ROCKY BRANDS, INC.
For the period ended Sep 30, 2026. Filed Nov 3, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 3, 2026
RCKY$51.34-1.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-04.
0001437749-26-025672
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-03.
0001437749-26-034685
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 61 previous paragraphs and 60 current paragraphs.
20 unchanged; 27 reworded; 13 added; 14 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 17 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
YEAR TO DATE 2026 FINANCIAL HIGHLIGHTS COMPARED TO YEAR TO DATE 2025
Current report
Operating expenses for the third quarter of 2026 were $44.3 million, or 31.9% of net sales, compared to $37.5 million, or 30.6% of net sales, for the third quarter of 2025. The increase in operating expenses as a percentage of net sales was partially due to an increase in outbound logistics costs associated with the increase in Retail segment net sales, an increase in digital advertising spend, and higher performance-based incentive compensation.
Current report
Gross margin for the nine months ended September 30, 2026 was $168.7 million, or 44.2% of net sales, compared to $139.6 million, or 40.8% of net sales, for the nine months ended September 30, 2025. The increase in gross margin was primarily due to $20.5 million of IEEPA tariff refunds recognized and a temporary $3.5 million benefit from the sale of inventory from the Company's free trade zone that carried no incremental tariffs, partially offset by tariff related costs and sourcing variances.
Current report
Operating expenses for the nine months ended September 30, 2026 were $127.2 million, or 33.3% of net sales, compared to $112.0 million, or 32.7% of net sales, for the nine months ended September 30, 2025. The increase in operating expenses as a percentage of net sales was primarily due to an increase in outbound logistics costs, an increase in digital advertising spend, and higher performance-based incentive compensation.
Current report
Wholesale segment net sales for the three months ended September 30, 2026 were $99.6 million compared to $89.1 million for the three months ended September 30, 2025. The increase in Wholesale segment net sales was primarily due to an increase in key customer sales due to the timing of replenishment orders and expanding our brand portfolio to certain key customers. Additionally, demand for new collections across several of our brands contributed to the increase over the prior year period.
Current report
Wholesale segment gross margin for the three months ended September 30, 2026 was $44.4 million, or 44.6% of net sales, compared to $35.2 million, or 39.5% of net sales, for the three months ended September 30, 2025. The increase in Wholesale segment gross margin as a percentage of net sales in thethird quarter of 2026 compared to thethird quarter of 2025 was due to a reduction in cost of goods sold, primarily driven by IEEPA tariff refunds recognized and a temporary benefit from the sale of inventory from the Company's free trade zone that carried no incremental tariffs, partially offset byunfavorable sourcing variances.
Current report
Retail segment gross margin for the three months ended September 30, 2026 was $17.7 million, or 50.0% of net sales, compared to $13.8 million, or 46.8% of net sales, for the three months ended September 30, 2025. The increase in Retail segment gross margin as a percentage of net sales was primarily due to reduction in cost of goods sold, driven by IEEPA tariff refunds recognized and a temporary benefit from the sale of inventory from the Company's free trade zone that carried no incremental tariffs, and a larger mix of e-Commerce website net sales in the third quarter of 2026 compared to the third quarter of 2025, which typically carry higher gross margins than our Lehigh CustomFit and Marketplace selling channels.
Current report
Operating expenses for the three months ended September 30, 2026 were$44.3 million, or 31.9% of net sales, compared to $37.5 million, or 30.6% of net sales, for the three months ended September 30, 2025. The increase in operating expenses as a percentage of net sales was partially due to an increase in outbound logistics costs associated with the increase in Retail segment net sales, an increase in digital advertising spend, and higher performance-based incentive compensation.
Current report
Nine Months Ended September 30, 2026 compared to Nine Months Ended September 30, 2025
Current report
Wholesale segment gross margin for thenine months ended September 30, 2026 was $112.0 million, or 43.6% of net sales, compared to $94.8 million, or 40.0% of net sales, for thenine months ended September 30, 2025. The increase in Wholesale segment gross margin as a percentage of net sales for thenine months ended September 30, 2026 compared to the prior year period was due to a reduction in cost of goods sold, primarily driven by the recognition of IEEPA tariff refunds and a temporary benefit from the sale of inventory from the Company's free trade zone that carried no incremental tariffs, which reduced cost of goods sold in the second and third quarters of 2026, partially offset by tariff related costs and sourcing variances.
Current report
Contract Manufacturing gross margin for thenine months ended September 30, 2026 was$1.0 million, or 9.5% of net sales, compared to $0.8 million, or 8.2% of net sales, for thenine months ended September 30, 2025. The increase in gross margin as a percentage of sales was due to increased production and economies of scale at our Puerto Rico manufacturing facility.
