Rocky Brands' Q1 2025: Navigating Contradictions in Manufacturing Strategies, Tariff Impacts, and Supply Chain Challenges

Manufacturing and sourcing strategy, tariff impact and mitigation strategies, inventory management and production shifts, supply chain and manufacturing changes are the key contradictions discussed in Rocky Brands' latest 2025Q1 earnings call.



Strong Financial Performance:
- Rocky Brands reported a 20% top-line growth in the retail segment for Q1 2025, with a record first-quarter gross margin of 41.2%.
- The growth was driven by increased demand for the rubber boot business, including XTRATUF and Muck brands, and better full-price selling.

Tariff Mitigation and Sourcing Strategy:
- In response to higher tariffs imposed on trade partners, Rocky Brands plans to implement price increases on footwear styles in early June and shift production to diversified sourcing locations.
- The company aims to reduce the amount of products sourced from China by transitioning to manufacturing facilities in Vietnam, Cambodia, India, the Dominican Republic, and Puerto Rico.

XTRATUF Brand Momentum:
- The XTRATUF brand delivered double-digit growth in Q1, with bookings up approximately 80% versus the previous year.
- This growth is attributed to expanding reach into new regions and niches, as well as successful launches and collaborations with key sporting retailers and partners.

Inventory and Logistics Strategy:
- Rocky Brands held an inventory position with an average of six to seven months of products to sell through, allowing for a buffer to manage tariff impacts.
- The company accelerated receipts in March to bring in products early to avoid the impact of higher tariffs announced in April.