More than a year after bringing five footwear labels under its umbrella, Rocky Brands is downsizing after completing a cost-savings review.
The boot manufacturer and seller, which acquired The Original Muck Boot Company and the Xtratuf fishing boot label among others in early 2021, is shuttering the Boston office that also came in the deal and cutting approximately 13 percent of non-manufacturing jobs.
Other impacted brands include wet weather boot brand Ranger, overshoes label Neos and protective rubber boot brand Servus, which Honeywell International acquired for $230 million. The company hasn’t broken out employee numbers for the individual brands, but said in April 2021 that it added 500 new employees after the acquisition.
The company’s original labels including Rocky, Georgia Boot, Durango and Lehigh Outfitters aren’t laying off workers.
“The success of our acquisition is evident by our sales performance over the last year,” Rocky Brands, Inc. president and CEO Jason Brooks said. “These cost-saving measures will allow us to better convert our top-line performance into enhanced margins and profitability. We are now in a stronger position to more efficiently capitalize on near-term marketplace opportunities while remaining agile and flexible for the future.”
Rocky Brands’s first-quarter sales increased 32.2 percent year over year on a pro-forma basis—which calculates sales as if all of the acquired brands revenue counted from the start of the 2021 first quarter. The company’s officially reported sales jumped 90.5 percent to $167 million since the acquisition officially closed in March 2021. Net income in the quarter reached $7.4 million, up from the $4.5 million in the year-ago period.
The company said in a statement that it identified a number of operational synergies and cost-saving opportunities following the integration of the acquired brands, which Rocky Brands labeled the Boston Group.
Brooks has indicated that Rocky Brands had more trouble than anticipated in fulfilling new orders from the added labels, leading to heightened fulfillment spending. In November, he said Rocky Brands hired more workers and increased the number of shifts at its distribution centers.
Then in May, Brooks noted that additional spending went toward April’s opening of the company’s 655,000-square-foot Reno, Nev. distribution center, which helped the footwear company clear is order backlog but also required more outlay for temporary labor.
“Unfortunately, the current cost environment and tight labor market has required us to spend more temporarily to bring our new distribution facility in Reno up to speed,” Brooks said in the May call. “While this limited our ability to flow more of our revenue outperformance to the bottom line, we are making good progress gaining greater efficiencies and expect we’ll be able to translate more of our top-line growth into enhanced profitability as the year proceeds.”
These actions are expected to result in approximately $3 million to $4 million in annualized savings. Rocky Brands expects to record a one-time severance charge of approximately $1 million in the second quarter of 2022 associated with the job cuts.
“The actions we are announcing today were the result of diligent planning for the long-term success of our organization, but the decisions that impact colleagues are not ones that we ever take lightly,” Brooks said in a statement. “We greatly value the contributions of the Boston team members who are not continuing on with our company and look to support them through this transition.”
Marc Fisher Footwear lands licensing deal with Earth
While Rocky Brands is looking to improve its profitability, two other companies are teaming up to put sustainability forward.
Marc Fisher Footwear Company announced a multi-year agreement to license the Earth brand for men’s and women’s footwear.
The full-service fashion footwear company owns the namesake Marc Fisher and Marc Fisher LTD labels and licenses brands like Guess, G by Guess, Tommy Hilfiger, Calvin Klein and Nine West. And with the new partnership, Marc Fisher Footwear will design, produce, market and distribute Earth-branded footwear starting Nov. 1.
“Earth is an authentic comfort footwear brand, and we are excited about the opportunity to build a thoughtfully designed and innovative collection of sustainable shoes with eco-friendly materials and expand the product assortment to an even broader consumer market,” Marc Fisher, CEO of Marc Fisher Footwear Company, said in a statement. “Our plan is to invest in Earth’s product innovation and sustainability while extending their digital footprint and reach to this sustainable minded community.”
The debut collections under the direction of Marc Fisher Footwear will launch at the August Fashion Footwear Association of New York (FFANY) show for delivery beginning spring 2023.
Susan Itzkowitz, president of Marc Fisher Footwear’s licensed brands, highlighted the company’s growth potential, both with their website and in the wider wholesale marketplace, to become a meaningful addition to the firm’s diversified portfolio of owned and licensed brands.
“We have had tremendous success in the comfort space and our belief is wellness and foot health are all intertwined and creating sustainable, yet modern fashionable shoes is something the customer wants,” Itzkowitz said. “Our expertise in design, sales, and sourcing will enable us to develop this iconic brand even further and positioning the Earth as one of the premiere global sustainable-comfort brands in the market today.”
Headquartered in Greenwich, Conn., with new showrooms in New York City, Marc Fisher Footwear is sold worldwide through department stores, specialty stores and e-commerce channels.
Earth Shoes brands include Earth Elements, Earth Origins and Kalso, and are sold online and in stores across the U.S., such as Walmart, QVC and Nordstrom.
When Windsong Global LLC acquired a majority stake in Earth in July 2021, the private investment firm’s chairman William Sweedler said he believed significant expansion opportunities existed within the sector, including “opportunities to leverage its intellectual property and brand equity into new categories.”
“In combination with their robust distribution network and strong digital and e-commerce team, we believe [Marc Fisher Footwear] will accelerate growth, increase brand awareness, and will position Earth in the comfort footwear category to today’s growing eco conscious customer base,” Sweedler said in a recent statement.