Current report
Interest Expense and Other - net for thenine months ended September 30, 2026 was $5.8 million compared to $7.4 million in the year-ago period. Included within interest expense and other - net for the three-months ended September 30, 2026 was $0.4 million of interest income related to the IEEPA tariff refunds. The remaining decrease in interest expense and other - net for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was primarily due to lower interest expense, driven by lower debt levels.
Current report
During the nine months ended September 30, 2026 and 2025, changes in working capital primarily reflected increases in accounts receivable and inventory, partially offset by increases in accounts payable. Accounts receivable used cash of $28.1 million and $10.2 million for the nine months ended September 30, 2026 and 2025, respectively. The higher use of cash in 2026 primarily reflected an increase in trade receivables as a result of increased net sales in the third quarter of 2026 compared to the prior year period and the recognition of the IEEPA tariff refunds receivable in the second quarter of 2026. Inventory used cash of $13.5 million and $26.9 million for the nine months ended September 30, 2026 and 2025, respectively. The lower use of cash in 2026 was primarily due to a decrease in tariff costs, partially offset by higher physical inventory and raw materials levels. Accounts payable provided cash of $16.5 million and $4.9 million for the nine months ended September 30, 2026 and 2025, respectively. The higher source of cash in 2026 was primarily due to an increase in in-transit inventory in the third quarter of 2026 compared to the prior year period.
Removed paragraphs (14)
Previous report
The decrease in inventory as of June 30, 2026 compared to June 30, 2025 was primarily due to our efforts to optimize our inventory position by reducing our discontinued inventory levels throughout the year.
Previous report
FIRST HALF OF 2026 FINANCIAL HIGHLIGHTS COMPARED TO FIRST HALF OF 2025
Previous report
Operating expenses for the second quarter of 2026 were $41.1 million, or 34.7% of net sales, compared to $36.1 million, or 34.2% of net sales, for the second quarter of 2025. The increase in operating expenses as a percentage of net sales was due to an approximate $1.1 million write-off of accounts receivable associated with a customer bankruptcy in the second quarter of 2026.
Previous report
Gross margin in the six months ended June 30, 2026 was $106.2 million, or 43.8% of net sales, compared to $90.3 million, or 41.1% of net sales, in the six months ended June 30, 2025. The increase in gross margin was primarily due to the recognition of actual and expected IEEPA tariff refunds, which lowered cost of goods sold in the second quarter of 2026.
Previous report
Wholesale segment net sales for the three months ended June 30, 2026 were$78.8 million compared to $73.1 million for the three months ended June 30, 2025. The increase in Wholesale segment net sales was due to increased demand across several key styles and brands coupled with price increases implemented in the third quarter of 2025. As part of a strategic initiative, we continued to build upon the lifestyle component of our outdoor category to broaden our distribution and consumer reach. Additionally, we offered select incentives to capture additional shelf space with key customers, and opportunistic selling of more discontinued styles in this year’s second quarter. The combination of these factors helped drive increased volume in the second quarter of 2026 compared to the prior year period.
Previous report
Wholesale segment gross margin for the three months ended June 30, 2026 was $40.6 million, or 51.5% of net sales, compared to $29.5 million, or 40.3% of net sales, for the three months ended June 30, 2025. The increase in Wholesale segment gross margin as a percentage of net sales in thesecond quarter of 2026 compared to thesecond quarter of 2025 was primarily due to the recognition of actual and expected IEEPA tariff refunds, which reduced cost of goods sold in the current quarter, partially offset by tariff-related costs and sourcing variances. The net impact of the aforementioned tariff refunds and tariff costs resulted in a reduction to Wholesale segment cost of goods sold of approximately $12.0 million in the second quarter of 2026. The increase in Wholesale segment gross margin resulting from the net tariff impact was partially offset by higher discontinued product sales as we continue to optimize our inventory position as well as additional promotions and discounts offered to several key customers in an effort to gain additional shelf space.
Previous report
Retail segment gross margin for the three months ended June 30, 2026 was$19.9 million, or 54.8% of net sales, compared to $13.5 million, or 45.2% of net sales, for the three months ended June 30, 2025. The increase in Retail segment gross margin as a percentage of net sales was primarily due to the recognition of actual and expected IEEPA tariff refunds, which lowered cost of goods sold in the current quarter, partially offset by tariff-related costs and sourcing variances. The net impact of the aforementioned tariff refunds and tariff costs resulted in a reduction to Retail segment cost of goods sold of approximately $3.0 million in the second quarter of 2026. Additionally, the increase in Retail segment gross margins as a percentage of net sales was also attributable to price increases implemented in the third quarter of 2025 as well as a favorable shift in our branded sales mix, with our rubber boot brands delivering stronger growth relative to the rest of the brands in our portfolio. Our rubber boots product typically yield higher gross margins than other products within our brand portfolio.
