Phoenix Footwear Group, Inc., the parent of Trotters and SoftWalk, reported first-quarter sales grew 16.7 percent to to $6.7 million from $5.7 million a year ago.

The company saw growth in both its Trotters and Softwalk brands during the
quarter. Net sales of the company’s occupational footwear increased by
143 percent.

Earnings before interest, taxes, depreciation and
amortization (EBITDA) for the first quarter of fiscal 2015 were
$392,000 compared to $382,000 for first quarter of fiscal 2014.

Operating
income totaled $278,000 for the first quarter of 2015 compared to
$341,000 for the comparable period a year ago. During the current
quarter, the company added to its sales, customer service and
distribution staff in order to support current and projected growth. In
addition, during the quarter, the company incurred a non-cash charge of
$66,000 related to the full vesting of previously granted stock options.

Net
loss of $39,000, or $0.01 per share, for the first quarter of fiscal
2015 compared to net income of $171,000 or $0.02 per share, for the
first quarter of fiscal 2014. Interest expense for the first quarter of
2015 included nonrecurring prepayment and other refinancing costs of
$167,000 incurred with the entry into a new loan and security agreement.

First Quarter 2015

For
the first quarter of fiscal 2015 ended March 29, 2015, net sales
increased 16.7 percent, or $954,000, to $6.7 million from $5.7 million
when compared to the first quarter of fiscal 2014 ended March 29, 2014.
The increase in net sales for the first three months of fiscal 2015 was
the result of a 143 percent increase in the sales of licensed footwear
sold into the medical uniform channel of distribution and an increase in
customer demand of Trotters and Softwalk’s Spring product offering.

Gross
profit for the first quarter of fiscal 2015 increased $262,000, or 12.4
percent, to $2.4 million from $2.1 million when compared to the first
quarter of fiscal 2014. Gross profit as a percentage of net sales for
the first quarter of fiscal 2015 declined to 35.6 percent compared to
36.9 percent for the first quarter of fiscal 2014. The 130 basis point
decline in the gross profit as a percentage of net sales was primarily
associated with the clearance of phased out and discontinued fall styles
and increased sales volume of lower margin licensed footwear when
compared to the same period of the prior year.

Selling, general
and administrative expenses or SG&A increased to $2.1 million during
the first quarter of fiscal 2015 compared to $1.8 million for first
quarter of fiscal 2014. SG&A as a percentage of net sales increased
to 31.4 percent for the first quarter of fiscal 2014 compared to 31.0
percent for the first quarter of fiscal 2014. The 18.4 percent increase
in SG&A was primarily attributable to additional sales, customer
service and warehouse distribution staff necessary to support current
and anticipated future growth. In addition, during the quarter the
Company incurred a non-cash charge of $66,000 related to the full
vesting of previously granted stock options.

Interest expense
from continuing operations was $317,000 compared to $170,000 for the
first quarter of fiscal 2014. The increase in interest expense is
primarily associated with the accelerated expensing of deferred
financing costs and early termination fees of $167,000 with the
termination of the AloStar Bank of Commerce and Gibraltar Business
Capital loan and security agreements on February 2, 2015.

The company reported a loss from continuing operations of $39,000, or 1 cent
per share, for the first quarter ended April 4, 2015, compared to
earnings from continuing operations of $171,000, or 2 cents per share, for
the first quarter ended March 29, 2014.

Earnings before
interest, taxes, depreciation and amortization (or “EBITDA”) from
continuing operations for the first quarter of fiscal 2015 were $392,000
compared to $382,000 for first quarter of fiscal 2014.