Rocky Brands reiterates 2025 guidance for 4–5% revenue growth as sourcing shifts aim to offset tariff impacts

Earnings Call Insights: Rocky Brands, Inc. (RCKY) Q3 2025

MANAGEMENT VIEW

* Jason Brooks, Chairman, CEO & President, stated that "sales for the quarter increased 7%. Gross margins were up 210 basis points, and we delivered adjusted diluted EPS of $1.03, a 34% increases versus our Q3 last year." Brooks also highlighted rapid diversification of the sourcing base, including new Asian manufacturing partners outside China and Vietnam and increased production at the company’s facilities in the Dominican Republic and Puerto Rico. He explained that "these actions, along with price increases and strong demand for our brands should help mitigate the impact of the higher tariffs as they start to hit our P&L more meaningfully in the fourth quarter and next year."
* Brooks outlined exceptional growth for XTRATUF and Muck brands, noting that XTRATUF’s U.S. wholesale business and e-commerce platform both posted double-digit growth, while Muck delivered double-digit growth in U.S. wholesale. He stated that "we are excited about the XTRATUF prospects for the fourth quarter and with the launch of our cold weather collection, a Sesame Street collaboration for holiday at retail and online, plus several exciting xtratuf.com exclusives."
* Thomas Robertson, COO, CFO & Treasurer, said, "for the third quarter, reported net sales increased 7% to $122.5 million." He attributed gross margin improvement to "higher wholesale and retail margins, which were fueled by brand mix and select price increases and higher percentage of retail sales."

OUTLOOK

* Management reiterated its prior 2025 guidance, expecting revenue to increase between 4% to 5% compared to 2024 levels. Full year gross margins are projected to be down approximately 70 basis points to between 38% and 39%, consistent with previous outlook. SG&A is expected to be up in dollars due to increased marketing spend and higher logistics costs, with modest expense leverage. Robertson stated, "we still expect 2025 EPS to increase approximately 10% over last year's $2.54."
* Brooks noted that "there is still uncertainty with respect to the outcome of certain trade negotiations," but expressed confidence in the company’s increased flexibility to shift sourcing and production as needed.

FINANCIAL RESULTS

* Robertson reported net sales for the quarter of $122.5 million. Wholesale net sales were $89.1 million, retail net sales were $29.5 million, and contract manufacturing net sales were $3.9 million. Gross profit was $49.3 million or 40.2% of net sales. Operating expenses were $37.6 million or 30.6% of net sales. Income from operations was $11.7 million, with adjusted income from operations at $12.4 million. Interest expense was $2.6 million. GAAP net income was $7.2 million or $0.96 per diluted share, with adjusted net income at $7.8 million or $1.03 per diluted share.
* Cash and cash equivalents ended the quarter at $3.3 million, with total debt at $139 million. Inventories stood at $193.6 million, with about $17 million attributed to higher tariffs.

Q&A

* Janine Hoffman Stichter, BTIG: Asked about the consumer environment versus three months ago and the impact on forecasting. Brooks replied, "this has been probably one of the most dynamic years in my career with trying to understand the consumer...it's just a little unsettling out there."
* Stichter: Inquired about delayed sales due to supply chain, and how tariffs would be offset. Robertson answered, "this quarter...we saw anywhere from a 3-week to 30-day delay getting those products. And so that number was a little bit larger than usual, probably a few million dollars being transparent."
* Jonathan Komp, Baird: Questioned how Q3 results compared to expectations and indicators on sell-through. Robertson said, "our marketplace business continues to be very strong compared to last year, up strong double digits." Brooks added, "I obviously would have loved to hit that top line number, but I think because of the transitions of the factories...it made things a little bit more complicated for us."
* Komp: Asked about pockets of weakness, particularly in Durango, and Q4 guidance range. Brooks indicated Durango was "maybe the only brand that we're just maybe watching a little bit closer." Robertson added, "we've seen a little bit of softness in kind of our independent Hispanic retail accounts."
* Komp: Sought color on Q4 profit guidance and gross margins. Robertson explained, "the reason the margins will be more depressed in the fourth quarter is, one, because of the $10 million that I noted before...Q4 of '25 will be the worst quarter from a tariff perspective and will only start improving from there."
* Komp: Asked about stimulus impact for 2026 and XTRATUF momentum. Brooks responded, "any time our consumer gets a little kick, they are willing to spend some more. So I think we will be prepared if it happens..."

SENTIMENT ANALYSIS

* Analysts expressed cautious curiosity, probing repeatedly about consumer behavior, inventory delays, and the impact of tariffs, with a slightly negative to neutral tone.
* Management maintained a confident, yet cautious tone, frequently referencing the dynamic environment, using phrases like "we are confident" and "we feel good about the changes we've made," but also acknowledging volatility and uncertainty.
* Compared to the previous quarter, management’s tone remained cautiously optimistic, but with increased emphasis on supply chain adjustments and tariff impacts. Analyst tone remained probing, reflecting ongoing uncertainties.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for 2025 was reiterated, with no changes from Q2’s outlook for revenue growth, margin compression, and EPS increase.
* Management’s focus shifted more heavily toward mitigating tariff impacts through sourcing diversification and in-house production, compared to Q2’s emphasis on broad-based brand momentum.
* Key metrics such as sales growth, gross margins, and EPS improved versus last year, with sequential inventory increases mainly tied to tariff-driven costs.
* Analysts’ focus remained on macro risks, supply chain execution, and consumer trends, with similar levels of skepticism as the prior quarter.
* Management’s confidence in navigating challenges was consistent quarter-over-quarter, but the discussion included more tactical mitigation strategies.

RISKS AND CONCERNS

* Brooks and Robertson flagged higher tariffs as a primary challenge, with $10 million of incremental tariffs expected to impact Q4 margins.
* Management cited some supply chain-related shipment delays due to the ramp-up with new partners, resulting in a few million dollars of delayed sales.
* Durango brand softness and independent Hispanic retail channel weakness were identified as areas of concern.
* Management’s mitigation strategies include price increases, accelerated sourcing diversification, and increased in-house production to reduce exposure to China.

FINAL TAKEAWAY

Rocky Brands’ management reinforced confidence in meeting full-year guidance despite ongoing challenges from tariffs and a volatile consumer environment. The company’s actions to diversify sourcing, ramp up internal manufacturing, and implement price increases are expected to help offset margin pressures, with the most significant headwinds anticipated in Q4 2025 before improvement in 2026. Brand momentum, especially for XTRATUF and Muck, remains strong, and strategic supply chain changes are central to sustaining growth and profitability moving forward.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/rcky/earnings/transcripts]

MORE ON ROCKY BRANDS

* Rocky Brands, Inc. (RCKY) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4834387-rocky-brands-inc-rcky-q3-2025-earnings-call-transcript]
* Rocky Brands Is A Compelling Play [https://seekingalpha.com/article/4833508-rocky-brands-stock-undervalued-compelling-play-upgrade-buy]
* Better setup to 2026 leads Baird to upgrade VF Corp, Canada Goose, Rocky Brands [https://seekingalpha.com/news/4489270-better-setup-to-2026-leads-baird-to-upgrade-vf-corp-canada-goose-rocky-brands]
* Seeking Alpha’s Quant Rating on Rocky Brands [https://seekingalpha.com/symbol/RCKY/ratings/quant-ratings]
* Historical earnings data for Rocky Brands [https://seekingalpha.com/symbol/RCKY/earnings]