16. SEGMENT INFORMATION

Operating Segments - We operate our business through three business segments: wholesale, retail and military.

Wholesale. In our wholesale segment, our products are offered in over 10,000 retail locations representing a wide range of distribution channels in the U.S. and Canada. These distribution channels vary by product line and target market and include sporting goods stores, outdoor retailers, independent shoe retailers, hardware stores, catalogs, mass merchants, uniform stores, farm store chains, specialty safety stores, specialty retailers and online retailers.

Retail. In our retail segment, we market directly to consumers through our Lehigh business-to-business including direct sales and through our CustomFit websites, consumer e-commerce websites, third-party marketplaces, and our Rocky outlet store. In 2017, we also operated four mobile trucks to service the New York Transit Authority’s employees, but that contract ended in the fourth quarter of 2017. Through our outlet store, we generally sell first quality or discontinued products in addition to a limited amount of factory damaged goods, which typically carry lower gross margins.

Military. While we are focused on continuing to build our wholesale and retail business, we also actively bid, from time to time, on footwear contracts with the U.S. military. Our sales under such contracts are dependent on us winning the bids for these contracts. We are currently fulfilling several multiyear contracts for the U.S. military.

The following is a summary of segment results for the Wholesale, Retail, and Military segments for the years ended December 31,. Certain amounts from prior year have been reclassified to conform to current year presentation.


($ in thousands)		2018		2017
NET SALES:
Wholesale	$	173,124	$	166,682
Retail		53,216		48,352
Military		26,354		38,163
Total Net Sales	$	252,694	$	253,197

GROSS MARGIN:
Wholesale	$	57,792	$	54,188
Retail		23,650		21,168
Military		5,587		5,413
Total Gross Margin	$	87,029	$	80,769

Segment asset information is not prepared or used to assess segment performance.

Product Group Information - The following is supplemental information on net sales by product group for the years ended December 31:


($ in thousands)		2018	% of Sales			2017	% of Sales
Work footwear	$	116,022	45.9	%	$	109,872	43.4	%
Western footwear		47,313	18.7			38,646	15.3
Duty and commercial military footwear		40,580	16.1			33,712	13.3
Lifestyle footwear		596	0.2			12,910	5.1
Outdoor footwear		15,811	6.3			13,003	5.1
Military footwear		26,354	10.4			38,163	15.1
Apparel		2,424	1.0			3,324	1.3
Other		3,594	1.4			3,337	1.3
Royalty income		-	-			230	0.1
	$	252,694	100.0	%	$	253,197	100.0	%

Net sales to foreign countries represented approximately 1.9% of net sales in 2018 and 3.0% of net sales in 2017.