Royal Robbins saw fourth-quarter sales jump 26.2% to $4.6 million from $3.7 million a year ago. However, Royal Robbins' success was overshadowed by the financial distress at the brand's parent, Phoenix Footwear Group Inc., which might lead to the sale of the brand. Phoenix Footwear said it does not believe it will meet its financial covenants for the first quarter and the company's independent public accountants have included a “going concern” qualification in its report.
Phoenix said it is having ongoing discussions with its bank about waiving its expected first quarter default and amending its financial covenants to better align with management's expected financial performance for the remainder of fiscal 2007. Phoenix said it has implemented initiatives to reduce working capital, and is “exploring a possible sale of one or more of its assets to reduce bank debt.”
Regarding Royal Robbins, management said the double-digit revenue growth was primarily attributable to moving to direct sales in Canada earlier in 2006 as well as improved sell-through in all of its retail accounts, including REI. In the full year, the Canadian operation added $6 million in sales to Royal Robbins. Management gave no further guidance on Royal Robbins. However, during the third quarter, management said it expected Royal Robbins growth to moderate through the first half of 2007 due to the brand's exit from Dicks Sporting Goods and Academy Sports.
For the fourth quarter, Phoenix overall reported a net loss of $23.4 million, or $2.95 a share, compared with a net income of $71,000, or a penny a share, in Q4 2005. The latest fourth quarter included a non-cash intangible impairment charge of $23.5 million, or $2.42 per diluted share, associated with its Premium Footwear and Military Boot segments. Sales for the quarter decreased 12.8% to $28.9 million compared to $33.2 million. Sales were down considerably in every division except Royal Robbins.
| Phoenix Footwear Group | |||
| Full Year Results | |||
| (in $ mm) | 2006 | 2005 | Change |
| Total Sales | $28.9 | $33.2 | -12.8% |
| Royal Robbins | $4.6 | $3.7 | 26.2% |
| Tommy Bahama | $1.2 | $3.0 | -58.5% |
| Chambers | $9.8 | $10.3 | -5.0% |
| Altama | $4.5 | $6.6 | -31.5% |
| Softwalk | $2.0 | $2.7 | -26.6% |
| Trotters | $3.7 | $4.1 | -11.5% |
| H.S. Trask | $3.1 | $2.8 | 11.5% |
| GM % | 22.4% | 37.4% | -1500 bps |
| Net Income | ($23.4) | $0.1 | vs. profit |
| Diluted EPS | ($2.95) | 1¢ | vs. profit |
| Inventory* | $32.2 | $37.2 | -13.5% |
| Accts Rec* | $20.8 | $21.8 | -4.5% |
| *at year-end | |||
