Rocky Brands (RCKY) risk factors, FY2024 10-K

Business Risks

1. 01Expanding our brands into new footwear and apparel markets may be difficult and expensive, and if we are unable to successfully continue such expansion, our brands may be adversely affected, and we may not achieve our planned sales growth
2. 02A majority of our products are produced outside the continental U.S. where we are subject to the risks of international commerce and other international conditions
3. 03the occurrence of contagious disease or illness
4. 04Our success depends on our ability to anticipate consumer trends
5. 05We depend on a limited number of suppliers for key production materials, and disruptions in the supply of such materials could interrupt product manufacturing and increase product costs
6. 06The emergence or persistence of geopolitical instability may disrupt the global economy, the impacts of which may negatively impact our business, financial, condition and results of operations
7. 07Our outdoor and insulated products are seasonal and sales of such products are sensitive to weather conditions
8. 08Our business could suffer if our third-party manufacturers violate labor, environmental or other applicable laws or fail to conform to generally accepted ethical standards
9. 09The growth of our business will be dependent upon the availability of adequate capital
10. 10Our current level of indebtedness could adversely affect our business by increasing our borrowing costs and decreasing our overall business flexibility
11. 11We must comply with the restrictive covenants contained in our credit facilities
12. 12We face intense competition, including competition from companies with significantly greater resources than ours, and if we are unable to compete effectively with these companies, our market share may decline and our business could be harmed
13. 13Our financial success is influenced by the success of our wholesale customers, and the loss of such a key customer could have a material adverse effect on our financial condition and results of operations
14. 14Certain of our larger wholesale customers may develop and manufacture competing products under their own brands and reduce purchases of our branded products
15. 15We currently manufacture a portion of our products, and we may not be able to do so in the future at costs that are competitive with those of competitors who source their goods
16. 16We rely on our distribution centers in Ohio and Nevada and manufacturing facilities in the Dominican Republic, Puerto Rico, and China and if there is a natural disaster or other serious disruption at any of these facilities, we may be unable to deliver merchandise effectively to our retailers and consumers
17. 17If our efforts to establish and protect our trademarks, patents and other intellectual property are unsuccessful, the value of our brands could suffer
18. 18An impairment of intangibles, including goodwill, could have an adverse impact to the Company’s results of operations
19. 19Our success depends on our ability to forecast sales
20. 20Our dividend policy may change

Industry Risks

1. 21Because the footwear market is sensitive to decreased consumer spending and slow economic cycles, if general economic conditions deteriorate, many of our customers may significantly reduce their purchases from us or may not be able to pay for our products in a timely manner
2. 22consumer confidence in future economic conditions
3. 23The continued shift in the third-party marketplace from traditional independent retailers to large mass merchandisers may result in decreased margins
4. 24The shift in consumer shopping to online retailers and our increased online sales pose various risks which may negatively impact our business
5. 25Changes to U.S. tax, tariff and import/export regulations may have a negative effect on global economic conditions, financial markets and our business
6. 26There are risks, including stock market volatility, inherent in owning our common stock
7. 27Disruption of our information technology systems and e-Commerce platforms could adversely affect our business
8. 28Some of our employees are working remotely which could strain our information technology systems and impact business continuity plans. Remote work could also introduce operational risk such as, but not limited to, cyber security risks
9. 29A cyber-security breach could have a material adverse effect on our business and reputation
10. 30Compliance with data privacy and marketing laws may subject us to increased additional costs, and our ability to effectively engage customers via personalized marketing may be impacted, all of which may have a material adverse effect on our business operations
11. 31We are subject to certain environmental and other regulations
12. 32We are subject to periodic litigation and other regulatory proceedings, which could result in the unexpected expenditure of time and resources
13. 33Loss of services of our key personnel could adversely affect our business