Phoenix Footwear Group, Inc. saw net sales from continuing operations for the second quarter of fiscal 2007 decrease 11.3% to $25.2 million, compared to $28.4 million for the second quarter of fiscal 2006. The decline was primarily driven by a 47.7% decrease in Tommy Bahama Footwear, and a 17.8% decrease in Altama. The net sales decrease was partially offset by a 14.9% increase at Trotters.
The company reported a net loss of $929,000, or 12 cents per share, for the second quarter, compared to a net loss of $342,000, or 4 cents per share, in the year-ago period. The net loss for the 2007 quarter included a net loss of $149,000 from the Royal Robbins brand, which was divested to Kellwood Company during the period, and the net loss for the 2006 second quarter included a net loss of $169,000, or 2 cents per share, from the divested division.
PXG closed on the sale of all of the outstanding capital stock of its wholly-owned subsidiary, Royal Robbins, along with related assets of PXG Canada, on July 2, 2007. The net proceeds from the sale were applied to reduce the company's bank debt. The gain from the transaction, which was approximately $23 million on a pre-tax basis, will be included in the third quarter of 2007 financial results.
As of June 30, 2007 PXG failed to meet its financial covenants with its bank. Since that date, the company's term loan indebtedness has been repaid in full and the company is having ongoing discussions with its bank about a replacement facility consistent with the company's reduced funding needs.