Rocky Brands, Inc. reported second quarter sales increased 15.8 percent to $68.8 million, led by double-digit sales increases on a percentage basis in its Work, Western, and Hunting categories. Earnings were down 12.2 percent to $1.5 million, or 20 cents a share, but were ahead of Wall Street’s consensus estimate of 19 cents a share.

Wholesale sales for the second quarter increased 23.8 percent to $56.7 million, including a 16.8 percent jump in wholesale sales of the company’s legacy brands (Rocky, Georgia Boot, Durango and Lehigh.) Its lineup also includes the recently-acquired Creative Recreation sneaker brand as well as Michelin under license.

On a conference call with analysts, David Sharp, president and CEO, noted that many of its major retail partners had “entered the second quarter with much clean inventory level compared with year ago,” helping support strong launches.

Among categories, its Rocky Hunting business was up 55 percent. Said Sharp, “The response to several of our new products has been fantastic which had us excited as we get set for the start of hunting season in September.”

Western was ahead 26 percent, with Durango achieving one of its best performances since joining the company as part of the EJ Footwear acquisition in 2005. Work footwear, its largest category, was ahead 16 percent with Georgia Boot adding new accounts such as Academy and Fred Meyer and expanding at Tractor Supply.

Creative Recreation, acquired in December 2013, is “still working through some of the supply chain changes that impacted the business prior to the acquisition. That said, we feel confident we are on top of the operational issues and the brands remain on track to hit the sales and profit contribution we budgeted for the back half of 2014,” said Sharp.

Retail sales rose 3.1 percent to $10.1 million. Military sales slumped 47.4 percent to $2.0 million.

Gross margins eroded to 32.8 percent from 34.2 percent. The 140-basis point margin decline was driven by the combination of lower wholesale margins due primarily to costs associated with the seeding program with a key retail partner announced in the first quarter of 2014 and lower retail gross margin than a year ago resulting from the completed transition to a web based retail platform.

SG&A expenses were reduced slightly to 29.1 percent of sales, from 29.4 percent a year ago due to leveraging expenses on higher sales. The $2.6 million increase in SG&A expenses was due largely to additional expenses associated with Creative Recreation, and higher compensation expense related to a new mid-year bonus program that wasn’t in place a year ago. Income from operations sank 13.8 percent to $2.5 million.

For the second half, Rocky plans to capitalize on Creative Recreation’s potential for growth within the broader casual footwear market. With the top-line performing better than recent years, a greater focus is being placed on gross margin expansion and increased operating expense leverage.

“We need to find the balance between driving the sustainable top and bottom line growth simultaneously,” said Sharp. “As we told you on our last conference call, we are convinced we have the right strategy in place to better leverage the investments we’ve made in the business to achieve this objective starting in the second half of the year and beyond.”