Key Highlights

  • Rocky Brands reported third quarter net sales of USD 138.8 million, up 13.3% year over year.
  • Adjusted earnings per diluted share increased 70.9% to USD 1.76, while GAAP diluted EPS was USD 1.69.
  • Gross margin increased 480 basis points to 45.0% of net sales, aided by tariff refunds and an inventory sale benefit.
  • Wholesale segment sales grew 11.8% to USD 99.6 million, while Retail segment sales grew 20.0% to USD 35.4 million.

Second Consecutive Quarter of Double-Digit Growth

Rocky Brands, Inc. (NASDAQ:RCKY) reported third quarter net sales of USD 138.8 million, up 13.3% from USD 122.5 million in the same period of 2025, marking the company's second consecutive quarter of double-digit top-line growth. Net income increased to USD 12.8 million, or USD 1.69 per diluted share, from USD 7.2 million, or USD 0.96 per diluted share, a year earlier. Adjusted net income, which excludes certain items, increased to USD 13.4 million, or USD 1.76 per diluted share, a 70.9% increase from USD 7.8 million, or USD 1.03 per diluted share.

Demand was broad based, with brands including Durango, Muck and XTRATUF, along with the company's Lehigh CustomFit business, achieving double-digit sales gains across the quarter.

Segment Growth and Margin Expansion

Wholesale segment net sales increased 11.8% to USD 99.6 million, while Retail segment net sales increased 20.0% to USD 35.4 million. Contract Manufacturing segment net sales decreased 3.1% to USD 3.8 million. Gross margin was USD 62.5 million, or 45.0% of net sales, up from USD 49.3 million, or 40.2% of net sales, a year earlier.

The gross margin increase was primarily due to USD 2.5 million of IEEPA tariff refunds recognized during the quarter and a temporary USD 3.5 million benefit from the sale of inventory from the company's free trade zone that carried no incremental tariffs, partially offset by sourcing variances. Operating expenses increased to USD 44.3 million, or 31.9% of net sales, reflecting higher outbound logistics costs tied to Retail segment growth and increased digital advertising spend.

Balance Sheet and Capital Position

Income from operations increased to USD 18.2 million, or 13.1% of net sales, from USD 11.7 million, or 9.6% of net sales, a year earlier. Interest expense declined to USD 2.0 million from USD 2.6 million, driven by lower debt levels. Inventories decreased 2.0% to USD 189.7 million compared with a year earlier.

Continued full price selling, which the company cited as a driver of profitability beyond the tariff refund benefit, could support margin levels into the holiday season, while the temporary nature of the free trade zone inventory sale benefit means that specific component of this quarter's gross margin gain may not recur in subsequent periods.

Growth and Margin Metrics to Track

Net sales growth relative to the 13.3% reported this quarter, continued gross margin levels excluding the temporary free trade zone benefit, and Wholesale and Retail segment growth relative to this quarter's 11.8% and 20.0% increases, respectively, are among the items that may shape how the fourth quarter compares with this result heading into the holiday season.