After posting a strong first quarter that marked its return to profitability, Rocky Brands is staying on an upward trend, posting a net income of $1.5 million for the second quarter of the year, compared with a loss of $1.8 million for the year-ago period. The company said the profit turnaround reflects enhancements to its production facility in Puerto Rico along with a number of organizational changes aimed at reducing its expense structure.

Although revenues dropped by 6.6 percent to $58.5 million, the company managed to improve its gross margin by 5.1 percentage points to 31.1 percent, thanks to significant improvements in the margins of both its wholesale and military segments, driven by a combination of less discounting and the discontinuation of a lower-margin private label program.

Wholesale revenues decreased by 10.5 percent to $37.1 million, partly due to the discontinuation of the private label program, which was partially offset by higher revenues under the Durango and Rocky brands. Sales were up slightly in the work category, led by the Georgia Boot brand. In the hunting category, sales were flat year-on-year while margins were down. In addition to selling some excess inventory, Rocky's entire outdoor footwear line was repriced to be more competitive in the marketplace. 

Sales in the military segment fell slightly by 3.7 percent to $10.3 million. Meanwhile, the company's own retail sales rose by 5.8 percent to $11 million, mainly due to the implementation of an improved operation model that yielded better account retention and higher account participation rates.

Rocky Brands' management didn't provide any guidance for the year, but said it remained upbeat about improving prospects, thanks to a portfolio of brands that hold leadership positions in their respective categories and provide growth opportunities at wholesale. It added that the expansion of its domestic manufacturing capabilities is allowing the company to bid on and win an increasing number of military contracts and produce footwear at better margins.