Phoenix Footwear Group Reports Second Quarter 2014

Phoenix Footwear Reports second Quarter 2014 results

CARLSBAD, Calif., August 4, 2014 -- Phoenix Footwear Group, Inc. (OTCMarkets.com: PXFG) today reported results for the Second Quarter and First Six months ended June 28, 2014.

Second Quarter and First Six Months of Fiscal 2014

Ø  Net sales from continuing operations for the second quarter increased $831,000 or 24.2% to $4.3 million compared to $3.4 million for the second quarter of fiscal 2013.

Ø  Consolidated net loss from continuing operations for the second quarter was $375,000 or $0.05 per share compared to a net loss of $359,000 or $0.05 per share during the second quarter of fiscal 2013.

Ø  Net sales from continuing operations for the first six months increased 8.1% to $10.0 million compared to $9.2 million for the first six months of fiscal 2013.

Ø  Consolidated net loss from continuing operations for the first six months of fiscal 2013 increased to $195,000 or $0.03 per share compared to a net loss of $91,000 or $0.02 per share for the first six months of fiscal 2013.

Ø  While the Company generated significant increases in revenue during the quarter, sales from sandals did not materialize as the Company had expected.  As a result, the Company moved aggressively during the quarter to liquidate certain seasonal inventory which adversely impacted Gross Margins compared to the prior quarters.

SECOND QUARTER AND FIRST SIX MONTHS OF FISCAL 2014

For the quarter ended June 28, 2014, net sales increased by $831,000, or 24.2% to $4.3 million compared to $3.4 million for the second quarter of fiscal 2013.  Net sales for the first six months of fiscal 2014 increased $752,000, or 8.1% to $10.2 million compared to $9.24 million for the first six months of fiscal 2013. 

The increase in net sales for the quarter and first six months of fiscal 2014 was primarily driven by sales of licensed footwear introduced during Spring 2014, together with increased sales to the Company’s internet and national retail customers.

Gross margins for the second quarter of fiscal 2014 declined to 33.0% compared to 37.1% for the second quarter of fiscal 2013. Gross margin for the first six months of fiscal 2014 decreased to 35.2% compared to 37.0% for the first six months of fiscal 2013. Lower gross margins for the second quarter and first six months of fiscal 2014 were a resulted of an increase in sales of off-priced goods, and sales of lower margin licensed footwear. 

SG&A for the second quarter of fiscal 2014 increased to $1.59 million or 9.4% compared to $1.45 million for the second quarter of fiscal 2013.  SG&A as a percentage of net sales decreased to 37.2% for the second quarter of fiscal 2014 from 42.1% when compared to the same period of fiscal 2013.  SG&A for the first six months of fiscal 2014 increased to $3.36 million compared to $3.13 million for the first six months of fiscal 2013. SG&A as a percentage of net sales decreased to 33.6% from 33.8% when compared to the same period of fiscal 2013.

The increase in SG&A for the second quarter and first six months of fiscal 2014 is attributable to the Company’s launch of Grey’s Anatomy footwear and expenses directly related to the increase in sales, including commissions and warehouse activity.

The Company reported a net operating loss from continuing operations of  $366,000 or $0.05 per share for the second quarter, compared to a net operating loss from continuing operations of $359,000 or $0.05 per share for the same period of the prior year.

For the first six months of fiscal 2014, the Company reported a net operating loss from continuing operations of $195,000 or $0.03 per share, compared to a net operating loss from continuing operations of $91,000 or $0.02 per share for the first six months of fiscal 2013.

Earnings before interest, taxes, depreciation and amortization (or “EBITDA”) from continuing operations for the first six months of fiscal 2014 was $259,600 compared $397,100 for the first six months of fiscal 2013.

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 677 customers in over 905 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 2014and/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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