Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you provide more details on the guidance commentary, particularly the underlying growth rate and the moderated pace of growth for the year?
A: Tom Robertson, CFO and COO of Rocky Brands, explained that Q1 benefited from closeout opportunities, which are not typically included in their models. He emphasized a cautious outlook for the rest of the year due to uncertainties, including the impact of an election year. Additionally, the end of a commercial military contract could affect future quarters unless new opportunities arise.
Q: How would you characterize the first quarter performance in terms of consumer demand and sell-through across different brands or segments?
A: CEO Jason Brooks noted strong sell-through for Durango and Extra Tuff brands, indicating positive sell-in to retailers. However, the work category, including Georgia and Rocky brands, saw weaker retail sell-through, impacting sell-in. The outdoor hunting category was particularly weak due to unfavorable weather conditions.
Q: Regarding the wholesale performance, is there a shift in how wholesale partners are placing orders due to stock outages and the need to chase inventory?
A: Tom Robertson mentioned that they are encouraging accounts to place orders earlier, especially for core styles in high demand like Muck, Extra Tuff, and Durango products. This strategy aims to secure inventory ahead of the peak season, acknowledging challenges in ramping up production to pre-pandemic levels.
Q: Can you discuss the impact of increased advertising spend following cost savings? How does this affect both wholesale and retail channels?
A: Jason Brooks highlighted that the increased advertising spend is primarily aimed at the wholesale channel to enhance brand visibility and product awareness, which indirectly benefits retail channels by driving traffic to Rocky Brands' websites. The focus is on supporting wholesale partners and boosting direct consumer engagement.
Q: How are you managing inventory and fulfilling orders for brands like Extra Tuff and Durango that have seen out-of-stock issues?
A: Tom Robertson praised the team's efforts in managing inventory effectively, especially in turning around orders quickly by the end of Q1. He emphasized ongoing efforts to increase in-transit inventory for high-demand styles and encouraging wholesale partners to place orders well in advance of the busy season to avoid stockouts.
Q: What are the expectations for SG&A expenses and revenue progression through the quarters, particularly with Q2 expected to be the low point?
A: Tom Robertson projected Q2 as the low point for revenue, with an increase expected in Q3 and Q4, which are typically stronger quarters. He also anticipated a low point for SG&A expenses in Q2, with increased spending in digital marketing during peak seasons. The company plans to maintain flexibility in managing discretionary spending to protect operating income throughout the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
