Military boot manufacturer McRae Industries Inc on Tuesday posted a sharp fall in second quarter net profit amid lower sales of standard issue all-leather combat boots.

The North Carolina-based company reported net income of $372,000 compared to $864,000 in the year-ago period. Net revenues fell to $17.3 million from $20.7m although sales at its western boot business rose to $6.1m from $4.7m in 2002.

"The decline in net earnings for the second quarter of fiscal 2003 was primarily the result of the decreased net revenues, higher military boot manufacturing costs, and competitive market pressures and was partially offset by a $314,000 gain on the sale of our motel property," the company said in a statement.

It added that last week it won a US military contract for a minimum of 93,734 pairs and a maximum of 187,903 pairs but had missed out on a contract to produce the new infantry combat boot.

McRae also said it is waiting to hear if has won another government contract and expects demand for its desert boot to remain strong for the foreseeable future.