The reduced intervention of the US government in Iraq negatively affected the turnover of at least three American shoe companies – LaCrosse Footwear, Phoenix Footwear and Rocky Shoes and Boots. Sales fell by 20.3 percent to $18.9 million at LaCrosse, but they would have grown by 6.8 percent excluding military sales and its discontinued low-margin PVC business. Sales increased at the two other companies, thanks only to acquisitions.
LaCrosse had a higher gross margin of 37.1 percent in the quarter, up 6.6 percentage points from the year before, because of lower military sales and the exit from PVC. However, a big increase in the tax rate led to a drop in net income to $300,000 from $1.1 million in the year-ago period.
Rocky benefited from the acquisition of EJ Footwear, which raising its revenues by 181 percent to $61.5 million in the quarter. Without EJ, sales would have declined by 1.4 percent due to lower shipments to the US Army. Margins increased, on the other hand, and they led to a net profit margin of 5.8 percent during the quarter, up from 1.3 percent a year ago.
At Phoenix, delayed military sales caused its newly acquired Altama business to suffer a big sales decline in the same quarter, offsetting increases of 29.2 percent at Royal Robbins and 5.8 percent for SoftWalk shoes and 24.8 percent for H.S. Trask footwear. The Trotters brand was down 27.8 percent, contributing to flat total sales without Altama. In absolute terms, Phoenix’ revenues increased by 41.6 percent to $26.4 million, but the gross margin declined to 40.1 percent and net income remained virtually flat.