Rocky Brands (NASDAQ:RCKY) reported second-quarter revenue growth of 12%, its strongest growth rate since 2022, as broad gains across its footwear portfolio and direct-to-consumer channels helped offset tariff-related cost pressures and uneven performance in certain brands.
Net sales rose to $118.4 million from the year-earlier period, exceeding the company’s expectations. Wholesale sales increased 7.9% to $78.8 million, retail sales climbed 21.8% to $36.2 million, and contract manufacturing revenue rose 17.2% to $3.3 million.
Tariff Refund Lifts Profitability
Second-quarter gross profit increased to $60.8 million, or 51.4% of sales, from $43.3 million, or 41.0% of sales, a year earlier. The reported margin included a $15 million net tariff benefit, consisting of $18 million in actual and expected refunds related to IEEPA tariffs, partially offset by about $3 million of tariff costs compared with the prior year.
Excluding the net tariff impact, gross margin was approximately 38.7%. Chief Operating and Financial Officer Tom Robertson said underlying margins faced pressure from changes to manufacturing, sourcing and shipping plans, higher expedited freight costs, incentives used to gain shelf space with select customers, and sales of discontinued styles.
Reported operating income rose to $19.7 million from $7.2 million a year earlier. GAAP net income was $13.9 million, or $1.83 per diluted share, compared with $3.6 million, or $0.48 per share, in the second quarter of 2025. Adjusted net income was $14.4 million, or $1.90 per share, versus $4.1 million, or $0.55 per share, a year earlier.
Operating expenses increased to $41.1 million, or 34.7% of sales, from $36.1 million, or 34.2% of sales. Robertson said the increase reflected, among other items, a $1.1 million accounts-receivable write-off connected to a customer bankruptcy, higher fuel-related outbound freight costs and greater logistics costs associated with retail growth.
XTRATUF Leads Brand Momentum
Brooks said XTRATUF remained the company’s fastest-growing brand, with gains across wholesale, e-commerce and marketplace sales. The brand’s 15-inch Legacy boot and ankle deck boot styles were among the better-performing products, while new colorways, the Kids’ Tufs Cruiser collection and Guy Harvey collaboration products contributed to results.
A major sporting-goods retailer that began carrying XTRATUF in stores this year has become one of the brand’s largest key accounts and plans to add doors and styles, Brooks said. He also said the brand is expanding beyond its marine heritage as consumers adopt products for everyday use.
Robertson said XTRATUF was Rocky Brands’ largest brand in the second quarter and is expected to exceed $100 million in sales for the full year, representing approximately 30% growth from the prior year.
Georgia Boot also posted broad-based growth, aided by expanded distribution at farm-and-ranch and work-and-Western retailers. Brooks said the Carbon Flex wedge has become Georgia’s second-highest-selling franchise behind the Romeo, with the company planning to expand BOA technology into women’s products and non-waterproof styles intended for warmer climates.
Rocky’s Work, Outdoor and Western categories all grew, supported by wholesale demand, new fall products that arrived early and increased shelf space in industrial safety-toe products. Durango sales declined year over year as the key-account business lapped bulk-buy orders placed by two major chains ahead of 2025 price increases. Excluding that comparison, management said the remaining key-account business grew.
Muck sales were down modestly, primarily because of the timing of sell-in to an international distributor. In the U.S., management said e-commerce and wholesale activity remained positive, although Arctic products saw some softness amid a milder and drier spring than the prior year.
Guidance Raised as Bookings Improve
Rocky Brands raised its full-year 2026 revenue outlook and now expects sales to increase approximately 8.5% over 2025. The company expects fourth-quarter growth to be modestly faster than third-quarter growth.
Management said bookings have increased across brands heading into the second half, though Robertson said the forecast incorporates conservatism around at-once business, historically the company’s largest business component. Brooks said the company has gained shelf space at larger accounts and expects strong e-commerce performance to continue through the third and fourth quarters.
The company now forecasts gross margin of approximately 40% for 2026 excluding actual and expected tariff refunds, with third- and fourth-quarter margins expected to improve sequentially into the low-40% range. The outlook reflects continued higher inbound freight rates, higher oil-related component costs and sourcing decisions intended to meet demand quickly.
Robertson said Rocky Brands expects about $2 million of additional tariff benefit in the third quarter. For the year, the company expects a gross tariff benefit of approximately $20 million, or about $10 million on a net basis after incremental IEEPA tariffs flowing through the profit-and-loss statement.
The company expects reported earnings per share to be “in the neighborhood” of $5 for 2026. Excluding the actual and expected tariff refund, it expects earnings per share similar to 2025’s $3.26; on a net basis excluding both the $20 million refund and $10 million in incremental IEEPA tariffs, it expects EPS of around $4.
Inventory, Debt and Investment Plans
Inventory was $173.5 million at quarter-end, down 7.1% from a year earlier and 4.2% from year-end 2025. Management said discontinued inventory declined by more than 30% during the quarter, leaving inventories in their cleanest condition since the company’s acquisition referenced on the call.
Cash and cash equivalents totaled $2.6 million, while debt net of unamortized issuance costs was $122.4 million, down 7.6% from a year earlier. During the quarter, Rocky Brands repurchased about 54,000 shares for $2 million at an average price of $37.09 and increased its quarterly dividend to $0.17 per share.
Management said it plans to reinvest part of the tariff proceeds in the business, including an expansion of its distribution center, while also using funds to reduce debt. The company is continuing to shift more production toward its Dominican Republic facility, although stronger-than-expected demand has required it to source some products directly from Asia and use expedited shipping to meet customer needs.
About Rocky Brands (NASDAQ:RCKY)
Rocky Brands, Inc is a designer, manufacturer and marketer of premium footwear, apparel and accessories for a diverse range of end-users. The company serves outdoor enthusiasts, hardworking professionals and military personnel under a family of brands that includes Rocky, Georgia Boot, Durango and Xtratuf. Products span hunting and hiking boots, work and safety footwear, western and lifestyle boots, as well as performance socks and outerwear.
Rocky Brands operates multiple production and distribution facilities in North America, with its corporate headquarters located in Nelsonville, Ohio.
