Phoenix Footwear Group, Inc. reported net sales for the fourth quarter increased 40.2 percent to $4.4 million compared to $3.1 million for the fourth quarter of fiscal 2012.
 
Other highlights of the quarter:

   — Consolidated loss from continuing operations for the fourth quarter
      declined to $128,000 or $0.02 per share compared to a loss of $467,000 or
      $0.06 per share for the fourth quarter of fiscal 2012
 
   — Reported net income of $70,000 or $0.01 per share for the twelve months
      of fiscal 2013 compared to net loss of $484,000 for the twelve months of
      fiscal 2012.
 
   — Net sales for the fiscal year of 2013 increased 14.8 percent to $19.2 million
      compared to $16.7 million for the fiscal year of 2012.
 
   — Consolidated earnings from continuing operations for the fiscal year
      improved to $143,000 or $0.02 per share compared to a loss of $437,000 or
      $0.06 per share for the 2012 fiscal year.
 
   — Earnings before interest, taxes, depreciation and amortization (“EBITDA”)
      for fiscal year 2013 improved 49.3 percent to $1.15 million compared to $771,000
      for fiscal year 2012.
 
   — The Company's Independent Auditors have removed the “Going Concern”
      paragraph from their Report as a result of the continuing improvement of
      the Company's operating results.

Grey's Anatomy by SoftWalk(R)

As previously announced, the Company entered into a joint licensing agreement with ABC/Disney Studios to develop and market professional footwear for the medical community. During the fourth quarter, Phoenix launched this footwear with a 60-day exclusive partnership with industry-leading retailer Scrubs and Beyond. Known as Meredith, the new SoftWalk shoe combines lightweight athletic performance with unparalleled comfort. Grey's Anatomy by SoftWalk is now available in over 150 retailers, including many of the medical uniform industry's better retailers. The Company expects this product expansion to facilitate growth in future quarters.

Fiscal 2013

For the fiscal year ended December 28, 2013, net sales increased $2.5 million or 14.8 percent to $19.2 million from $16.7 million when compared to the fiscal year ended December 29, 2012. The increase in net sales for fiscal year 2013 was primarily driven by new product introductions designed to appeal to the broader customer demographic of the Company's internet-based accounts, the on-time delivery of spring and fall goods, together with an improvement in the customer reorder volume of the Company's fall product offering.

Gross profit for fiscal 2013 increased $847,000 or 13.5 percent to $7.1 million from $6.3 million when compared to fiscal 2012. Gross profit as a percentage of net sales declined slightly to 37.1 percent from 37.5 percent when compared to fiscal 2012. The decrease in the gross profit as a percentage of net sales was primarily due to an increase in discounts and allowances provided to certain internet-based customers on significantly higher sales and an increase in the reserve for the phase out of various styles.

Selling, general and administrative expenses or SG&A increased to $6.3 million during fiscal 2013 compared to $5.8 million for fiscal 2012. SG&A as a percentage of net sales decreased to 32.8 percent for fiscal 2013 compared to 34.4 percent for fiscal 2012.

During the third quarter of fiscal 2012, the Company recorded a non-cash adjustment of $160,000 reducing the state nexus sales tax accrual. Excluding this onetime adjustment, SG&A for fiscal 2013 increased $378,000 to $6.3 million compared to $5.9 million for fiscal 2012. $241,000 or 64.0 percent of the increase in SG&A was associated with the Grey's Anatomy rollout, along with increases in sales and marketing expenses driven by the 14.8 percent increase in net sales during the year.

The Company reported earnings from continuing operations of $143,000 or $0.02 per share for the fiscal year ended December 28, 2013, compared to loss from continuing operations of $437,000 or $0.06 per share for the fiscal year ended December 29, 2012.

Earnings before interest, taxes, depreciation and amortization (or “EBITDA”) from continuing operations for fiscal 2013 improved 49.3 percent to $1.15 million compared to $771,000 for fiscal 2012.