After posting dismal results for the second quarter, Rocky Brands announced that it will reduce its U.S. workforce. It will also redeploy more capital to support its lifestyle brands and to further expand its production facilities in Puerto Rico, partly to take advantage of a triple-digit increase in military footwear orders.

The management didn't specify the size of the job cuts at its headquarters in Ohio, but said they should result in annualized savings of about $3 million. The local media speculated about 20 layoffs of more.

Based at Nelsonville, Ohio, the company markets its footwear under the Rocky, Georgia Boot, Durango, Lehigh and Creative Recreation brand names. It is also a licensee for Michelin branded boots.

The American company posted a net loss of $1.8 million in the latest quarter against net income of $2 million in the year-ago quarter. Revenues decreased by 8.7 percent to $62.6 million, with the company blaming weak store traffic and the softening of local economies, especially those where the demand for its work shoes for oil and gas exploration is significant.

High inventories in the western, work, and hunting boot categories negatively impacted wholesale revenues, which decreased by 23.0 percent to $41.5 million. The decline was partially offset by a 2.0 percent increase in retail sales to $10.4 million, along with a significant gain in Rocky Brands' military sales, which jumped by 139.0 percent to $10.7 million thanks to increasing demand for its “Temperate Weather” combat boots from the U.S. Military.

However, the company incurred additional costs as it had to ramp up its internal production capabilities to meet the increase in military footwear demand. The higher production costs - along with the fact that military segment sales carry lower initial gross margins than the wholesale and retail segments - caused the gross margin to plummet by 7.0 percentage points to 26.0 percent.

Despite these results, Rocky Brands said it remains confident that the strategic course set for the company will lead to improved profitability and greater shareholder value over the longer term.