Previous report
Operating expenses for the three months ended June 30, 2026 were$41.1 million, or 34.7% of net sales, compared to $36.1 million, or 34.2% of net sales, for the three months ended June 30, 2025. The increase in operating expenses as a percentage of net sales was due to an approximate $1.1 million write-off of accounts receivable associated with a customer bankruptcy filing in the second quarter of 2026.
Previous report
Six Months Ended June 30, 2026 compared to Six Months Ended June 30, 2025
Previous report
Wholesale segment gross margin for thesix months ended June 30, 2026 was $67.6 million, or 43.0% of net sales, compared to $59.6 million, or 40.3% of net sales, for thesix months ended June 30, 2025. The increase in Wholesale segment gross margin as a percentage of net sales in the first half of 2026 compared to the first half of 2025 was primarily due to the recognition of actual and expected IEEPA tariff refunds, which reduced cost of goods sold in the second quarter of 2026, partially offset by tariff-related costs and sourcing variances. The net impact of the aforementioned tariff refunds and tariff costs for the six months ended June 30, 2026 resulted in a net impact of $6.3 million as a reduction to costs of goods sold to our Wholesale segment. Additionally, the increase in Wholesale segment gross margin as a percentage of net sales was also due to a favorable shift in our branded sales mix, with our rubber boot brands delivering stronger growth relative to the rest of the brands in our portfolio. The increase in Wholesale segment gross margin as a percentage of net sales in the first half of 2026 compared to the prior year period was partially offset by higher discontinued product sales as we continue to optimize our inventory position as well as additional promotions and discounts offered to several key customers in an effort to gain additional shelf space.
Previous report
Contract Manufacturing gross margin for thesix months ended June 30, 2026 was$0.6 million, or 9.3% of net sales, compared to $0.5 million, or 9.2% of net sales, for thesix months ended June 30, 2025.
Previous report
Operating expenses for the six months ended June 30, 2026 were$82.9 million, or 34.2% of net sales, compared to $74.4 million, or 33.9% of net sales, for the six months ended June 30, 2025. The increase in operating expenses was due to higher logistics costs, primarily outbound freight, associated with the increase in Retail sales as well as an approximate $1.1 million write-off of accounts receivable associated with a customer bankruptcy filing in the second quarter of 2026.
Previous report
Interest Expense and Other - net for thesix months ended June 30, 2026 was $4.0 million compared to $4.9 million in the year-ago period. The decrease in interest expense was due to lower debt levels.
Previous report
During the six months ended June 30, 2026, the net change in working capital was primarily impacted by an increase in accounts receivable and a decrease in accrued expenses. The increase in accounts receivable and the decrease in accrued expenses resulted in a use of cash of $16.5 million and $5.0 million, respectively. The increase in accounts receivable was primarily due to the recognition of the IEEPA tariff refunds receivable in the second quarter of 2026. The decrease in accrued expenses for the six months ended June 30, 2026 was a result of a decrease in tariff costs as a result of the U.S. Supreme Court's ruling to invalidate certain IEEPA tariffs in the first quarter of 2026. During thesix months ended June 30, 2025, the net change in working capital was primarily impacted by an increase in inventory resulting in a use of cash of $20.1 million. The increase in inventory was a result of the additional tariffs imposed during 2025 as well as increased purchases in order to meet estimated demand in the second half of 2025.
