Rocky Brands Profit Jumps as Tariff Refunds Lift Margins
Second-quarter net sales rose 12.0% to $118.4 million as IEEPA refunds lifted gross margin to 51.4% of sales.
Rocky Brands, Inc. (RCKY), the footwear and apparel maker, reported second-quarter net sales of $118.4 million, up 12.0% from $105.6 million a year earlier, as demand accelerated from the pace of the first quarter.
Growth had been 9.1% in both the fourth quarter of 2025 and the first quarter of 2026. Chairman, President and Chief Executive Officer Jason Brooks said demand further accelerated from strong trends in 2025 and early 2026, with several brands growing strong double digits, led by XTRATUF and followed by Georgia Boot, Rocky and the Lehigh safety-shoe business.
The sharper turn was in profitability. Gross margin expanded to 51.4% of net sales, or $60.8 million, from 41.0% a year earlier and from 36.5% in the first quarter, when a 470-basis point year-over-year decline had compressed the rate. The company said the increase was primarily due to recognition of actual and expected IEEPA tariff refunds that lowered cost of goods sold, partially offset by tariff costs and sourcing variances. The net impact of that tariff activity was an approximate $15.0 million reduction to cost of goods sold.
Income from operations rose to $19.7 million, or 16.6% of net sales, from $7.2 million, or 6.8% of net sales, a year earlier, and from $3.6 million, or 2.9% of net sales, in the first quarter. Net income was $13.9 million, or $1.83 a share, compared with $3.6 million, or $0.48 a share, in the year-ago quarter. Adjusted net income was $14.4 million, or $1.90 a share.
Wholesale segment sales increased 7.9% to $78.8 million, after 4.8% growth in the first quarter and a 2.1% decline in the fourth quarter of 2025. Retail segment sales increased 21.8% to $36.2 million. Contract Manufacturing sales increased 17.2% to $3.3 million. Brooks said selling was robust across channels, with particular strength on direct-to-consumer websites, and that strong bookings in the quarter would provide good Wholesale momentum for the second half of the year.
Operating expenses were $41.1 million, or 34.7% of net sales. The company said the increase in operating expenses as a percentage of net sales was due to an approximate $1.1 million write-off of accounts receivable associated with a customer bankruptcy. Interest expense was $2.1 million, which the company said was driven by lower debt levels.
Inventories as of June 30, 2026 were $173.5 million, down 7.1% from $186.8 million a year earlier. Total debt, net of unamortized issuance costs, was $122.4 million, consisting of a $22.6 million senior term loan and $101.3 million of borrowings under the senior secured asset-backed credit facility. Other receivables were $20.1 million, primarily due to the IEEPA tariff refund receivable. Cash and cash equivalents were $2.6 million.
Brooks said the significant year-over-year improvement in earnings reflected the positive impact from the actual and expected recovery of IEEPA tariffs recognized in the second quarter, and that those refunds more than offset incremental costs from adjusting manufacturing, sourcing and shipping plans to meet customer demand. The company said it expects strong second-quarter bookings to provide Wholesale segment momentum for the second half of the year.
Stronger demand supports expansion as pricing diverges
American Assets Trust Reiterates Full-Year FFO Guidance
MiMedx to Buy Sanara MedTech in $350 Million Cash-and-Stock Deal