Phoenix Footwear Group Inc., the parent of Trotters and Softwalk, reported break-even results in the third quarter against a loss of $45,000 a year ago.
For the quarter ended October 1, 2016, net sales decreased by $50,000, or 1 percent, to $5.77 million compared to $5.82 million for the third quarter of fiscal 2015.
Net sales for the first nine months of fiscal 2016 decreased $1 million, or 6.3 percent, to $15.5 million compared to $16.6 million for the first nine months of fiscal 2015. The decrease in net sales for the period was primarily driven by lower sales in the catalog, online and national retail channels that were partly offset by increases in the company’s e-commerce and other internet-based accounts.
Gross profit for the third quarter of fiscal 2016 increased $291,000, or 15 percent, to $2.2 million from $1.9 million when compared to the third quarter of fiscal 2015. Gross profit as a percentage of net sales for the third quarter of fiscal 2016 increased to 38.6 percent compared to 33.2 percent for the third quarter of fiscal 2015. The increase in the gross profit as a percentage of net sales for the quarter was the result of a reduction in air freight and other negative purchase price variances when compared to the third quarter of fiscal 2015.
Gross profit increased $427,000, or 7.8 percent, to $5.9 million in the first nine months of fiscal 2016 compared to $5.5 million for the first nine months of fiscal 2015. Gross profit as a percentage of net sales for the first nine months of fiscal 2016 improved to 37.9 percent compared to 32.9 percent for the first nine months of fiscal 2015. The improvement in the gross margin as a percentage of net income for the first nine months of fiscal 2016 was primarily associated with a reduction in air freight and other negative purchase price variances when compared to the first nine months of fiscal 2015.
SG&A for the third quarter of fiscal 2016 increased to $2.1 million, or 13.2 percent, compared to $1.8 million for the third quarter of fiscal 2015. SG&A as a percentage of net sales increased to 36 percent for the third quarter of fiscal 2016 from 31.6 percent when compared to the same period of fiscal 2015. Included in SG&A in the third quarter of fiscal 2016 was $272,000 of bad debt expense resulting from the failure of a large retail customer that was partly offset by a decrease in selling and other marketing expenditures during the period.
SG&A for the first nine months of fiscal 2016 increased to $6.2 million, or 10.8 percent, compared to $5.6 million for the first nine months of fiscal 2015. SG&A as a percentage of net sales increased to 39.7 percent from 33.6 percent when compared to the same period of fiscal 2015. Included in the increase in SG&A was $272,000 of bad debt as a result of the failure of a large retail customer during the third quarter and an increase in headcount in sales, marketing and the company’s warehouse, along with an increase in other planned spending in support of the company’s e-commerce direct to consumer channel and other marketing and tradeshow activities. During the third quarter, the company took steps to realign its operating structure. These measures are expected to provide an annualized reduction in operating expenses of $722,000, $100,000 of which were realized in the third quarter.
The company reported a break-even result from continuing operations, compared to a net operating loss from continuing operations of $45,000 during the third quarter of fiscal 2015.
For the first nine months of fiscal 2016, the company reported a net loss from continuing operations of $737,000, or 6 cents per share, compared to a net loss from continuing operations of $735,000, or 7 cents per share, for the first nine months of fiscal 2015.
