Mike Brooks was between a rock and a hard place. Or so it
seemed at first. The chairman and CEO of Rocky Brands Inc.
knew his biggest retail customer wasn’t playing fair. The customer
was selling Rocky merchandise below target prices and duplicating hot-selling Rocky products overseas under its own name. Yet,
the customer accounted for more than 10 percent of Rocky’s total
sales. “They were powerful,” Brooks says. “They were driving the
business, and they could sell tons of stuff. But they were really a
pain, because you could never trust anything they said. It was not
a pleasant relationship.” One potentially fateful day in 1992,
Brooks decided he’d been pushed around enough.
“I just got tired of all the games they were playing,” he says. “I
went out, by myself with a salesman, and I sat down with the president and the buyer and said, ‘We’re no longer going to do business
with you.’ I was young and foolish then, but that’s what I told him:
‘I’ll complete all orders that we have at the price you were quoted,
but I have no trust in you, so I’m not going to do business with you
anymore.’ The buyer and owner looked me in the eye and said,
‘Are you sure you want to do that?’ and I said, ‘Yup.’ I was a little
apprehensive. What happens if my sales just go south? But I’d tried
everything. It was my personal decision.”
It was also a huge gamble. Not only because Rocky was certain
to lose a big chunk of its sales as a direct result of that conversation, but because the company was in the midst of preparing for its
initial public offering at the time.
“That was my largest single customer, and I didn’t tell the public
that I was going to divorce my largest single customer,” Brooks
says. “But I just felt it was the right thing to do, and I didn’t know
the public game very well at that time.”
Fortunately, the story has a happy ending.
“Our volume went to nothing in about six months, but we sold
that up elsewhere and didn’t miss a beat,” Brooks says. “And I didn’t hurt myself in the public eye, I don’t believe.”
Rocky went public under its previous Rocky Shoes & Boots
name in February 1993 without a hitch, selling shares at its original asking price of $10 each on the NASDAQ for a net of roughly
$15 million.
Clearly, Brooks won’t let maverick or high-maintenance customers push him around. Here’s how he has built, rebuilt and
maintained strong relationships — and a $275 million company —
without compromising his principles.
