In back-to-back press releases late last week, Phoenix Footwear announced that the companys President and Chief Operating Officer, Greg Tunney is resigning, and announced they would not meet quarterly or annual guidance. These two blows sent PXG stock tumbling 15.2% for the week to close at $6.20 on Friday.
Greg Tunnys responsibilities as President and Chief Operating Officer will be taken over by Richard White, CEO of Phoenix Footwear. Phoenix said that Mr. Tunney is resigning to “pursue other, personal interests.”
Phoenix also stated that it would be missing its guidance because of softness in its Trotters and Altama Footwear brands. The company now expects an unspecified Q4 net loss compared to an EPS of two cents reported last year. For the full 2004 year, the company still expects to be profitable, but will not meet previous guidance of 65 to 70 cents.
Royal Robbins net sales increased approximately 30% for the full year compared to pro forma net sales for 2003. During 2004, Royal Robbins expanded its distribution base among new channels, including Dillard’s and Dick’s Sporting Goods. Royal Robbins continues to expand its Fall 2005 offering and is experiencing strong acceptance of its product at retail. Royal Robbins recently added a national sales manager and is expected to post strong organic growth in 2005.
SoftWalk completed 2004 with net sales growth of approximately 8% over the previous year, representing the brand’s fourth consecutive year of growth.
During the fourth quarter, the Company’s Trotters brand continued to experience lower sell through and reorder rates compared to previous quarters. For the full year, Trotters net sales decreased approximately 4% versus 2003.
In 2004 the company completely redesigned and repositioned its H.S. Trask line. As a result, H.S. Trask’s net sales decreased approximately 21% for the full year compared to pro forma net sales for 2003. Future orders for H.S. Trask are up and the Company expects this momentum to accelerate in 2005 and to result in significant organic growth for the full year.
The biggest hit to company sales and earnings came from the Altama Brand. Altama’s net sales during the past two quarters have declined approximately 33%. Phoenix expects orders and shipments under its DOD contract to continue at the current levels throughout 2005. PXG expects two sizable DOD combat boot procurements to be solicited during 2005 and believes that Altama is “well positioned” to participate in both.
For the full year 2005, the company expects to report overall revenues of $90 to $95 million and diluted EPS of 65 to 70 cents.
