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Rocky Shoes & Boots’ Sales Rise 8.2% In First Half Of 2003 Despite Losing Military Business

Concerned About Section 936 Tax Benefits That Will Be Lost In 2006; Plans To Renegotiate Local Abatements Next Year


July 31, 2003
Copyright © 2003 CARIBBEAN BUSINESS. All Rights Reserved.

Sales of Rocky Shoes & Boots Inc. (RSB), Moca-based Lifestyle Footwear Inc.’s parent company, rose 8.2% during the first six months of 2003 despite the loss of approximately $6 million in annual sales from the military, said RSB Chairman & CEO Mike Brooks.

The company’s net income improved from a loss of $1.1 million during the first half of 2001 to a profit of $473,250 during this half.

The U.S. government bought more than 120,000 pairs of Intermediate Cold Wet military boots from RSB between April 2001 and December 2002, generating sales of $12.8 million. Military footwear sales averaged 8% of the company’s net sales in 2001 and 2002.

"Sales of military boots to the U.S. government declined $2.5 million to $6.4 million in 2002 due to the fulfillment of a contract that began in 2001 [and] was completed in the second quarter of 2002," according to RSB’s financial statement. "These sales are dependent on specific awards from the U.S. government based on competitive bidding processes, which occur from time to time. These military boots were produced at margins substantially below the company’s overall gross margin as a percentage of net sales."

RSB said it is concerned about losing the tax credits provided under Internal Revenue Code Section 936 in 2006 and the expiration of local tax abatements in 2004, which it will have to renegotiate. Another concern is that while 50% of the com company’s products are manufactured in Puerto Rico and the Dominican Republic, the remaining 50% of the products are sourced from the Far East and bring in higher gross margins, which may drive the company to expand in that area.

RSB moved its operations from Ohio to Moca in 1988. The company operates two buildings, occupying a total 84,559 square feet, leased from the Puerto Rico Industrial Development Co. (Pridco).

Another 82,600-square-foot facility and a standalone 32,000-square-foot building were constructed in the Dominican Republic’s Foreign Trade Zone; both are leased from the Dominican Republic Corp. for Industrial Development. The company has an approximate total of 690 employees in Puerto Rico and the Dominican Republic.

RSB designs, manufactures, and markets men’s and women’s footwear, primarily under the trademark Rocky. Rugged outdoor footwear represents about 47% of the company’s net sales, occupational footwear accounts for 33%, and the remaining part is made up of casual footwear, outdoor gear, and footwear accessories. RSB’s corporate headquarters, finished-goods distribution center, and 12,500-square-foot retail store remain in Ohio.

This Caribbean Business article appears courtesy of Casiano Communications.
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