Phoenix Footwear Announces 2011 Third Quarter Results

Phoenix Footwear

Reports Third Quarter 2011 Results

CARLSBAD, Calif., November 15, 2011 -- Phoenix Footwear Group, Inc. (OTCMarkets.com: PXFG) today reported results for the Third quarter ended October 1, 2011.

Third Quarter 2011

Ø  Operating income from continuing operations of $242,000 or $0.03 per share

Ø  Net earnings of $73,000 or $0.01 per share

Ø  Net Sales from continuing operations increased to $4.7 million or 7.1%

Ø   Gross margins improved to 38%

Ø  SG&A expense decreased by $608,000 or 28%

For the quarter ended October 1, 2011, net sales totaled $4.7 million compared to $4.4 million in the prior year comparative period. The increase in net sales for the quarter is primarily due to improvements in the supply chain in stock inventory position of key core and fall product offerings and on time customer order fulfillment.

Gross profit was $1.8 million for the quarter, an increase of $646,000 compared to the prior year’s comparable quarter, while gross margin improved 12% to 38%, compared to 26% in the third quarter of 2010. The improvement in gross margin for the third quarter was the result of a higher percentage of full margin sales coupled with decrease in closeout sales of slow moving and discontinued styles.

Selling, general and administrative expenses, or SG&A, totaled $1.5 million, a decrease of 28% compared to $2.1 million in the third quarter of 2010. SG&A as a percentage of net sales was 33% for the third quarter of 2011 compared to 49% in the prior year comparative period. The improvement in SG&A for the period was primarily due to lower employee compensation and benefits, office rents, utilities, insurance and public company expenses as a result of the Company’s restructuring, relocation of the corporate headquarters in Carlsbad and delisting and deregistration from the NYSE Amex and Securities Exchange Act of 1934 reporting and Sarbanes- Oxley compliance requirements.

Interest expense for the quarter totaled $177,000 compared to $127,000 for the third quarter of 2010.

In the third quarter, the Company reported net earnings of $73,000, compared to a net loss of $1.1 million for the same period of the prior year. Operating income before interest and taxes from continuing operations for the quarter totaled $242,000 or $0.03 a share compared to an operating loss of $1.0 million or $0.12 a share in the prior year comparative period. 

About Phoenix Footwear Group, Inc.

Phoenix Footwear Group, Inc., headquartered in Carlsbad, California, specializes in quality comfort women’s and men’s footwear with a design focus on fitting features. Phoenix Footwear designs, develops, markets and sells footwear in a wide range of sizes and widths under the brands Trotters® and SoftWalk®, These brands are primarily sold through department stores, leading specialty and independent retail stores, mail order catalogues and internet retailers and are carried by approximately 700 customers in over 950 retail locations throughout the U.S. Phoenix Footwear has been engaged in the manufacture or importation and sale of quality footwear since 1882.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. These forward-looking statements include, but are not limited to, statements regarding Phoenix Footwear’s ability to repay its bank debt in a timely manner, future growth and performance of its individual brands, expected financial performance and condition for fiscal 2011 and/or statements preceded by, followed by or that include the words “believes,” “could,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “projects,” “seeks,” “exploring,” or similar expressions. Although Phoenix Footwear believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by Phoenix Footwear or any other person that the objectives and plans of Phoenix Footwear will be achieved. All forward-looking statements included in this press release speak only as of the date of this press release and are based on Phoenix Footwear's current expectations and projections about future events, based on information available at the time of the release, and Phoenix Footwear expressly disclaims any obligation to release publicly any update or revision to any forward-looking statement contained herein if there are changes in Phoenix Footwear’s expectations or if any events, conditions or circumstances on which any such forward-looking statement is based.

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