Reworded paragraphs (27)
Previous wording
Our business is subject to a highly evolving and everchanging macroeconomic environment, including changes in tariffs, taxes and industry changes. We continue to monitor changes in policy impacting global trade, including tariffs, which have been dynamic, unpredictable, and subject to ongoing modification. Beginning in early 2025, pursuant to the Inte rnational Emergency Economic Powers Act ("IEEPA"), significant additional tariffs were imposed on products imported from various countries, including those countries where we primarily source our products. In February 2026, the U.S. Supreme Court invalidated certain tariffs imposed under the IEEPA and in March 2026, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection Agency to suspend collection of the invalidated tariffs and to establish a process to refund certain IEEPA tariffs previously collected. As a result of this ruling, we are eligible to receive refunds of tariffs previously paid on qualifying imports, including interest. We have paid approximately $20.5 million in tariffs for products that were subject to the invalidated IEEPA tariffs. We applied the loss recovery model and determined the expected receipt of the refund of the previously paid IEEPA tariffs is probable. Accordingly, we recognized a benefit of $18.0 million as a reduction to cost of goods sold within the accompanying Unaudited Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2026. Additionally, $2.5 million has been recorded as a reduction of inventory within the accompanying Unaudited Condensed Consolidated Balance Sheet as of June 30, 2026, and will be recognized as a reduction to cost of goods sold as the inventory is sold. As of June 30, 2026, we have received $3.7 million in refunds and recorded $16.8 million of outstanding IEEPA tariff receivables, which is included in "other receivables" within the accompanying Unaudited Condensed Consolidated Balance Sheet. Subsequent to June 30, 2026, we have received an additional $8.2 million of the IEEPA tariff receivable.
Current wording
Our business is subject to a highly evolving and ever-changing macroeconomic environment, including changes in tariffs, taxes and industry changes. We continue to monitor changes in policy impacting global trade, including tariffs, which have been dynamic, unpredictable, and subject to ongoing modification. Beginning in early 2025, pursuant to the International Emergency Economic Powers Act ("IEEPA"), sign ificant additional tariffs were imposed on products imported from various countries, including those countries where we primarily source our products. In February 2026, the U.S. Supreme Court invalidated certain tariffs imposed under the IEEPA and in March 2026, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection Agency to suspend collection of the invalidated tariffs and to establish a process to refund certain IEEPA tariffs previously collected. As a result of this ruling, we are eligible to receive refunds of tariffs previously paid on qualifying imports, including interest. We have paid approximately $20.5 million in tariffs for products that were subject to the invalidated IEEPA tariffs. We applied the loss recovery model and determined the expected receipt of the refund of the previously paid IEEPA tariffs is probable. Accordingly, we recognized a benefit of $20.5 million as a reduction to cost of goods sold within the accompanying Unaudited Condensed Consolidated Statement of Operations for the nine months ended September 30, 2026, of which $2.5 million was recognized during the three months ended September 30, 2026 as the remaining inventory was sold through. As of September 30, 2026, we have received$12.2 million in refunds and have an outstanding IEEPA tariff receivable of $8.3 million, which is included in "other receivables" within the accompanying Unaudited Condensed Consolidated Balance Sheet.
Previous wording
During the second quarter of 2026, we experienced an increase in net sales over the second quarter of 2025. This increase was attributable to an increase in net sales across all three of our reportable segments, Retail, Wholesale, and Contact Manufacturing. The price increase implemented in the third quarter of 2025 allowed us to experience steady growth during the first half of 2026 over the first half of 2025. Our Retail segment continues to be our fastest growing reportable segment, with double digit growth in the first and second quarters of 2026 over the prior year periods, driven by growth across all of our Retail selling channels. The increase in net sales on our e-commerce websites and third-party marketplace platforms was driven by a continued focus on our digital marketing and expansion into new marketplaces. The increase in net sales in our Lehigh CustomFit business was attributed to expanding our customer base and product offerings. We saw an increase in gross margin as a percentage of sales in our Wholesale and Retail segments as a result of the recognition of actual and expected IEEPA tariff refunds in the second quarter of 2026, which reduced cost of goods sold.
Current wording
During the third quarter of 2026, we experienced an increase in net sales over the third quarter of 2025. This increase was attributable to an increase in net sales across our Wholesale and Retail segments. Our Retail segment continues to be our fastest growing reportable segment, with double digit growth in each of the first three quarters of 2026 over their respective prior year periods, driven by growth across all of our Retail selling channels. We saw an increase in gross margin as a percentage of net sales in our Wholesale and Retail segments for the three months ended September 30, 2026. The increase in gross margin as a percentage of net sales was primarily due to lower duty costs as a result of the IEEPA tariff ruling, including a $3.5 million benefit from previously accrued duties on foreign trade zone inventory that was reversed as of the ruling date and recognized in cost of goods sold as the inventory was sold and the recognition of a $2.5 million IEEPA tariff refund, partially offset by unfavorable sourcing variances.
Previous wording
Our operating expenses as a percentage of net sales for the three and six months ending June 30, 2026 increased due to an approximate $1.1 million write-off of accounts receivable associated with a customer bankruptcy during the second quarter of 2026.
Current wording
Our operating expenses as a percentage of net sales for the three andnine months ending September 30, 2026 increased due to an increase in outbound logistics costs, an increase in digital advertising spend, and higher performance-based incentive compensation.
