RCKY - Rocky Brands shares plunge over 20% after surprise Q1 loss

2023-05-03 12:36:50 ET

Rocky Brands ( NASDAQ: RCKY ) shares reeled during Wednesday’s trading after posting big misses on top and bottom lines for the first quarter.

On Tuesday evening, the Ohio-based footwear manufacturer reported a $0.12 per share loss, surprising against the Street consensus set at positive $0.05. A 33.9% decline in revenue to $110.44M for the quarter also came in $14.02M below consensus expectations. The headline offset any optimism on a 200 basis points expansion in gross margins to 39.6% and a sharp 22.5% reduction in previously bloated inventory levels.

“We experienced positive sell-through with many of our key accounts during the first quarter. Unfortunately, our Wholesale performance didn’t translate into increased sell-in as many of our retail partners are in the process of working down elevated inventory levels and have recently adopted a more cautious approach to reorders due to the current economic backdrop,” CEO Jason Brooks explained. “In response to more challenging market conditions, we are taking actions to reduce expenses and protect profitability.”

Management forecast net sales to be approximately $500M for the full year, as compared to a prior outlook of approximately $565M. The updated guide falls well short of the $563.86M consensus expectation. Gross margins are still expected to expand to 40% in 2023 as compared to adjusted gross margins of 36.6% in 2022.

Cash and cash equivalents declined to $4.9M at the close of the first quarter, down from $15M at the close of Q1 2023. Inventories ended the quarter at $224.1M, down from $235.4M at the start of 2023.

Shares of Rocky Brands ( RCKY ) dropped 21.72% in afternoon trading on Wednesday.

Read the earnings call transcript .

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