Rocky Brands, Inc. (RCKY): Business Model Canvas [Dec-2025 Updated]

You're looking at Rocky Brands, Inc. (RCKY) right now, and honestly, the big question is how they manage those tariff pressures while keeping their brands firing. After two decades analyzing these plays, I see a clear playbook: they are aggressively shifting production to the Dominican Republic and Puerto Rico while leaning hard on their specialized portfolio-think XTRATUF momentum driving double-digit growth. It's a balancing act, using a $175.5 million inventory buffer to ride out the storm while pushing Direct-to-Consumer (DTC) sales up 20.4%. This company isn't just surviving; it's actively re-engineering its foundation. Here's the quick math: the strategy hinges on making their supply chain flexible enough to protect those strong wholesale revenues, which still hit $74.8 million in Q1 2025. Dive into the full Business Model Canvas below to see exactly how Rocky Brands, Inc. is structuring itself for the next few years.

Rocky Brands, Inc. (RCKY) - Canvas Business Model: Key Partnerships

You're looking at the core relationships Rocky Brands, Inc. (RCKY) relies on to get product made and into customers' hands as of late 2025. These partnerships are crucial, especially as the company navigates tariff pressures and supply chain shifts.

The distribution network is anchored by strong relationships with wholesale accounts and brick-and-mortar retailers. This channel remains the largest revenue driver for Rocky Brands, Inc. (RCKY). For the third quarter ended September 30, 2025, Wholesale net sales hit $89.1 million, representing about 72.72% of the total net sales for that period. Retail sales, which capture a good portion of the e-commerce growth, contributed $29.5 million, or 24.09% of Q3 2025 net sales.

The manufacturing side is actively being rebalanced. Rocky Brands, Inc. (RCKY) is diversifying its sourcing footprint away from China, leveraging its own facilities in the Dominican Republic and Puerto Rico, alongside third-party partners. The company expects to manufacture approximately 50% of its inventory needs in-house in 2026, a significant jump from the approximately 30% manufactured in-house in 2025. This shift is a direct response to trade policy uncertainty.

The U.S. government and military represent a specialized, yet important, partnership through the Contract Manufacturing segment. This segment includes sales where Rocky Brands, Inc. (RCKY) is contracted to manufacture or source specific footwear for the U.S. Military. The company secured a multi-year contract in 2023, with shipments expected through 2026. For the third quarter of 2025, Contract Manufacturing net sales were $3.9 million, though this segment's gross margin was the lowest at 6.9% for the quarter.

Authorized online partners are integrated within the Retail segment, which saw strong growth. The focus on e-commerce channels, alongside brick-and-mortar, helped drive the Retail segment's gross margin up by 320 basis points in Q3 2025 compared to the prior year period, reflecting the higher margins these direct-to-consumer/online sales carry.

Here's a quick look at the channel revenue breakdown from the third quarter of 2025:

The supply chain strategy involves a mix of owned and third-party production. The third-party sourcing network includes facilities in Vietnam, India, and Mexico, in addition to the planned reduction of sourcing from China. The company's owned facilities are in the Dominican Republic and Puerto Rico, where they plan to increase production volume.

The strategic manufacturing shift involves these key sourcing locations:

• - Third-party partners in Vietnam, Cambodia, and India for sourcing diversification.
• - Owned facilities in the Dominican Republic and Puerto Rico for increased in-house production.
• - Reduced reliance on China, with only approximately 10% of total inventory expected to be imported from there in 2026.
• - Active bidding on U.S. Military contracts through the Contract Manufacturing segment.

Finance: draft 13-week cash view by Friday.

Rocky Brands, Inc. (RCKY) - Canvas Business Model: Key Activities

The Key Activities for Rocky Brands, Inc. center on supply chain optimization, brand stewardship, and targeted sales channel investment to navigate macroeconomic pressures like tariffs.

Accelerating production shift to company-owned facilities in the Dominican Republic and Puerto Rico

The company is actively accelerating efforts to reduce reliance on Chinese sourcing by shifting production to Vietnam, Cambodia, India, and its own manufacturing facilities in the Dominican Republic and Puerto Rico. This strategic move is intended to mitigate the impact of higher tariffs. Management noted in Q2 2025 that the volume coming out of the Dominican Republic is expected to be twice the amount compared to 2024 and year-to-date 2025 figures. The full margin benefits from this production shift are not expected to fully materialize until 2026.

