs.

Financial highlights

• Net sales: $114.1 million (up 1.1% year-over-year); retail sales: $36.6 million (up 20.5%); wholesale sales: $74.8 million (down 6.3%).

• Gross profit: $47 million (41.2% of sales), a Q1 record, up from 39.1% last year.

• Operating income: $8.7 million (7.6% of sales); adjusted operating income: $9.4 million (8.2% of sales).

• Net income: $4.9 million ($0.66 per diluted share), up from $2.6 million ($0.34 per share); adjusted net income: $5.5 million ($0.73 per share).

• Total debt: $128.6 million, down 17.5% year-over-year; interest expense dropped to $2.4 million from $4.5 million.

Outlook and guidance

• Reiterated full-year 2025 guidance: revenue expected to increase low single digits over 2024, with price increases in Q2 to offset lower volumes and tariffs.

• Gross margins projected to decline modestly year-over-year due to tariff headwinds, but gross profit dollars expected to remain consistent.

• Management expects continued retail growth, supported by digital marketing and e-commerce expansion, and sufficient liquidity to fund operations.

• Sourcing diversification, including facilities in Vietnam, India, Cambodia, Dominican Republic, and Puerto Rico, expected to support targets.

• 2025 EPS expected just below 2024's adjusted EPS of $2.54.