Rocky Brands has reported net sales for the fourth quarter of 2012 down to $58.0 million, versus $64.0 million a year ago, but the company simultaneously announced a new contract with the U.S. military including a minimum purchase amount of $3.0 million for the first year.

The net income for the quarter was up to $2.5 million from $0.3 million in 2011, but it recorded a decline excluding a onetime, non-operational charge of $3.7 million that affected the 2011 results. For the full financial year, the company reported net income of $8.9 million versus $8.3 million for fiscal 2011. Excluding special items, the net income for fiscal 2011 would have been $12.0 million.

Net sales for 2012 were down to $228.3 million, against $239.6 million in 2011. The sales decline in the fourth quarter reflected the challenges due to the more weather-sensitive areas of the company's business, as a second consecutive winter of mild temperatures narrowed the demand for insulated, waterproof boots. In an effort to limit the impact of weather conditions and diversify operations, the company has been developing new product lines, with good results evidenced by a sales increase for Durango lifestyle and Western boots, which were both up by 44 percent in 2012.

Retail sales increased to $12.0 million in the latest quarter, compared with $11.8 million for the same period last year. Wholesale revenues for the quarter were $46.0 million, down from $51.7 million. There were no military sales in the quarter, compared with $0.4 million in the fourth quarter of 2011.

The quarterly gross margin increased to 35.7 percent of sales, compared with 35.1 percent for the same period last year. The increase was driven by higher retail gross margins. The operating margin of 6.8 percent compared with 8.9 percent of net sales in the year-ago period, excluding extraordinary items.

The Ohio-based shoe company announced that it has received an order to fulfill a contract to the U.S. military to produce “hot weather” combat boots. The shipment of the boots is expected to begin this month. The first year of the contract includes a minimum purchase amount of $3.0 million and a maximum of $15.0 million, and the contract includes an option for four additional years under the same terms.Based on the success of the Durango lifestyle and Western categories, combined with other growth factors, including a private-label program with one of its largest wholesale accounts, as well as the new military contract, the company expects to generate solid top-line expansion in the first half of 2013.