Phoenix Footwear Group, Inc. Announces Q1 2016 Results

Phoenix Footwear Reports first Quarter 2016 results

CARLSBAD, Calif., May 11, 2016 -- Phoenix Footwear Group, Inc. (OTCMarkets.com: PXFG) today reported results for the first quarter ended April 2, 2016.

First Quarter 2016

Ø  Net Sales decreased $1.2 million, or 17.5%, to $5.5 million for the first quarter of fiscal 2016 with the planned exit from a large national retailer and shift in the timing of sales for an occupational account and online retailer.

Ø  Gross profit as a percentage of net sales improved 240 basis points to 38.0% from 35.6% help by the reduction of allowances and discounts provided to a large national retailer.

Ø  Net loss of $198,000, or $0.02 per share for the first quarter of fiscal 2016 compared to a net loss of $39,000 or $0.01 per share for the first quarter of fiscal 2015.  Interest expense for the first quarter of 2015 included nonrecurring prepayment and other refinancing costs of $167,000 incurred with the entry into a new loan and security agreement.

First Quarter 2016

For the first quarter of fiscal 2016 ended April 2, 2016, net sales decreased 17.5%, or $1.2 million, to $5.5 million from $6.7 million when compared to the first quarter of fiscal 2015 ended April 4, 2015.  The decrease in net sales for the first three months of fiscal 2016 was comprised of a planned decrease in sales to a large national retailer, and a shift in the timing of sales to an occupational account and online retailer, together with an increase in the returns reserve resulting from a change in the channel sales mix.

Gross profit for the first quarter of fiscal 2016 decreased $285,000 or 12.0% to $2.1 million from $2.4 million when compared to the first quarter of fiscal 2015.  Gross profit as a percentage of net sales for the first quarter of fiscal 2016 improved to 38.0% compared to 35.6% for the first quarter of fiscal 2015. The 240 basis point increase in the gross profit as a percentage of net sales was primarily associated with a decrease in allowances and discounts provided to a large national retailer.

Selling, general and administrative expenses or SG&A, increased by $50,000 during the first quarter of fiscal 2016 to $2.15 million compared to $2.10 million for first quarter of fiscal 2015. SG&A as a percentage of net sales increased to 39.0% for the first quarter of fiscal 2016, compared to 31.4% for the first quarter of fiscal 2015.  The increase in SG&A was driven by an increase in selling and marketing activity including the addition of a vice president of marketing.

Interest expense from continuing operations was $141,000 compared to $317,000 for the first quarter of fiscal 2015. Included in interest expense in the first quarter of fiscal 2015 was the accelerated expensing of deferred financing costs and early termination fees of $167,000 related to the termination of the AloStar Bank of Commerce and Gibraltar Business Capital loan and security agreements on February 2, 2015.

The Company reported an operating loss of $198,000 or $0.02 per share for the first quarter ended April 2, 2016, compared to a loss from continuing operations of $39,000 or $0.01 per share for the first quarter ended April 4, 2015.

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 843 customers in over 1,576 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 2016 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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