Phoenix Footwear Group, Inc. announced today results for the first quarter ended March 29, 2003, which were on pace with the Company’s prior annual guidance. Net sales totaled $9.2 million versus $10.8 million for the first quarter of 2002. Net income for the first quarter of 2003 was $375,000 versus $605,000 for the first quarter of 2002 and earnings per diluted share were $0.19 versus $0.33 for the prior year comparable period. Included in the first quarter results for 2003 were Other expenses totaling $476,000 or $0.15 per diluted share in costs associated with the previously disclosed corporate relocation and the discontinued Antigua Enterprises acquisition effort.
James R. Riedman, Chairman and CEO, commented, “While first quarter sales for our Trotters(R) and SoftWalk(R) shoe lines were impacted by the challenging retail environment, we are encouraged by the continued improvement in the profitability of our underlying business. Looking to the future, we remain focused on growing the distribution of our footwear brands while pursuing strategic acquisitions that will be accretive to earnings and that will maximize shareholder value. We are confident in the long-term outlook of our business and look forward to improving profitability as the year progresses.”
Greg A. Tunney, President and Chief Operations Officer, added, “The domestic footwear market experienced considerable softness during the first quarter of 2003, with the majority of our retailing customers reporting period over period sales declines associated with unseasonably cold weather and continued war and economic concerns. Nonetheless, our brands were able to maintain their share of the available consumer dollars, and we remain optimistic in our ability to generate positive growth on both a sales and net income basis throughout the balance of this year.”
Results for the First Quarter Ended March 29, 2003:
Net sales for the quarter ended March 29, 2003 decreased 14.7% to $9.2 million as compared to $10.8 million for the first quarter of 2002.
Gross profit in the first quarter of 2003 was $4.0 million or 43.7% of net sales as compared to $3.8 million or 35.5% of net sales in the first quarter of 2002. The improvement in gross margin as a percentage of net sales primarily relates to an improved product sales mix and a reduction in the volume of closeout sales.
Selling, general and administrative expenses as a percentage of net sales were 31.0% or $2.9 million in the first quarter 2003 versus 24.0% or $2.6 million for the comparable prior year period. This increase was primarily related to increased advertising and promotional expenses.
During the first quarter of 2003, interest expense amounted to $66,000 as compared to $232,000 in the prior year period. The decrease is a result of lower interest rates and average outstanding indebtedness during the current quarter as compared to the prior year period.
Additionally, in accordance with the Company’s stock repurchase program approved by its Board of Directors in May 2002, the Company repurchased approximately 20,700 shares during the first quarter of 2003 at an average purchase price of $6.19.
For the Quarter Ended (Unaudited) March 29, March 31, 2003 2002 Net sales $9,207,000 100.0% $10,793,000 100.0% Cost of goods sold 5,187,000 56.3% 6,960,000 64.5% Gross profit 4,020,000 43.7% 3,833,000 35.5% Operating expenses: Selling and Administrative expenses 2,853,000 31.0% 2,593,000 24.0% Other expenses, net 476,000 5.2% 0.0% Total operating expenses 3,329,000 36.2% 2,593,000 24.0% Income from operations 691,000 7.5% 1,240,000 11.5% Interest expense 66,000 0.7% 232,000 2.1% Income before income taxes 625,000 6.8% 1,008,000 9.3% Income tax provision 250,000 403,000 Net Income $375,000 4.1% $605,000 5.6%