Rocky Brands, Inc. (NASDAQ:RCKY) Q3 2018 Earnings Conference Call Transcript

Oct 23, 2018 • 04:30 pm ET

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Rocky Brands, Inc. (NASDAQ:RCKY) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. And welcome to the Rocky Brands Third Quarter Fiscal 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. (Operator Instructions)

(Forward-Looking Cautionary Statements)

I would like to remind everyone that this conference is being recorded, and I'll now turn the conference over to Jason Brooks, CEO of Rocky Brands. Please go ahead, sir.

Executive
Jason Brooks

With me on today's call is Tom Robertson, our CFO. As you saw from our earnings release issued earlier today, we delivered another solid quarter highlighted by strong gains in gross margin and profitability. The product, marketing and distribution strategies we implemented a little over a year ago, coupled with our commitment to operational excellence across the organizations, have been fueling quality sales growth in our highest margin channels, wholesale and retail.

Our teams have done a good job developing compelling products with accessible price points that serve the needs of our consumers in work, western, hunting, commercial military segments of the market. At the same time, we strengthened our consumer connections through targeted digital marketing programs and personalized communications. We've also stepped up our service levels. This includes supporting our retail partners with exciting programs, in-store promotions and new POP materials as well as providing our B2C and B2B customers with broader product offerings and increased shipping options. Many of these initiatives started to bear fruit late last year and have continued to gain traction. While we start to lap more difficult comparisons starting in the fourth quarter, we are confident that the work we have done has put Rocky on a path towards delivering profitable growth on an annual basis over the long term.

I will now walk through the key drivers of our Q3 sales performances by segment and provide some color on how the fourth quarter is shaping up. Tom will then review the numbers in more details, after which, we will be happy to take any questions. Starting with wholesale, sales increased 2.1%, or 5.2% excluding Creative Rec brand. By brand, Georgia Boot had another very solid quarter, as sell-in benefited from select door expansion with Tractor Supply as well as incremental shelf space we secured with other key accounts such as Boot Barn, Coastal Farm & Ranch and Zappos.

Selling through was equally as strong led by our Carbo-Tec work western and Athens collection, both of which feature our new easy-on, easy-off technology. As I mentioned on our last call, we've been supporting the introduction of this new innovation with enhanced in-store point of purchase materials as well as social media programs aimed at driving traffic to our participating retail partners and georgiaboot.com. We continue to see positive results as we shift our marketing spend from broad-spectrum national campaigns to more digital grassroot initiatives that bring us closer to our customers.

Moving to Durango. Q3 sales were down modestly versus a year ago. While this is a