Rocky Brands Raises 2026 Revenue Growth Outlook to 10.5% and EPS to $5.30

Key Facts

Rocky Brands raised its 2026 revenue growth outlook to about 10.5% compared with 2025, from 8.5% in its previous guidance, and increased its estimate for reported earnings per share to about $5.30 from about $5. The update came after the company recorded sales growth of 13.3% in the third quarter, with the pace of increase accelerating from the previous quarter. On the earnings call, management said net earnings per share were still expected to be about $4. The stock closed at $44.57 on October 27, according to EL7 data. The new outlook reflects continued sales growth, with the company distinguishing between its reported estimate and its net estimate, which excludes some benefits recorded during the year.

The company’s third-quarter sales totaled $138.8 million, up from $122.5 million in the year-earlier period. The chief executive said on the earnings call that the quarter marked the second consecutive quarter of double-digit sales growth. He added that the increase accelerated to about 13% from 12% in the second quarter, consistent with the company’s reported annual growth of 13.3% in its results. Second-quarter sales had risen to $118.4 million from $105.6 million a year earlier. The comparison shows revenue growth continuing for two consecutive quarters, with sales increasing between the second and third quarters.

Third-quarter growth was supported by an 11.8% increase in wholesale sales to $99.6 million, from $89.1 million a year earlier. Retail was the fastest-growing activity, with sales rising 20% to $35.4 million from $29.5 million. By contrast, contract manufacturing sales fell 3.1% to $3.8 million, compared with $3.9 million in the year-earlier period. The results highlight differing performance across segments, with growth in wholesale and retail and a slight decline in contract manufacturing. The chief executive said demand growth was broad across brands, without providing any additional numerical breakdown of that demand.

Third-quarter gross margin rose to 45% of sales, up 480 basis points from 40.2% in the year-earlier quarter. The company attributed the improvement mainly to recording $2.5 million in refunds of International Emergency Economic Powers Act tariffs and a temporary benefit of $3.5 million from selling free-trade-zone inventory without additional tariffs. Management said the expected 2026 gross margin was about 41% after normalizing the net effects of tariffs and the free-trade-zone benefit. The gap between the third-quarter margin and the annual outlook reflects the effects of benefits the company described as temporary. Gross margin was 51.4% in the second quarter, compared with 41% in the second quarter of 2025; the company then attributed the increase to tariff refunds.

The company’s third-quarter net income rose to $12.8 million, or $1.69 per diluted share, from $7.2 million and $0.96 per share a year earlier. On an adjusted basis, net income was $13.4 million, or $1.76 per diluted share, compared with $7.8 million and $1.03 in the year-earlier period. These figures put the quarter’s results in context with the raised full-year reported EPS outlook of about $5.30. Management kept its net EPS outlook at about $4, however, presenting the two estimates separately on the earnings call. It also said the annual gross margin estimate of about 41% accounts for the normalization of the effects of tariffs and the free-trade zone.

Management expects overall sales to grow about 8% in the fourth quarter, with retail sales growing slightly faster than wholesale. Contract manufacturing sales, meanwhile, are expected to decline by a few million dollars as military contracts wind down. The chief executive said the company was optimistic about momentum heading into the holiday season and believed it was positioned to finish the year strongly. Product costs remain a factor in management’s margin outlook: the chief financial officer said they were seeing mid-single-digit increases linked to oil and commodity prices and inbound freight costs. He added that the company was evaluating pricing for 2027, with the chief executive set to provide further guidance on that year on the next earnings call.