Managing a diversified portfolio of footwear and apparel brands

Rocky Brands, Inc. manages a portfolio that includes Rocky®, Georgia Boot®, Durango®, Lehigh®, The Original Muck Boot Company®, Xtratuf, and Ranger. This multi-brand strategy is a key driver of performance.

Here is a look at the segment and brand performance that informs this activity:

The XTRATUF brand is noted as the leader in the Direct-to-Consumer (DTC) business. The Muck brand delivered its best quarter-to-quarter comparison since 2023 in Q2 2025.

Implementing price increases on footwear to mitigate tariff headwinds

Rocky Brands planned to implement price increases on most footwear styles in early June 2025 to offset higher tariff costs. The company expects full-year 2025 gross margins to be down approximately 70 basis points to between 38% and 39%.

Gross margin percentages for the reported quarters were:

• Q1 2025 Gross Margin: 41.2% of net sales.
• Q2 2025 Gross Margin: 41.0% of net sales.
• Q3 2025 Gross Margin: 40.2% of net sales.

The company projected 2025 EPS to increase approximately 10% over 2024's adjusted EPS of $2.54.

Increasing digital marketing spend to drive direct-to-consumer (DTC) sales growth

Selling, General, and Administrative (SG&A) expenses are expected to increase in dollars due to higher marketing spend to support growth, especially during the key holiday season. The company reported strong gains in DTC sales in Q1 2025.

DTC-related performance highlights include:

• Q1 2025 retail segment top-line growth was 20%.
• Lehigh, a DTC business, continues to grow at the mid-teen numbers.
• A digital advertising campaign for the Muck brand delivered the best results in company history in Q2 2025.
• Operating expenses as a percentage of net sales in Q2 2025 were 34.2%, driven by higher selling and logistics costs associated with the increase in the DTC business.

Product design and development focused on functional, durable, and lifestyle footwear

Product development activity is evidenced by recent certifications and brand focus areas. Rocky Brands recently earned a USMC hot weather boot certification, which enables the pursuit of large bid opportunities and individual marine sales. The XTRATUF brand, a lifestyle/functional footwear focus, saw bookings up approximately 80% versus the previous year in Q1 2025.

Segment Gross Margins by Quarter:

Rocky Brands, Inc. (RCKY) - Canvas Business Model: Key Resources

When we look at the Key Resources for Rocky Brands, Inc. (RCKY), we're really looking at the tangible and intangible assets that power their premium footwear and apparel business. You can see the strength here in their brand equity and their control over production.

The foundation is definitely the portfolio of well-recognized brands. They market products across outdoor, work, duty, commercial military, military, and western segments. This collection is what gives them market access and consumer trust.

• - Rocky Boots, known for rugged, reliable performance.
• - Georgia Boot, building America's Hardest Working Boot since 1937.
• - XTRATUF, a rugged boot brand with Alaskan roots.
• - The Original Muck Boot Company, focused on being 100% MUCKPROOF footwear.
• - Durango, crafting western boots with comfort and style.
• - Lehigh CustomFit, Lehigh Outfitters, and Lehigh Safety Shoes, serving the safety and work segments.
• - Ranger, offering boots for hazardous, wet, or cold-weather environments.

Control over manufacturing is a significant resource, especially given the recent tariff environment. Rocky Brands, Inc. operates company-owned manufacturing facilities in The Dominican Republic and Puerto Rico. This internal capacity is being leveraged strategically; for 2025, the projection is to manufacture approximately 30% of inventory needs in-house, with a goal to increase that to approximately 50% in 2026. This shift helps mitigate exposure, as only about 10% of total inventory, which is half of the remaining production in China, is projected to be imported into the United States in 2026.

To buffer against supply chain shocks and tariff impacts, the company intentionally built up its stock. As of March 31, 2025, inventories stood at $175.5 million, which was up 6.3% compared to the same date a year prior.

The intellectual property (IP) and design expertise in specialized footwear is an intangible asset that supports the value proposition of all their brands. For instance, the Rocky Wildlands 77 boot design incorporated extensive research into firefighter gear and user feedback to reduce weight while maintaining stability.