Previous wording
Interest expense declined for the three and six months ending June 30, 2026 compared to the same periods in 2025 due to continued debt repayments over the past twelve months, which have reduced the overall outstanding principal balances, as well as a decrease in interest rates.
Current wording
Interest expense declined for the three andnine months ending September 30, 2026 compared to the same periods in 2025 due to continued debt repayments over the past twelve months, which have reduced the overall outstanding principal balances.
Previous wording
SECOND QUARTER 2026 FINANCIAL HIGHLIGHTS COMPARED TO SECOND QUARTER 2025
Current wording
THIRD QUARTER 2026 FINANCIAL HIGHLIGHTS COMPARED TO THIRD QUARTER 2025
Previous wording
Net sales increased to $118.4 million in the second quarter of 2026 compared to $105.6 million in the second quarter of 2025. The increase in net sales in the current year quarter compared to the prior year quarter was due to an increase in net sales across all of our reportable segments: Wholesale, Retail, and Contract Manufacturing.
Current wording
Net sales increased to $138.8 million in the third quarter of 2026 compared to $122.5 million in thethird quarter of 2025. The increase in net sales in the current year quarter compared to the prior year quarter was due to an increase in net sales across our Wholesale and Retail segments primarily relating to increased demand and expanding our brand portfolio to certain key customers and increased product offerings.
Previous wording
Gross margin in the second quarter of 2026 was $60.8 million, or 51.4% of net sales, compared to $43.3 million, or 41.0% of net sales, in the second quarter of 2025. The increase in gross margin as a percentage of net sales wasprimarily due to the recognition of actual and expected IEEPA tariff refunds, which reduced cost of goods sold in the second quarter of 2026.
Current wording
Gross margin in the third quarter of 2026 was $62.5 million, or 45.0% of net sales, compared to $49.3 million, or 40.2% of net sales, in the third quarter of 2025. The increase in gross margin as a percentage of net sales wasprimarily due to lower cost of goods sold driven by $2.5 million of IEEPA tariff refunds recognized and a temporary $3.5 million benefit from the sale of inventory from the Company's free trade zone that carried no incremental tariffs, partially offset byunfavorable sourcing variances.
Previous wording
Income from operations for the second quarter of 2026 was$19.7 million, or 16.6% of net sales, compared to $7.2 million, or 6.8% of net sales, in the year-ago period. The increase in income from operations was primarily driven by the increase in gross margin for the three months ended June 30, 2026 compared to the year-ago period.
Current wording
Income from operations for the third quarter of 2026 was$18.2 million, or 13.1% of net sales, compared to $11.7 million, or 9.6% of net sales, in the year-ago period. The increase in income from operations was primarily driven by the increase in gross margin for the three months ended September 30, 2026 compared to the year-ago period.
Previous wording
Net sales increased to $242.8 million in the six months ended June 30, 2026 compared to $219.7 million in the six months ended June 30, 2025. Theincrease in net sales in the current year quarter compared to the prior year quarter was due to an increase in net sales across all of our reportable segments: Wholesale, Retail, and Contract Manufacturing.
Current wording
Net sales increased to $381.6 million in the nine months ended September 30, 2026 compared to $342.3 million in the nine months ended September 30, 2025. Theincrease in net sales in the current nine-month period compared to the prior year nine-month period was due to an increase in net sales across all of our reportable segments: Wholesale, Retail, and Contract Manufacturing.
Previous wording
Income from operations for the six months ended June 30, 2026 was$23.3 million, or 9.6% of net sales, compared to $15.9 million, or 7.2% of net sales, in the year-ago period. The increasein income from operations was primarily driven by the increase in gross margin for the six months ended June 30, 2026 compared to the year-ago period.
Current wording
Income from operations for the nine months ended September 30, 2026 was$41.5 million, or 10.9% of net sales, compared to $27.6 million, or 8.1% of net sales, in the year-ago period. The increasein income from operations was primarily driven by the increase in gross margin for the nine months ended September 30, 2026 compared to the year-ago period.
Previous wording
Retail segment net sales for the three months ended June 30, 2026 were$36.2 million compared to $29.7 million for the three months ended June 30, 2025. The increase was attributed to increases in our owned e-commerce website net sales, our Lehigh CustomFit business, and third-party marketplace net sales. We upgraded our e-commerce platform during the third quarter of 2025 and have increased our investments in digital advertising, driving more traffic to our website and increasing our net sales in the second quarter of 2026 compared to the prior year period. We experienced an increase in our Lehigh CustomFit business as we continue to expand our customer base and increase product offerings. The increase in third-party marketplace platforms was attributed to increased presence within the marketplace space as well as price increases.
