0001437749-26-007634
SEC filingRocky Brands, Inc. reported improved financial performance for fiscal year 2025. Net sales increased to $481.98 million from $453.77 million in 2024, driven by growth in the Retail segment. Net income more than doubled to $22.27 million from $11.39 million in the prior year, with earnings per share (diluted) rising to $2.96 from $1.52. Gross margin expanded to $197.29 million (40.9% of sales) from $179.01 million (39.5% of sales). Operating income increased to $37.19 million from $31.07 million. The company generated $16.30 million in net cash from operating activities, though overall cash decreased by $817,000 due to investing and financing activities. Total assets grew to $477.49 million, with shareholders' equity reaching $252.09 million. The performance reflects successful execution of growth strategies, particularly in e-commerce and the Lehigh business-to-business platform.
Rocky Brands delivered strong financial results for fiscal year 2025, with net sales increasing 6.2% to $481.98 million from $453.77 million in 2024. The company achieved significant profitability improvement, with net income more than doubling to $22.27 million from $11.39 million in the prior year. This translated to diluted earnings per share of $2.96, compared to $1.52 in 2024. Operating income grew 19.7% to $37.19 million, while gross margin expanded to $197.29 million (40.9% of sales) from $179.01 million (39.5% of sales). The company maintained a solid balance sheet with total assets of $477.49 million and shareholders' equity of $252.09 million as of December 31, 2025.
Revenue growth was primarily driven by the Retail segment, which increased 20.5% to $152.89 million from $126.87 million in 2024. The Wholesale segment showed modest growth of 1.0% to $316.56 million, while Contract Manufacturing declined 7.7% to $12.53 million. By product line, work footwear remained the largest category at $193.64 million (40.2% of sales), followed by outdoor footwear at $165.70 million (34.4% of sales). Western footwear contributed $76.38 million (15.8% of sales), while duty/commercial military and military footwear represented 6.4% and 2.1% of sales, respectively. Foreign sales represented approximately 2.3% of total net sales in 2025, down from 3.2% in 2024.
The company achieved meaningful margin expansion in 2025, with gross margin improving 140 basis points to 40.9% from 39.5% in the prior year. This improvement contributed to operating margin of 7.7%. The Retail segment showed particularly strong gross margin performance at $73.05 million (47.8% of segment sales), while Wholesale generated $123.63 million in gross margin (39.1% of segment sales). Contract Manufacturing had minimal gross margin of $0.61 million (4.8% of segment sales). Operating expenses increased to $160.10 million from $147.94 million, reflecting investments in growth initiatives. Interest expense decreased to $10.01 million from $17.01 million in 2024, benefiting from debt refinancing activities.
The company generated $16.30 million in net cash from operating activities, a significant decrease from $52.76 million in 2024. This was primarily due to changes in working capital, particularly increases in inventories ($14.43 million) and decreases in accounts payable ($5.97 million). Investing activities used $6.20 million for purchases of fixed assets, while financing activities used $10.91 million primarily for debt repayments and dividend payments. Free cash flow (operating cash flow minus capital expenditures) was $10.10 million. The balance sheet shows total debt of $124.38 million (net of issuance costs), with $8.36 million classified as current. The company had $39.50 million of borrowing capacity available under its asset-based lending facility as of December 31, 2025.
The company's growth strategy focuses on expanding into new target markets under existing brands, cross-selling brands to retailers, growing international business, increasing e-commerce sales, and expanding the Lehigh business-to-business platform. Management noted competitive pressures in the footwear and apparel industry, susceptibility to changes in consumer preferences, and dependence on third-party manufacturers. The company benefits from tax incentive programs in Puerto Rico (4.0% income tax rate) and the Dominican Republic (0% income tax rate). The Michelin brand license agreement expires on December 31, 2028. The company announced a new $7.50 million share repurchase program effective February 24, 2026, and declared a quarterly dividend of $0.155 per share payable in March 2026.