Phoenix Footwear reported a net loss of $339,000, or 4 cents a share, in
the first quarter. Sales from continued operations declined 8.5 percent
while gross margins improved 190 basis points to 35.5 percent.
For the quarter ended April 2, 2011, net sales totaled $4.8 million
compared to $5.3 million in the prior year comparative period. This
decrease is primarily attributable to significant production delays the
company experienced from one of its primary vendors and to a lesser
degree, poor sell through of the company’s HealthGlide product also
contributed to lower sales as the market for toning and similar
footwear became highly promotional during the quarter.
Gross profit was $1.7 million for the quarter, decreased $60,000
compared to the prior year’s comparable quarter, while gross margin
improved 190 basis points to 35.5 percent, compared to 33.6 percent in
the first quarter of 2010.
Selling, general and administrative expenses, or SG&A, totaled $2.0
million, a decrease of 18.4 percent compared to $2.5 million in the
first quarter of 2010. SG&A as a percentage of net sales was 42
percent for the first quarter of 2011 compared to 47 percent in the
prior year comparative period. SG&A for the period include $164,000
in expense related to its migration from the NYSE Amex to the OTC
Markets in addition to $72,100 in expense related to the downsizing of
its headquarters as the last phase of the company’s downsizing efforts.
Also included in SG&A is $53,000 of depreciation expense.
Interest expense for the quarter totaled $179,000 compared to $61,000 for the first quarter of 2010.
In the first quarter, our net loss totaled $339,000. Operating loss from
continuing operations for the quarter totaled $436,000 or $0.05 a share
compared to an operating loss of $760,000 or $0.09 a share in the prior
year comparative period.
Other Events
During the first quarter of this year, the company entered into
discussions for the sale of its H.S. Trask brand reflecting the
company’s focus on growing the Trotters and SoftWalk brands. As a
result, operating results for H.S. Trask have been reclassified to
discontinued operations beginning in fiscal 2011 and for all periods
presented.
On May 13, 2011, the company entered into an Asset Purchase Agreement
with Genesco, Inc. whereby the company agreed to sale the intellectual
property and related assets of the H.S. Trask brand. As part of the
Agreement, Genesco has provided the company with a 90 day royalty free
license to sell all remaining H.S. Trask inventory in its possession. As
of the closing, the company had approximately $150,000 of H.S. Trask
inventory on hand.
The company also announced today, the addition of Stephanie Pianka to
its Board of Directors. With this addition the Board is expanded to four
directors including Messrs. Steven Deperrior, Frederick Port and James
Riedman. Ms. Pianka is presently a principal with MPT Advisors and has
held a number of financial executive positions, including 15 years
within the General Electric organization.
Phoenix Footwear’s brands include Trotters, SoftWalk, and H.S. Trask.