Current wording
Retail segment net sales for the three months ended September 30, 2026 were $35.4 million compared to $29.5 million for the three months ended September 30, 2025. The increase was attributed to increases in our owned e-commerce website net sales, our Lehigh CustomFit business, and third-party marketplace net sales. We have increased our investments in digital advertising, driving more traffic to our website and increasing our net sales in the third quarter of 2026 compared to the prior year period. We experienced an increase in our Lehigh CustomFit business due to continued expansion of our customer base and increased product offerings. The increase in third-party marketplace platforms was attributed to increased product offerings among our marketplace platforms and continued investments in digital advertising.
Previous wording
Contract Manufacturing net sales for the three months ended June 30, 2026 were$3.3 million compared to $2.8 million for the three months ended June 30, 2025. The increase in Contract Manufacturing net sales was due to increased sales to the U.S. Military.
Current wording
Contract Manufacturing net sales for the three months ended September 30, 2026 were$3.8 million compared to $3.9 million for the three months ended September 30, 2025.
Previous wording
Contract Manufacturing segment gross margin for the three months ended June 30, 2026 was$0.3 million, or 9.3% of net sales, compared to $0.3 million, or 12.4% of net sales, for the three months ended June 30, 2025. The decrease in gross margin as a percentage of sales was due to reduced economies of scale at our Puerto Rico manufacturing facility.
Current wording
Contract Manufacturing segment gross margin for the three months ended September 30, 2026 was$0.4 million, or 9.9% of net sales, compared to $0.3 million, or 6.9% of net sales, for the three months ended September 30, 2025. The increase in gross margin as a percentage of sales was due to increased production and economies of scale at our Puerto Rico manufacturing facility.
Previous wording
Interest Expense and Other - net for the three months ended June 30, 2026 was $2.0 million compared to $2.5 million in the year-ago period. The decrease in interest expense was due to lower debt levels.
Current wording
Interest Expense and Other - net for the three months ended September 30, 2026 was $1.8 million compared to $2.5 million in the year-ago period. Included within interest expense and other - net for the three-months ended September 30, 2026 was $0.3 million of interest income related to the IEEPA tariff refunds. The remaining decrease in interest expense and other - net for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 was primarily due to lower interest expense, driven by lower debt levels.
Previous wording
The decrease in our effective tax rate in the second quarter of 2026 compared to the year-ago period was primarily due to the mix of earnings between the United States and our international subsidiaries.
Current wording
The decrease in our effective tax rate in the third quarter of 2026 compared to the year-ago period was primarily due to the mix of earnings between the United States and our international subsidiaries.
Previous wording
Wholesale segment net sales for the six months ended June 30, 2026 were$157.2 million compared to $147.9 million for the six months ended June 30, 2025. The increase in Wholesale segment net sales was due to price increases that went into effect in the third quarter of 2025, and increased demand across several key styles and brands. As part of a strategic initiative, we continue to build upon the lifestyle component of our outdoor category to broaden our distribution and consumer reach. Additionally, we offered select incentives to capture additional shelf space with key customers, and opportunistic selling of more discontinued styles in this year’s second quarter. The combination of these factors helped drive increased volume in the first half of 2026 compared to the prior year period.
Current wording
Wholesale segment net sales for thenine months ended September 30, 2026 were $256.8 million compared to $237.0 million for thenine months ended September 30, 2025. The increase in Wholesale segment net sales was due to price increases that went into effect in the third quarter of 2025, increased demand across several key styles and brands, and increased sales to certain key customers driven by incentives offered to capture additional shelf space as well expanding our brand offerings.
Previous wording
Retail segment net sales for thesix months ended June 30, 2026 were$78.9 million compared to $66.4 million for thesix months ended June 30, 2025. The increase was attributed to increases in our owned e-commerce website net sales, our Lehigh CustomFit business, and third-party marketplace net sales. We upgraded our e-commerce platform during the third quarter of 2025 and have increased our investments in digital advertising, driving more traffic to our website and increasing our net sales in the second quarter of 2026 compared to the prior year period. We experienced an increase in our Lehigh CustomFit business as we continue to expand our customer base and increase product offerings. The increase in third-party marketplace platforms was attributed to increased presence within the marketplace space as well as price increases.
