CORRECTED-Rocky Brands Q1 profit falls, hurt by tariffs impact

Overview

• U.S. footwear and apparel maker's Q1 net sales rose 9.1% yr/yr

• Adjusted EPS for Q1 fell sharply from prior year

• Profitability impacted by higher tariffs, partly offset by price hikes and sourcing changes

Outlook

• Company expects tariff impact to lessen beginning in second qtr

• Rocky Brands sees a path back to gross margins in the low 40% range

• Company anticipates improved profitability over the second half of the yr

Result Drivers

• BRAND AND ONLINE DEMAND - Co said sales growth was driven by continued strength in XTRATUF and Muck brands across channels and robust online demand

• HIGHER TARIFFS - Co attributed lower gross margin and profitability to increased tariff-related sourcing costs of about $7.1 mln in Q1

• PRICE HIKES AND SOURCING CHANGES - Co said impact of tariffs was partially offset by price increases, channel mix, and sourcing diversification, including leveraging own manufacturing facilities

Company press release: ID:nBw6Xqhfra

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 1 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the footwear peer group is "buy"

• Wall Street's median 12-month price target for Rocky Brands Inc is $53.00, about 22.6% above its April 27 closing price of $43.22

• The stock recently traded at 11 times the next 12-month earnings vs. a P/E of 9 three months ago

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