Financially, the refinanced debt structure is a key resource providing stability. Following the refinancing completed in April 2024, interest expense dropped materially. For the first quarter of 2025, interest expense was only $2.4 million, compared to $4.5 million in the year-ago period. This reduction, combined with lower overall debt levels, helped boost net income leverage. Total debt, net of unamortized debt issuance costs, was reported at $128.6 million at the end of Q1 2025.

Rocky Brands, Inc. (RCKY) - Canvas Business Model: Value Propositions

You're looking at what makes Rocky Brands, Inc. stand out in the tough footwear market, so let's break down the core value they offer customers right now, based on late 2025 performance indicators.

The fundamental value proposition centers on delivering high-quality, comfortable, and functional footwear specifically engineered for demanding environments. This isn't just about fashion; it's about protection and performance where it counts, whether that's on a construction site or in the Alaskan wilderness. The company backs this up with a robust family of brands, which is key to covering diverse needs.

This multi-brand strategy allows Rocky Brands, Inc. to offer specialized products across distinct markets. You see this clearly when you look at the segments they serve, which include work, outdoor, and western categories. Honestly, this diversification helps smooth out demand fluctuations across different customer bases.

Here's a quick look at the brand portfolio and how the segments performed coming out of the first half of 2025:

You'll note the strong momentum in the retail channel, which is a major value driver right now. The company specifically called out XTRATUF brand momentum, delivering double-digit growth in Q1 2025, which is a significant tailwind for the overall outdoor positioning.

Another critical value component is the operational flexibility built into their sourcing. Rocky Brands, Inc. is actively demonstrating supply chain flexibility through diversified sourcing and internal production. Management is moving faster to reduce the amount of product sourced from China, a direct response to tariff headwinds, which supports the long-term reliability of their supply.

For the industrial customer, the value proposition is highly specific:

• Safety-toe products and custom-fit programs via the Lehigh safety shoe business.
• Lehigh Safety Shoe business saw top-line growth in the high-teens in Q1 2025.
• Lehigh offers on-site shoe trucks and managed footwear programs like Lehigh CustomFit.
• The overall brand family includes Rocky®, Georgia Boot®, Durango®, Lehigh®, The Original Muck Boot Company®, XTRATUF®, and Ranger®.

The shift in sales mix is also a value proposition in itself, as a higher proportion of retail sales-which carry higher gross margins-led to a record Q1 gross margin of 41.2%, up 210 basis points year-over-year for the first quarter of 2025. That's defintely a strong indicator of customer preference for their direct channels.

Finance: draft 13-week cash view by Friday.

Rocky Brands, Inc. (RCKY) - Canvas Business Model: Customer Relationships

You're looking at how Rocky Brands, Inc. engages with its customer base across different channels as of late 2025. The focus is clearly on driving higher-margin retail sales while maintaining strong wholesale relationships.

Direct-to-consumer (DTC) e-commerce engagement for brand loyalty and higher margin sales.

The retail segment, which captures DTC, is showing significant growth, which naturally carries a higher gross margin than wholesale. For instance, in the first quarter of 2025, retail sales jumped 20.4% year-over-year to $36.6 million. This momentum continued, with Q2 2025 retail net sales increasing 13.9% to $29.7 million, and Q3 2025 retail net sales growing 10.3% to $29.5 million. The increase in the direct-to-consumer business is noted as a driver for higher selling costs within operating expenses in Q3 2025. The company saw strong gains in DTC sales to kick off 2025.

The focus on digital engagement is paying off, as evidenced by the Q2 2025 digital advertising campaign targeting working utility customers, which delivered the best results in company history for driving brand awareness and e-commerce gains.

Dedicated retail support for key wholesale accounts to ensure sell-through.

While the retail channel is accelerating, the company still relies heavily on its wholesale partners. In Q1 2025, wholesale sales were $74.8 million, though this represented a 6.3% decrease year-over-year. However, management noted solid sell-through with key wholesale accounts in Q1 2025, which was fueling an acceleration in bookings for the rest of 2025. By Q3 2025, wholesale net sales rebounded to $89.1 million, up 6.1% from $84.0 million the prior year. Furthermore, U.S. Wholesale saw strong double-digit growth in Q2 2025. This segment mix shift-more retail, better wholesale margins-helped the overall gross margin increase by 210 basis points in Q1 2025.

