Rocky Brands Q4 2024: Navigating Tariffs, Supply Chain Hurdles, and Retailer Cautiousness

These are the key contradictions discussed in Rocky Brands' latest 2024 Q4 earnings call, specifically including: Tariff Impact and Pricing Decisions, Inventory Shortages and Supply Chain Issues, Retailer Cautiousness and Sell-Through, Sales Growth Expectations, and Sourcing Strategy:



Sales and Brand Performance:
- Rocky Brands reported a 1.7% increase in sales to $128.1 million for the fourth quarter, with retail sales up 15.3% to $43.6 million.
- Growth was driven by strong performance in the direct-to-consumer channel, led by Durango and XTRATUF brands, and increased investments in marketing.

Gross Margin Expansion and Cost Management:
- Gross margins increased by 120 basis points to 41.5%, driven by an increase in wholesale gross margin and a higher mix of retail sales.
- The company managed higher expenses from increased marketing, logistics costs, and incentive compensation by focusing on gross margin expansion.

Wholesale Sales Recovery:
- Wholesale sales declined by 5.2% but increased by 4.5% on a recurring basis, marking the first growth in this segment since the fourth quarter of 2023.
- This recovery was attributed to better boot weather and postelection clarity, along with investments in demand creation and new product offerings.

Impact of Tariffs and Supply Chain Strategy:
- Rocky Brands expects a 110 basis point impact on gross margins due to a 10% tariff increase on products sourced from China.
- The company is working to reduce exposure to China and plans to maintain manufacturing presence while mitigating tariff impacts through pricing adjustments and vendor negotiations.