Phoenix Footwear Group announced that it has signed a definitive agreement to acquire Royal Robbins, Inc., an established casual and outdoor apparel brand based in California. The acquisition will mark Phoenix Footwear's entry into the men's and women's apparel category, and elevate the Company into a full-scale men's and women's footwear and apparel company with an emphasis on classic, comfortable footwear and outerwear brands.

The purchase price for this transaction includes $6.5 million due at closing, plus additional contingent purchase value of approximately $5.0 million based on a two year earn-out formula. The closing payment will be $6.0 million in cash, and the remainder in Phoenix Footwear common stock. Phoenix Footwear anticipates that the acquisition will increase sales by 30% to 40% on an annual basis. In addition, Phoenix Footwear expects the acquisition will be accretive to GAAP earnings per share within the first full year of operation under Phoenix Footwear's ownership. Further information on the contribution of Royal Robbins to fiscal 2004 earnings will be provided after the close of the transaction.

The transaction is subject to financing and other customary closing conditions. Phoenix Footwear has received a commitment from its lender for a new $24,750,000 credit facility. The transaction is expected to close in the fourth quarter of 2003.

The Royal Robbins line of apparel will compliment Phoenix Footwear's recently acquired H.S. Trask and Ducks Unlimited footwear brands, creating cross-marketing opportunities in the outdoor apparel and footwear sectors.

James R. Riedman, Chairman and CEO of Phoenix Footwear, commented, “We believe that today's acquisition will allow us to further enhance our profitability and provides us with a significant new growth vehicle. A well-known brand with strong sales and a loyal and growing customer base, Royal Robbins is the perfect compliment to our current line of classic and comfortable men's and women's footwear brands. In addition, this transaction is consistent with our strategic focus on acquiring brands that can strengthen our earnings and operating margins. As we seek to grow the top line, we have an opportunity to utilize our existing infrastructure to drive natural cost-saving synergies. I look forward to working closely with the Royal Robbins' senior management team as we take the brand to the next level. We welcome Dan Costa, Francisco Morales and all of the Royal Robbins employees.”

“This partnership is a 'win win' for our retailers and our consumers,” said Dan Costa, Chairman of Royal Robbins. “Phoenix Footwear brings us tremendous resources that will enable us to build upon our heritage and extend the brand. Through this new relationship, we will expand our ability to offer innovative styling, distinctive fabrications and a broad choice of apparel at excellent price points. In addition, we anticipate strengthening and preserving our existing specialty retail distribution channel, which has been a fundamental building block for this brand. We look forward to being part of the Phoenix Footwear family.”

Greg A. Tunney, Phoenix Footwear's President and COO, added, “Royal Robbins carries a complete line of men's and women's outdoor clothing that is practical, comfortable and affordable. Royal Robbins does not rely on short-term fashion trends, but rather focuses on sustainable, classic styles utilizing high-quality materials. These are among the hallmarks of our current lines of men's and women's footwear brands. As we integrate Royal Robbins into Phoenix Footwear, we will take advantage of strong cross-promotional opportunities between the customer bases of both companies to drive sales and earnings.”