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Rocky Brands, Inc. Message Board

  • floppy_6 floppy_6 Mar 13, 2013 10:44 PM Flag

    A flu in the final?

    Bejamin had a flu in the final exam of 9th grade. So, he scored badly. Are you going to write him off for 10th grade?

    Same happened to RCKY. For warm weather two years in a row, Rocky managed thru 1st year, then can't avoid to catch a bad flu in 2013. So, does she deserve the penalty?

    Well, some may argue Rocky not a weather-sensitive product. Well, hunting and insultated work boot should have some impact from weather. Following is excerpt from CC -

    " No, Mitch. We're not that pessimistic. I think that we -- we've got some visibility into the hunting and the heavily insulated work products, and we're ahead of the bookings that we had last year. We think that retailers certainly ended with less inventory in their stocks than they ended the prior year.

    Also, a lot of -- we're very optimistic about this Western business. Of course, that a lot of ships in the third and fourth quarter. And we do have the C.E. Schmidt business -- the private label business at GSC. That, of course, is a year-round program. And the military business, also, into the third and fourth quarters. We'll also be shipping, beginning in May and June, the healthcare products. Our bookings are ahead of our expectations at this point, and we have a lot of optimism for that program in third and fourth quarters."

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    • Nope but Benjamin still has to pass the exam in order to graduate. Rocky gets good grades for paying down debt but a D for growth and/or sell out. They will get an F should they try and acquire.

    • Weather could be a valid excuse for one season, maybe two. But I suggest looking at the trend over the years... Outdoor footwear (i.e., hunting boot) sales were $51mm in 2003, $49mm in 2004, $42mm in 2005, $35mm in 2006, $31mm in 2007, $29mm in 2008, $27mm in 2009, $26mm in 2010, $27mm in 2011, and now $22mm in 2012. Practically a straight line down. This is straight from their 10Ks, and this is all under current management.

      I don't think you can blame this on global warming, because a similar trend exists across their product lines. Western footwear sales were $40mm in 2005 (when they acquired the business via EJ Footwear) and today they're $30mm. Work footwear sales were $140mm in 2005 and today they're $117mm. Only one or two small categories are up, but they don't really move the needle. Total sales were $296mm in 2005 and today they are $228mm.

      I would be wary of investing in any company that depends on retail distribution and has declining sales. When sales decline to the point that retailers decide it's not worth carrying your brand, the whole business can fall apart. Then even your inventory isn't worth much.

      Sentiment: Hold

      • 1 Reply to greengrosser1
      • You have to look at RCKY on brand by brand basis, not on segment (i.e. hunting, work etc).

        Lots of brandnames listed in 2010 10K are gone. Two notable goners are :

        1) Lehigh - a licensed low-margin brand.
        2) Military sales (low margin)

        I believe these two least contributed teens millions each in sales before 2010. And the management consciously discontinued Lehigh due to low margin.

        And also you have to give credit on the better balance sheet the management reversed it now. Check out 2010 balance sheet and compare to what they have now. If the business was better then, how the heck they had that balance sheet?

        And RCKY once reached $31 back in 20005. When you compare the business back then to now, you are comparing a Japan pure breed koi to a locally breeded koi. Each one has its value. You, as a investor, simply want to make sure that you are not over-paying. RCKY is a value play not a growth play. If you are looking for a sure-bet growth trend, take a deep breath, plung your money to 200 PE Netsuite.

        Lastly, Durango is a sure grower from $25 millions basis.

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