Rocky Shoes & Boots is riding a two-tiered wave made up of increased military sales and aggressive expansion strategies among several key retail customers. RCKY third quarter sales increased 21.0% to $50.1 million in sales, with roughly 10%, or $5.1 million, of that coming from military sales. Nearly all of the military sales were new business.

The Military impact, combined with the IPO-funded expansions of Gander Mountain and Cabela’s, is boosting Rocky into a level the company has not experienced before, surpassing $50 million in quarterly sales for the first time.

The company has also launched several new product lines, and has seen some solid growth in their apparel category, which has “richer” margins than their footwear. Rocky apparel sales were $6.5 million, more than double the $3.0 million in Q3 last year.

The Gates glove division was the sole sore spot for the company this quarter, with sales flat at $2.3 million. Rocky will continue with its plans to sell both Gates and Rocky branded gloves going forward. The slower than anticipated sales were said to be caused by delivery problems from Rocky’s sourcing companies.

The company did experience some delays in production at their Puerto Rico and Dominican Republic factories caused by the hurricane season, but luckily there were no serious injuries reported among Rocky’s employees and no damages to the structures.

Rocky’s branded retail concept store, which is owned entirely by a third party, has now been open for 60 days, and was said to be trending better than expected. Rocky management said they will keep the store open for at least two seasons before they decide on any expansion opportunities for the concept.

Gross margin rose 40 basis points to 32.0% of net sales for the third quarter from 31.6% a year ago. Net income increased 40.9% to $4.9 million, or 98 cents per diluted share, compared to $3.5 million, or 77 cents per diluted share, in Q3 2003.

Rocky reaffirmed net sales and earnings per share guidance for the year 2004. Net sales are anticipated to be approximately $133 million for the year 2004, which is $27 million above net sales for the year 2003.