Current wording
Retail segment net sales for thenine months ended September 30, 2026 were$114.4 million compared to $95.9 million for thenine months ended September 30, 2025. The increase was attributed to increases in our owned e-commerce website net sales, our Lehigh CustomFit business, and third-party marketplace net sales. We upgraded our e-commerce platform during the third quarter of 2025 and have increased our investments in digital advertising, driving more traffic to our website and increasing our net sales through the third quarter of 2026 compared to the prior year period. We experienced an increase in our Lehigh CustomFit business as we continue to expand our customer base and increase product offerings. The increase in third-party marketplace platforms was attributed to price increases, expanded product offerings and continued investments in digital advertising.
Previous wording
Contract Manufacturing net sales for thesix months ended June 30, 2026 were$6.6 million compared to $5.5 million for thesix months ended June 30, 2025. The increase in Contract Manufacturing net sales was due to increased sales to the U.S. Military.
Current wording
Contract Manufacturing net sales for thenine months ended September 30, 2026 were$10.4 million compared to $9.4 million for thenine months ended September 30, 2025. The increase in Contract Manufacturing net sales was due to increased sales to the U.S. Military.
Previous wording
Retail segment gross margin for the six months ended June 30, 2026 was$38.0 million, or 48.2% of net sales, compared to $30.2 million, or 45.5% of net sales, for the six months ended June 30, 2025. The increase in Retail segment gross margin as a percentage of net sales was due to the recognition of actual and expected IEEPA tariff refunds, which reduced cost of goods sold in the second quarter of 2026, partially offset by tariff-related costs and sourcing variances. The net impact of the aforementioned tariff refunds and tariff costs for the six months ended June 30, 2026 resulted in a net impact of $1.5 million as a reduction to cost of goods sold to our Retail segment gross margin. Additionally, the increase in Retail segment gross margins as a percentage of net sales was also attributable to price increases as well as a favorable shift in our branded sales mix, with our rubber boot brands delivering stronger growth relative to the rest of the brands in our portfolio.
Current wording
Retail segment gross margin for the nine months ended September 30, 2026 was$55.7 million, or 48.7% of net sales, compared to $44.0 million, or 45.9% of net sales, for the nine months ended September 30, 2025. The increase in Retail segment gross margin as a percentage of net sales was primarily due to a reduction in cost of goods sold driven by the recognition of IEEPA tariff refunds and a temporary benefit from the sale of inventory from the Company's free trade zone that carried no incremental tariffs, which reduced cost of goods sold in the second and third quarters of 2026, partially offset by tariff related costs and sourcing variances. Additionally, the increase in Retail segment gross margins as a percentage of net sales was attributable to price increases as well as a favorable shift in our Retail segment channel mix, with more e-Commerce sales as a percentage of total Retail net sales, which typically carry higher margins than our Lehigh CustomFit and Marketplace selling channels.
Previous wording
Operating expenses for the six months ended June 30, 2026 were $82.9 million, or 34.2% of net sales, compared to $74.4 million, or 33.9% of net sales, for the six months ended June 30, 2025. The increase in operating expenses as a percentage of net sales was due to an approximate $1.1 million write-off of accounts receivable associated with a customer bankruptcy in the second quarter of 2026.
Current wording
Operating expenses for the nine months ended September 30, 2026 were$127.2 million, or 33.3% of net sales, compared to $112.0 million, or 32.7% of net sales, for the nine months ended September 30, 2025. The increase in operating expenses was due to an increase in outbound logistics costs associated with the increase in Retail segment net sales, an increase in digital advertising spend, and higher performance-based incentive compensation. Additionally, we recognized an approximate $1.1 million write-off of accounts receivable associated with a customer bankruptcy in the second quarter of 2026.
Previous wording
The decrease in our effective tax rate in thesix months ended June 30, 2026 compared to the year-ago period was primarily due to the mix of earnings between the United States and our international subsidiaries.
Current wording
The decrease in our effective tax rate in thenine months ended September 30, 2026 compared to the year-ago period was primarily due to the mix of earnings between the United States and our international subsidiaries.
Previous wording
Our principal sources of liquidity are our income from operations, as well as access to the borrowing capacity under our ABL Facility. We believe that we have sufficient liquidity to support our ongoing operations and to re-invest in our business to drive future growth. As of June 30, 2026, we maintained cash and cash equivalents of $2.6 million and had $46.3 million of availability under our ABL Facility. Our primary ongoing operating cash flow requirements are for inventory purchases and other working capital needs, capital expenditures, and payments on our credit facilities.