Here's a look at the segment sales performance through the first three quarters of 2025:

Targeted digital advertising campaigns to drive demand for key brands like Muck.

Specific brand focus, particularly on the rubber boot business, is a clear customer relationship tactic. The Muck brand delivered its best quarter-to-quarter comparison since 2023 in Q2 2025. This performance was supported by strong double-digit increases in the women's business and the success of the digital advertising campaign mentioned above. Demand for Muck was noted as especially strong in Q1 2025.

Building lifestyle components for functional brands to broaden consumer reach.

The strategy includes emphasizing lifestyle and outdoor appeal to expand beyond traditional work/western segments. The resurgence of the Outdoor category, led by XTRATUF and Muck, was highlighted as a key driver in Q2 2025. XTRATUF is noted as maintaining its position as the fastest-growing brand with accelerating momentum. In Q2 2025, Rocky Work, Outdoor, and Western all grew, with Outdoor and West seeing double-digit increases.

The company is also building relationships with government/military segments, having recently earned a USMC hot weather boot certification, which opens up large bid opportunities and individual marine sales.

• XTRATUF momentum is accelerating across wholesale and e-commerce channels in 2025.
• Outdoor and Western segments grew by double digits in Q2 2025.
• The Muck women's business saw strong double-digit increases in Q2 2025.

Finance: draft 13-week cash view by Friday.

Rocky Brands, Inc. (RCKY) - Canvas Business Model: Channels

The distribution network for Rocky Brands, Inc. (RCKY) is heavily weighted toward the Wholesale segment, which generated $89.1 million in net sales for the third quarter ended September 30, 2025. This represented approximately 72.7% of the total net sales of $122.5 million for that period. You see the channel mix shift when comparing the first and third quarters of 2025.

The Direct-to-Consumer (DTC) e-commerce platforms fall under the Retail segment, which showed significant year-over-year acceleration early in the year. For the first quarter ended March 31, 2025, Retail sales grew 20.4% compared to the prior year period. This growth was fueled by strong gains in both DTC and the Lehigh safety shoe business for corporate safety programs.

The Lehigh safety shoe business specifically saw high-teens growth in the first quarter of 2025. The overall Retail segment carries a higher gross margin than the Wholesale and Contract Manufacturing segments, which positively impacted the consolidated gross margin in Q1 2025 to 41.2% of net sales.

The Contract Manufacturing sales component remains a smaller, yet consistent, part of the overall revenue base. For the first quarter of 2025, Contract Manufacturing sales were $2.7 million, remaining flat compared to the first quarter of 2024. By the third quarter of 2025, this segment grew to $3.9 million in net sales.

The primary outlets for Rocky Brands, Inc. (RCKY) products include:

• Key sporting and Western retailers, which are the core of the Wholesale segment.
• National safety shoe distributors supporting the Lehigh business.
• Brand websites and other e-commerce platforms driving Direct-to-Consumer sales.

Rocky Brands, Inc. (RCKY) - Canvas Business Model: Customer Segments

You're looking at the customer base for Rocky Brands, Inc. as of late 2025. The company serves distinct groups through its three operating segments: Wholesale, Retail, and Contract Manufacturing.

The Wholesale channel remains the largest revenue driver, indicating a significant reliance on traditional retail partners who serve a broad base of consumers, including outdoor and workwear customers. For the third quarter ended September 30, 2025, Wholesale net sales were $89.1 million out of total net sales of $122.5 million.

The Retail segment, which includes direct-to-consumer (DTC) sales and the Lehigh safety shoe business, is growing faster, suggesting a focus on capturing higher-margin sales directly from the end-user. Retail net sales for Q3 2025 reached $29.5 million. The company's brand portfolio directly targets several key customer groups:

• - Outdoor enthusiasts and professionals (fishing, hunting, farming) are served by brands like The Original Muck Boot Company and XTRATUF.
• - Industrial and construction workers requiring durable safety footwear are targeted through the Lehigh safety shoe business within the Retail segment and wholesale distribution.
• - Military and government personnel are served via the Contract Manufacturing segment, which secured a new contract with the U.S. Military in late 2023.
• - Western lifestyle consumers are addressed by the Durango brand, which showed solid sell-through.
• - General consumers seeking durable, weather-appropriate footwear are reached across the entire portfolio.

