Military shoe maker Wellco Enterprises has reported a 63 per cent first-quarter slump in production of boots under contract with the US Department of Defense, caused by a quality problem and a decrease in orders.

Wellco now expects a net loss of between $600,000 and $700,000 for the quarter ended 1 October 2005, compared with a net income of $397,000 last year.

The company has received new delivery orders for a total of 280,000 pairs of boots that have required delivery dates from November 2005 until June 2006.