18 Aug Rocky Brands Restructuring Includes Layoffs
Rocky Brands, Inc. said August 17 that it is working with third-party advisors to restructure the company, including reducing expenses, reorganizing and refocusing its sales efforts and increasing operating efficiencies.
To that end, the company, whose brands include Rocky, Georgia Boot, Durango, Lehigh, Creative Recreation and the licensed brand Michelin, recently reduced its U.S. work force, which is expected to result in approximately $3 million in reduced annualized operating expenses once the plan is fully implemented. Local media in Rocky Brands’ hometown of Nelsonville, OH reported at least 20 layoffs at the company’s headquarters, retail stores and distribution centers.
“Similar to many of its direct competitors, including the North American operations of the Heritage Group of Wolverine Worldwide and Timberland Pro Group of VF Corporation, the company’s net sales in the first half of 2016 were affected by unusually warm weather, retailer strategies to lower their inventory levels, increased e-commerce sales, volatility in the oil and gas markets, and lower consumer spending for soft goods generally, including footwear,” officials said.
The company will shift more resources to support its lifestyle segment growth prospects, which it believes will help reduce its dependence on weather and improve profits.
The company’s profitability in the first half of 2016 was also impacted by additional costs to significantly increase production of contract military boots at its Puerto Rico factory, officials said, noting that Rocky Brands will continue to make investments in its internal manufacturing capabilities to take advantage of the current strong demand.
“Our total focus at this time is on maximizing earnings and laying the groundwork for more consistent profitability in future years,” said Rocky Brand CEO David Sharp. “While unseasonal weather and a soft retail environment have created headwinds for our core boot business along with many of our industry peers, we remain confident that our ongoing efforts to reduce our dependence on optimal weather and improve operational efficiencies will help to boost top and bottom line performance. Following an initial investment in additional labor and training in our Puerto Rico facility which has temporarily pressured margins, we are now well positioned to fulfill the triple digit increase in contracted military orders we have already received for 2016. These efforts should contribute to more consistent growth and greater shareholder value in the years ahead.”
Mike Brooks, Chairman of the Board, added, “The Board has confidence in management’s ability to return the Company to profitability. The Board is always evaluating the best means by which to help grow the business and enhance long-term value for our shareholders. Part of this process will involve a thoughtful search process to identify potential director candidates who could bring additional industry expertise and experience to our Board, as well as focusing our investments on the growth prospects with the highest possible returns.”
Rocky Brands plans to continue returning capital to shareholders through its quarterly dividend of 11 cents per share, or approximately $3.3 million annually, and through its $7.5 million share buyback program authorized by the board in March 2016 and in effect through February 2017.
“The Board of Directors believes that the shares are undervalued and that the repurchase of shares at this time is in the long-term interest of all shareholders,” officials said. The company to date has repurchased 106,171 shares for $1.236 million under the share repurchase authorization.