Phoenix Footwear Group, Inc. reported earnings in the fourth quarter reached $1.0 million, or 13 cents a share, rebounding from a loss of $14.9 million, or $1.83, after charges for the fourth quarter of fiscal 2008. Sales from continuing operations reached $4.4 million, down 25% compared to $5.9 million a year ago.

Income from continuing operations during the fourth quarter of $612,000, arising from a tax gain, compared to a loss from continuing operations of $4.4 million for the fourth quarter of fiscal 2008.

Income from discontinued operations during the fourth quarter of $414,000 compared to a loss from discontinued operations of $10.5 million for the fourth quarter of fiscal 2008.

Funded bank debt balance of $3.0 million at the close of the fourth quarter, which is an increase of $383,000 from the close of the third fiscal quarter of 2009.

Commenting on the quarter, Rusty Hall, CEO, said, “Despite not being profitable on an operating basis, we were able to report a profit for the quarter due to income from our Chambers divestiture and a tax gain. More importantly, the quarter marked further improvement in our capital base as we completed the refinancing of our revolving credit facility with First Community Financial. Also, the period was marked by a continued build of momentum in our sales efforts. During the second half of 2009, we opened over 60 new or former accounts and we continue to experience double digit growth in our future orders.”

Full Year 2009

    * Net loss of $7.0 million, or $0.86 per share, compared to $19.5 million for fiscal 2008.
    * Loss from continuing operations of $5.3 million compared to $8.3 million for fiscal 2008.
    * Net sales from continuing operations of $19.9 million, down 33% compared to $29.6 million for fiscal 2008.
    * Loss from discontinued operations of $1.7 million compared to $11.1 million for fiscal 2008.

Commenting on the year, Hall said, “It has been an unprecedented and challenging year both for our Company and the retail industry as a whole. Our focus this past 12 months has been on reducing our cost structure, retiring liabilities and positioning the Company for a return to growth and profitability. While we are disappointed with the year’s sales and net loss, I applaud our team’s success in reducing our cost structure by millions of dollars, our bank debt by 74% and our total liabilities by $11.6 million. More importantly, the work we have done to improve our product and sales efforts is resulting in growing backlogs and future orders. Our backlog presently stands approximately 37% above last year at this time. We are certainly not out of the woods yet, but our progress has been considerable and we have reason to be encouraged.”

Other Events

Recently the Worker, Homeownership and Business Assistance Act of 2009 (the “Act”) was enacted. The Act provides for an election for federal taxpayers to increase the carry back period for an applicable net operating loss to 3, 4 or 5 years. Accordingly, the Company received a refund of approximately $2.0 million from the Internal Revenue Service in the first quarter of fiscal 2010.

Phoenix Footwear’s brands include Trotters, SoftWalk, and H.S. Trask.

Phoenix
Footwear Group, Inc.


Consolidated Condensed Statements
of Operations


(Unaudited)


(In thousands, except per share
data)















For the Three Months Ended









January 2,


January 3,




2010


2009









Net sales

$             4,434

100%

$             5,921

100%


Cost of goods
sold

3,076

69%

3,873

65%








Gross profit

1,358

31%

2,048

35%








Operating expenses:  






 Selling,
general and administrative expenses

2,667

60%

4,334

73%


 Goodwill and
intangible impairment charges

– %

1,999

34%


    Total
operating expenses

2,667

60%

6,333

107%








Operating loss

(1,309)

-30%

(4,285)

-72%








Interest expense, net

113

3%

13

0%








Loss before income taxes and
discontinued operations

(1,422)

-32%

(4,298)

-73%








Income tax (benefit) expense

(2,034)

-46%

About The Author

Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

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