Rocky Brands lifts third-quarter sales 13.3% to $138.8 million
Key Facts
Rocky Brands reported results on October 27 for the third quarter ended September 30, 2026, posting net sales of $138.8 million, up 13.3% from $122.5 million in the year-earlier period. The company said net income rose to $12.8 million, or $1.69 per diluted share, compared with $7.2 million and $0.96 per share a year earlier. Adjusted net income was $13.4 million, or $1.76 per diluted share. Sales growth came from the wholesale and retail segments, while contract manufacturing sales declined. The results show year-over-year improvement in revenue and earnings, with temporary factors contributing to the increase in gross margin.
Wholesale led revenue, with sales rising 11.8% to $99.6 million in the third quarter. Retail sales grew faster, up 20.0% to $35.4 million, while contract manufacturing sales fell 3.1% to $3.8 million. Channel performance differed from the second quarter, when retail grew 21.8% to $36.2 million and wholesale rose 7.9% to $78.8 million, while contract manufacturing increased 17.2% to $3.3 million. In the third quarter of 2025, total sales were $122.5 million after year-over-year growth of 7.0%, compared with 13.3% growth in the latest quarter. The mix reflects continued expansion in wholesale and retail, alongside a reversal in contract manufacturing compared with the second quarter.
Gross margin rose to 45.0% of sales from 40.2% in the third quarter of 2025, an increase of 480 basis points. The company attributed the improvement mainly to $2.5 million in tariff refunds and a temporary $3.5 million benefit from the sale of free-zone inventory. These factors follow a different impact disclosed by the company in the second quarter, when net tariff activity reduced the cost of goods sold by about $15.0 million. Gross margin was 40.2% in the third quarter of 2025, compared with 38.1% in the third quarter of 2024, as improved wholesale and retail margins then were partly offset by a decline in contract manufacturing margin. These comparisons put the current margin improvement in the context of its continued year-over-year growth, alongside disclosed benefits tied to tariffs and free-zone inventory.
Operating income rose to $18.2 million in the third quarter, compared with $11.7 million a year earlier. Operating expenses were $44.3 million, or 31.9% of sales, versus $37.5 million and 30.6% in the year-earlier period. The company said the increase in expenses was partly related to higher outbound freight costs as retail sales grew, increased digital advertising spending and higher performance-related compensation. Operating income therefore rose alongside an increase in operating expenses and their share of sales. Net income increased to $12.8 million from $7.2 million, while adjusted income was $13.4 million.
On the balance sheet, inventory declined 2.0% to $189.7 million as of September 30, 2026, year over year. Total debt fell 16.6% to $116.0 million on the same date. The year-over-year decline in debt came alongside growth in sales and reported earnings during the quarter. In the second quarter of 2026, the company recorded sales of $118.4 million, up 12.0%, and net income of $13.9 million, or $1.83 per diluted share. Those earlier results provide a recent comparison: third-quarter sales rose to $138.8 million, while net income was below the second-quarter level.
Chief Executive Jason Brooks said demand was broad-based, and that the Durango, Muck, XTRATUF and Lehigh CustomFit brands led sales gains. He added that the company expects a strong finish to the year as it enters the holiday season. In its third-quarter 2025 results, the company had said that price increases and diversified sourcing, including manufacturing facilities in the Dominican Republic and Puerto Rico, would help offset some of the impact of higher tariffs on margins in subsequent quarters. On October 27, 2026, management held a call to review the results at 4:30 p.m. Eastern time. The company's shares, traded under the ticker RCKY, closed at $45.72 on October 26, the eve of the results announcement.