Rocky Brands reported net sales of $125.6m – a decrease of 14.8% compared to Q3 2022, as wholesale sales fell 17.4%, which was partially offset by a 4.7% increase in retail sales.

Gross margin, as a percentage of net sales, increased by 180 basis points to 37%.

Operating income increased 22.8% to $14.3m while net income increased 20% to $6.8m.

The group also reported a 26.5% decrease in inventory levels compared to the same period last year.

Jason Brook, chairman, president and CEO at Rocky Brands, says the inventory decrease was caused by growing demand for the group’s products and increased at-once orders from wholesale partners.

“Despite the difficult start to 2023, we were confident that our results for the first half of 2023 reflected macroeconomic headwinds and industry dynamics more than the strength and desirability of our brand portfolio,” Brook says.

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While market conditions remain a challenge for the group, Brook says that customer demand for its work, western and outdoor footwear is increasing.

“At the same time, the work we’ve done to enhance our distribution and fulfilment capabilities and reduce operating expenses translated into significantly higher quarterly profitability year-over-year, which along with lower inventories allowed us to pay down debt by nearly 25% over the same time period,” Brook adds.

Brook believes that the group is now “well positioned” to improve on recent trends in the fourth quarter and “begin 2024 with an improved balance sheet and good momentum” across the group.

In 2021, Rocky Brands acquired the performance and lifestyle footwear business of Honeywell International, including The Original Muck Boot Company and Xtratuf footwear brands for $230m.

Rocky Brands also owns the Rocky, Georgia Boot, Durango, Lehigh, XTRATUF and Ranger businesses.

In 2016, the group signed a contract with the US military worth up to $100m to produce hot weather combat boots for workers in the US army. A year later, Rocky Brands sold its Creative Recreation sneaker business to a private investment group, in order to focus on the more profitable work, military and western products in its portfolio.