Here's a look at the net sales contribution by channel for the third quarter of 2025, which reflects where the revenue from these customer segments is realized:

The trailing twelve-month revenue as of September 30, 2025, stood at $470M. The Retail segment showed significant growth earlier in the year, with Q1 2025 Retail sales up 20.4% year-over-year to $36.6 million. As of July 31, 2025, there were 7,468,341 shares of common stock outstanding.

Rocky Brands, Inc. (RCKY) - Canvas Business Model: Cost Structure

You're looking at the cost side of the Rocky Brands, Inc. equation for late 2025. It's a story of navigating external pressures, like tariffs, while simultaneously investing in growth channels and internal capabilities. Here's the breakdown of what's driving costs.

Cost of Goods Sold (COGS) pressured by an estimated $11 million tariff headwind in 2025.

The company has been transparent about the impact of new trade measures. Management has quantified the expected drag on profitability from tariffs imposed on goods sourced from China. The full-year 2025 guidance reflects an estimated \$11 million tariff headwind, with the bulk of this impact expected to materialize in the second half of the year, particularly in the fourth quarter. To counter this, Rocky Brands, Inc. has been implementing price increases across most footwear styles, starting in early June, and accelerating shifts in its sourcing base.

Operating expenses rising due to higher selling and logistics costs from DTC growth.

Growth in the direct-to-consumer (DTC) segment, while positive for gross margin mix, directly inflates operating expenses. For the third quarter of 2025, operating expenses hit \$37.6 million, representing 30.6% of net sales, up from \$33.6 million or 29.3% of net sales in the third quarter of 2024. This increase was driven by higher outbound logistics costs and increased selling costs directly tied to the growth in the DTC business.

The trend of rising operating expenses as a percentage of sales is clear when looking at the adjusted figures for Q3 2025:

Significant investment in sourcing diversification and internal manufacturing capacity.

A key strategic action to mitigate future supply chain risk and tariff exposure involves shifting production away from China. This investment includes rapidly diversifying the sourcing base by adding new Asian manufacturing partners outside of China and Vietnam. Furthermore, the company is leveraging and increasing production at its internal facilities located in the Dominican Republic and Puerto Rico. These capital and operational investments are a necessary cost to build a more resilient structure.

Interest expense reduced due to the 2024 debt refinancing.

The debt refinancing completed in April 2024 is providing tangible cost relief in 2025. The company projected an annualized savings of approximately \$4.4 million in interest expense for the full year 2025 due to lower interest rates and reduced debt levels. This is evident in the quarterly results, where interest expense has materially decreased year-over-year. For instance, Q3 2025 interest expense was \$2.6 million, down from \$3.3 million in Q3 2024. Even in Q1 2025, interest expense was \$2.4 million, down from \$4.5 million in the prior year period.

Here's a look at the interest expense reduction across recent quarters:

• Q3 2025 Interest Expense: \$2.6 million
• Q2 2025 Interest Expense: \$2.5 million
• Q1 2025 Interest Expense: \$2.4 million

SG&A (Selling, General, and Administrative) costs increasing from marketing investments.

Overall SG&A is expected to increase in dollar terms for fiscal year 2025, driven by planned increases in marketing spend to support brand growth, especially heading into the key holiday season. This marketing investment supports the strong performance seen in brands like XTRATUF, which had double-digit growth in its e-commerce platform. Management has guided that SG&A as a percentage of revenue will remain similar to FY2024, indicating modest expense leverage on higher projected sales, but the absolute dollar amount is rising due to these strategic marketing and logistics outlays.

Finance: draft 13-week cash view by Friday.

Rocky Brands, Inc. (RCKY) - Canvas Business Model: Revenue Streams

Rocky Brands, Inc. generates revenue through distinct channels that reflect its brand portfolio and market focus, primarily in footwear and accessories.

The first quarter of 2025 provided a clear snapshot of the current revenue mix, showing a significant contribution from the Retail segment.

Total net sales for the first quarter of 2025 reached $114.1 million.

Looking forward, the overall revenue outlook for the full year 2025 is based on management guidance:

• Full-year 2025 revenue is projected to increase between 4% to 5% over 2024 revenue of $453.77 million.
• Revenue from apparel and accessories, complementary to the core footwear offering, contributes to the overall top line, though specific segment figures are often bundled with footwear sales within the Wholesale and Retail channels.