Shares for Rocky Brands Inc. are in the red in extended hours trading — down more than 7 percent as of 5:15 p.m. ET — following a Q2 sales and profit miss.
The company posted a second quarter net loss of $1.8 million, or 23 cents per diluted share (loss), compared to net income of $2 million, or 26 cents per diluted share in the comparable period. Market watchers had forecast earnings per share of 24 cents.
Meanwhile, net sales slipped 9 percent, to $62.6 million, from $68.6 million in the prior year, missing Wall Street’s forecast for sales of $72.4 million.
Rocky Brands president and CEO David Sharp blamed the “poor” results on inventory overages in various categories as well as macroeconomic factors.
“Much as they did in the first quarter, elevated inventories in the Western, Work, and Hunting channels negatively impacted sales and margins in our wholesale business,” Sharp said in a release. “Softening of local economies, especially those where oil and gas exploration had been significant, and weak store traffic across retail contributed to our poor performance.”
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The company said its wholesale sales for the second quarter decreased 23 percent, to $41.5 million, from $53.9 million for the same period in 2015. Retail sales increased 2 percent, to $10.4 million, from $10.2 million for the same period last year. Military segment sales advanced 139 percent, to $10.7 million, from $4.5 million in the second quarter of 2015.
“The wholesale sales decline was partially offset by [the] significant gain in our military sales,” Sharp noted. “However, our need to ramp up our internal production capabilities to meet the increase in military footwear demand resulted in additional costs, including labor and training that has temporarily pressured gross margins.”
Gross margins saw a 700 basis point decrease in the quarter, to $16.3 million, or 26 of sales.
“While we are disappointed in our recent results, we continue to be confident that the strategic course we’ve set for the company will lead to improved profitability and greater shareholder value over the long-term,” Sharp added.
Rocky Brands is the parent of several shoe brands, including Rocky, Georgia Boot and Creative Recreation.