Phoenix Footwear Announce Results for the First Quarter of 2017

Phoenix Footwear Reports first Quarter 2017 results

CARLSBAD, Calif., May 11, 2017 -- Phoenix Footwear Group, Inc. (OTCMarkets.com: PXFG) today reported results for the first quarter ended April 1, 2017.

First Quarter 2017

Ø  Net Sales decreased $519,000, or 9.4%, to $5.0 million for the first quarter of fiscal 2017 from $5.5 million in the first quarter of fiscal 2016. In January of 2017, Shoes.com, ceased operations.   Together with the loss of Benchmark Brands in the third quarter of 2016, these retailers accounted for a $348,000 year over year decline in revenue. The Company has taken certain actions to replace the loss of these two customers to further improve its profitability.

Ø  Gross profit as a percentage of net sales declined 120 basis points to 36.7% from 37.9% with the clearance of slower moving and phased-out goods during the period.

Ø  Operating expense decreased $349,000 or 16.3% to $1.80 million in the first quarter of fiscal 2017 compared to $2.15 million in the first quarter of fiscal 2016, reflecting steps the Company took to reduce operating expenses in the fall of 2016.

Ø  Operating Income improved to $31,000 for the first quarter of fiscal 2017 compared to an Operating Loss of $57,000 in the first quarter of fiscal 2016. Net loss was $93,000, or $0.01 per share for the first quarter of fiscal 2017 compared to a net loss of $198,000 or $0.02 per share for the first quarter of fiscal 2016.  EBITDA was $75,500 for the quarter, compared to break even EBITDA in 2016.

First Quarter 2017

For the first quarter of fiscal 2017 ended April 1, 2017, net sales decreased 9.4%, or $519,000 million, to $5.0 million from $5.5 million when compared to the first quarter of fiscal 2016 ended April 2, 2016.The decrease in net sales for the first three months of fiscal 2017 was impacted by the loss of two internet based customers who accounted for net sales of $348,000 in the first quarter of fiscal 2016. The Company is actively moving to replace this lost revenue of these two customers.

Gross profit for the first quarter of fiscal 2016 decreased $261,000 or 12.5% to $1.8 million from $2.1 million when compared to the first quarter of fiscal 2016.  Gross profit as a percentage of net sales for the first quarter of fiscal 2016 declined to 36.7% compared to 37.9% for the first quarter of fiscal 2016. The 120 basis point decrease in the gross profit as a percentage of net sales was primarily associated with increase in sales of slower moving and phased out goods during the period.

Selling, general and administrative expenses or SG&A, decreased by $349,000 during the first quarter of fiscal 2017 to $1.80 million compared to $2.15 million for the first quarter of fiscal 2016. SG&A as a percentage of net sales decreased to 36.0% for the first quarter of fiscal 2017, compared to 39.0% for the first quarter of fiscal 2016.  The decrease in SG&A was result of the Company actively taking steps to reduce operating expenses in fiscal 2016. These steps included, but were not limited to; the elimination of sales positions, reductions in marketing expenditures, and the consolidation of service functions.

Income from operations improved to $31,000 in the first quarter of fiscal 2017 compared to an operating loss of $57,000 in the first quarter of fiscal 2016.

The Company reported an operating loss of $93,000 or $0.01 per share for the first quarter ended April 1, 2017, compared to a loss from operations of $198,000 or $0.02 per share for the first quarter ended April 2, 2016.

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 829 customers in over 1,391 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 2017and/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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