McRae Industries, Inc. Reports Fiscal 2025 Q2 Earnings and Revenue Analysis

McRae Industries, Inc. Earnings Report for Q2 Fiscal 2025

On March 17, 2025, McRae Industries, Inc. (traded under the Pink Sheets as MCRAA and MCRAB) disclosed its earnings for the second quarter and the first half of fiscal year 2025. The consolidated net revenues for the second quarter reached $27.5 million, marking an increase from $25.8 million achieved in the same quarter of the previous year.

Despite this revenue growth, the company experienced a decrease in net earnings, reporting $1.05 million, or $0.47 per diluted Class A common share, compared to $1.64 million, or $0.72 per diluted share in Q2 fiscal 2024. This trend continues in the cumulative results for the first six months, where consolidated net revenues dropped to $56.3 million from $58.6 million in the corresponding period last year. Net earnings for this period decreased to $2.9 million, representing $1.28 per diluted share, down from $4.86 million or $2.15 per share in fiscal 2024.

Q2 Fiscal 2025 vs. Q2 Fiscal 2024

In evaluating the second quarter results, the notable contributor to revenue was the sales of western and lifestyle boot products, which rose to $20.4 million compared to $18.2 million in the previous year’s same quarter. The brands driving this increase included Dan Post and Laredo. However, the work boot category saw a decline, with revenues falling from $7.8 million in Q2 fiscal 2024 to $7.5 million in Q2 fiscal 2025. This was attributed largely to lower sales of Dan Post work boots.

The gross profit stood at approximately $7.1 million compared to $7 million in Q2 fiscal 2024, but the gross profit margin decreased from 27.1% to 25.9%. This margin reduction was primarily due to decreased profitability on military boot sales, which faced challenges due to inefficiencies in manufacturing processes during the quarter.

Selling, general, and administrative expenses saw an increase, totaling about $6.4 million compared to $5.6 million in the same quarter last year. This was predominantly due to higher sales commissions and marketing expenses, ultimately leading to an operating profit of $0.7 million for Q2 fiscal 2025, down from $1.4 million in Q2 fiscal 2024.

First Six Months Fiscal 2025 vs. First Six Months Fiscal 2024

For the first half of fiscal 2025, revenues from western and lifestyle products totaled approximately $41.4 million, up from $40.2 million in the previous year. This was driven by increased sales from Dan Post and Dingo brands, even though a decrease was noted in Laredo and El Dorado sales. In contrast, the revenues from work boots fell from $17.2 million last year to $15.5 million this year.

The gross profit for the first half decreased to $15.5 million with a margin of 27.5%, down from $16.9 million and a margin of 28.8% in fiscal 2024. Again, the reduced profit margins stemmed from performance factors related to previous investments in real estate.

Furthermore, the total selling, general, and administrative expenses rose to about $12.9 million from $11.6 million year-on-year, resulting in a consolidated operating profit of $2.6 million compared to $5.3 million reported in the first half of fiscal 2024.

Financial Condition Overview

As of February 1, 2025, McRae Industries maintained a robust financial position, with cash and cash equivalents totaling approximately $22.8 million, reflecting an increase from $20.7 million at the start of fiscal 2024. The working capital rose from $75.0 million to $79.6 million in the same period.

The company has secured two lines of credit amounting to $6.75 million, fully accessible and secured against its inventory and accounts receivable from Dan Post Boot Company subsidiary. Looking ahead, McRae is optimistic that its existing cash reserves, operational cash flows, and access to credit will adequately sustain capital requirements for the rest of fiscal 2025.

Conclusion

McRae Industries, Inc. continues to navigate a challenging fiscal landscape as it grapples with shifting sales dynamics and manufacturing efficiencies. The company’s strategic focus on enhancing its core western and lifestyle products, which have shown encouraging sales growth, will be crucial as it seeks to rebound profitability in a competitive market.