Phoenix Footwear Sees Double-Digit Q3 Revenue Gains

Phoenix Footwear Group, Inc., the parent of Trotters and SoftWalk, reported sales from continuing operations for the third quarter increased
$794,000 or 14.3 percent to $6.4 million compared to $5.6 million for
the third quarter of fiscal 2013.

Net income for the third quarter improved 71.6 percent to $548,000 or $0.07 per share, compared to earnings of $320,000 or $0.04 per share during the third quarter of fiscal 2013. Included in net income for fiscal 2013 was a nonrecurring loss from discontinued operations of $43,000. Excluding this loss, net income increased 51.6 percent

The company generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $801,000 from continuing operations for the third quarter of fiscal 2014, compared to EBITDA of $628,000 for the third quarter of fiscal 2013.

Net sales from continuing operations for the first nine months increased 10.4 percent or $1.5 million to $16.3 million compared to $14.8 million for the nine months of fiscal 2013.

Net income from continuing operations for the first nine months of fiscal 2014 increased by 29.8 percent to $353,000 or $0.04 per share compared to a net income from continuing operations of $272,000 or $0.03 per share for the first nine months of fiscal 2013.

During the quarter, Phoenix continued its efforts to expand its distribution of key product categories resulting in accelerated growth. Notably, the company increased its presence in several national retailers including Nordstrom, Dillards and Uniform Advantage.

In addition, during the quarter the company also received the American Podiatric Medical Associations (APMA) Seal of Acceptance for its Greys Anatomy by SoftWalk Collection. This innovative footwear for medical professionals is now sold in over 560 retail locations nationwide including many of the uniform industrys leading retailers, such as Scrubs and Beyond, Work ‘n Gear and Uniform Advantage.

THIRD QUARTER AND FIRST NINE MONTHS OF FISCAL 2014

For the quarter ended September 27, 2014, net sales increased by $794,000, or 14.3 percent to $6.4 million compared to $5.6 million for the third quarter of fiscal 2013. Net sales for the first nine months of fiscal 2014 increased $1.5 million, or 10.4 percent to $16.3 million compared to $14.8 million for the first nine months of fiscal 2013. The increase in net sales for the quarter and first nine months of fiscal 2014 was primarily driven by sales of licensed footwear introduced during Spring 2014, together with increased sales to the companys catalog, Internet, and national retail customers.

Gross profit as a percentage of net sales for the third quarter of fiscal 2014 decreased to 38.3 percent compared to 39.3 percent for the third quarter of fiscal 2013. Gross profit as a percentage of net sales for the first nine months of fiscal 2014 decreased to 36.4 percent compared to 37.8 percent for the first nine months of fiscal 2013. Lower gross margins for the third quarter and first nine months of fiscal 2014 resulted primarily from the sale of lower margin licensed footwear.

SG&A for the third quarter of fiscal 2014 increased to $1.7 million or 4.8 percent compared to $1.6 million for the third quarter of fiscal 2013. SG&A as a percentage of net sales decreased to 26.6 percent for the second quarter of fiscal 2014 from 28.9 percent when compared to the same period of fiscal 2013. SG&A for the first nine months of fiscal 2014 increased to $5.0 million compared to $4.7 million for the first nine months of fiscal 2013. SG&A as a percentage of net sales decreased to 30.8 percent from 32.0 percent when compared to the same period of fiscal 2013.

The increase in SG&A for the third quarter and first nine months of fiscal 2014 is attributable to an increase in sales commissions generated from 14.3 percent and 10.4 percent growth in net sales during the third and first nine months of fiscal 2014.

The company reported a net income from continuing operations of $548,000 or $0.07 per share for the third quarter, compared to a net operating income from continuing operations of $362,000 or $0.04 per share during the third quarter of fiscal 2013.

For the first nine months of fiscal 2014, the company reported net income from continuing operations of $353,000 or $0.04 per share, compared to net income from continuing operations of $272,000 or $0.03 per share for the first nine months of fiscal 2013.

Earnings before interest, taxes, depreciation and amortization (or EBITDA) from continuing operations for the first nine months of fiscal 2014 was $1.06 million compared to $1.03 million for the first nine months of fiscal 2013.