Current wording
Our principal sources of liquidity are our income from operations, as well as access to the borrowing capacity under our ABL Facility. We believe that we have sufficient liquidity to support our ongoing operations and to re-invest in our business to drive future growth. As of September 30, 2026, we maintained cash and cash equivalents of $2.3 million and had $67.5 million of availability under our ABL Facility. Our primary ongoing operating cash flow requirements are for inventory purchases and other working capital needs, capital expenditures, and payments on our credit facilities.
Previous wording
In addition to our ABL Facility with outstanding borrowings of $101.3 million as of June 30, 2026, we also have a Term Facility with outstanding borrowings of $22.6 million as of June 30, 2026. Our ABL Facility and Term Facility require us to maintain a minimum fixed charge coverage ratio, as defined in the ABL Agreement. Additionally, the ABL Facility and Term Facility contain restrictions on the amount of dividend payments and the amount of share repurchases of common stock. As of June 30, 2026, we were in compliance with such covenants and restrictions under the ABL Facility and Term Facility. We may utilize portions of our excess cash to prepay certain amounts of long-term debt prior to maturity.
Current wording
In addition to our ABL Facility with outstanding borrowings of $96.9 million as of September 30, 2026, we also have a Term Facility with outstanding borrowings of $20.5 million as of September 30, 2026. Our ABL Facility and Term Facility require us to maintain a minimum fixed charge coverage ratio, as defined in the ABL Agreement. Additionally, the ABL Facility and Term Facility contain restrictions on the amount of dividend payments and the amount of share repurchases of common stock. As of September 30, 2026, we were in compliance with such covenants and restrictions under the ABL Facility and Term Facility. We may utilize portions of our excess cash to prepay certain amounts of long-term debt prior to maturity.
Previous wording
Our capital expenditures primarily relate to investments in information technology, molds and equipment associated with our manufacturing and distribution operations, merchandising fixtures, and projects related to our corporate offices. In 2025, we purchased land for the future expansion of our distribution center in Logan, Ohio and as such it is possible that a significant portion of future capital expenditures may relate to this expansion.
Current wording
Our capital expenditures primarily relate to investments in information technology, molds and equipment associated with our manufacturing and distribution operations, merchandising fixtures, and projects related to our corporate offices.
Previous wording
*Operating Activities.*Net cash provided by operating activities was $9.7 million and $2.0 million for thesix months ended June 30, 2026 and 2025, respectively. The increase in cash provided by operating activities was primarily due to an increase in net income resulting from an increase in net sales over the prior year period as well as IEEPA tariff refunds received during the second quarter of 2026. The net change in working capital and other assets and liabilities resulted in cash used by operating activities of $14.5 million and $14.2 million for thesix months ended June 30, 2026 and 2025, respectively.
Current wording
*Operating Activities.*Net cash provided by operating activities for thenine months ended September 30, 2026 was $18.2 million, and net cash used in operating activities for the nine months ended September 30, 2025 was $1.3 million. The cash provided by operating activities for thenine months ended September 30, 2026 was primarily due to an increase in net income resulting from an increase in net sales over the prior year period as well as IEEPA tariff refunds received during the current-year period. The net change in working capital and other assets and liabilities resulted in cash used by operating activities of $23.0 million and $28.7 million for thenine months ended September 30, 2026 and 2025, respectively.
Previous wording
Investing Activities. Net cash used in investing activities for thesix months ended June 30, 2026 and 2025 was$4.8 millionand $3.9 million, respectively. The use of cash in both periods was a result of capital expenditures for our manufacturing operations, distribution center, and information technology.
Current wording
Investing Activities. Net cash used in investing activities for thenine months ended September 30, 2026 and 2025 was $7.1 million and $5.7 million, respectively. The use of cash in both periods was a result of capital expenditures for our manufacturing operations, distribution center, and information technology.
Previous wording
Financing Activities. Net cash used in financing activities for thesix months ended June 30, 2026 was $5.2 million, and net cash provided by financing activities for the six months ended June 30, 2025 was $0.9 million. The net use of cash for the current year period was primarily due to dividend payments and repurchases of common stock. The net source of cash for the six months ended June 30, 2026 primarily related to proceeds from our revolving credit facility offset by payments on our term loan and dividend payments.
Current wording
Financing Activities. Net cash used in financing activities for thenine months ended September 30, 2026 was $11.8 million, and net cash provided by financing activities for the nine months ended September 30, 2025 was $6.6 million. The net use of cash for the current-year period was primarily due to repayments on our term loan and dividend payments. The net source of cash for the nine months ended September 30, 2025 primarily related to proceeds from our revolving credit facility offset by payments on our term loan and dividend payments.