PXFG Phoenix Footwear Group Inc (PK)

Phoenix Footwear Group, Inc. (OTCMarkets.com: PXFG) today reported results for the first quarter ended March 29, 2014.

COMPANY GENERATES NET INCOME OF $0.02 PER SHARE, OR $0.01 PER SHARE FULLY DILUTED.

First Quarter 2014

• Net income of $171,000, or $0.02 per share for the first quarter of fiscal 2014, a decrease of $88,000 or $0.01 per share when compared to Net income of $259,000 for the first quarter of fiscal 2013.
• Net sales for the first quarter of fiscal 2014 decreased 1.4% to $5.7 million compared to $5.8 million for the first quarter of fiscal 2013.
• Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the first quarter of fiscal 2014, were $382,000 compared to $512,000 for first quarter of fiscal 2014.
• The Company continued to expand its distribution of Meredith, the Grey’s Anatomy by SoftWalk footwear line for professional caregivers. It is now available in more than 300 uniform and medical retailers.

First Quarter 2014

For the first quarter of fiscal 2014 ended March 29, 2014, net sales decreased 1.4% or $80,000 to $5.7 million from $5.8 million when compared to the first quarter of fiscal 2013 ended March 30, 2013. The unusually cold weather, and extended winter throughout most of the country, adversely impacted the Company’s sales of scandalized footwear. The Company does expect its sales of sandals to normalize during the second quarter and to generate growth for the first half of this year.

Gross profit for the first quarter of fiscal 2014 decreased $27,000 or 1.3% to $2.11 million from $2.14 million when compared to the first quarter of fiscal 2012. Gross profit as a percentage of net sales for the first quarter of fiscal 2014 and 2013 was 36.9%.

Selling, general and administrative expenses or SG&A, increased to $1.8 million during the first quarter of fiscal 2014 compared to $1.7 million for first quarter of fiscal 2013. SG&A as a percentage of net sales increased to 31.0% for the first quarter of fiscal 2014, compared to 28.9% for the first quarter of fiscal 2013. The 5.7% increase in SG&A was primarily attributable to the planned expansion of Grey’s Anatomy by SoftWalk and was in line with the Company’s expectations.

The Company reported earnings from continuing operations of $171,000 or $0.02 per share for the first quarter ended March 29, 2014, compared to earnings from continuing operations of $268,000 or $0.03 per share for the first quarter ended March 30, 2013.

Earnings before interest, taxes, depreciation and amortization (or “EBITDA”) from continuing operations for the first quarter of fiscal 2014 were $382,000 compared to $512,000 for first quarter 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 763 customers in over 1,052 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 2014 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.

Phoenix Footwear Group, Inc. Condensed Consolidated Balance Sheets (In thousands)     (Unaudited) March 29, 2014 December 28, 2013 ASSETS   Current assets: Cash and cash equivalents $ 250 $ 141 Accounts receivable, net 3,795 2,671 Inventories, net 8,102 7,646 Other current assets 483 753 Income taxes receivable   30   30 Total current assets 12,660 11,241   Property, plant and equipment, net 68 73 Capital leased assets 574 589 Other assets   43   75 TOTAL ASSETS $ 13,345 $ 11,978   LIABILITIES AND STOCKHOLDERS' EQUITY   Current liabilities: Notes payable, current $ 6,056 $ 4,169 Accounts payable 1,922 2,733 Accrued expenses 830 646 Current portion of long term debt   186   220 Total current liabilities 8,994 7,768   Notes payable, net of current portion 612 618 Capital lease obligation, net of current portion 571 577 Convertible notes payable 1,350 1,350 Other non-current liabilities   268   286 Total liabilities 11,795 10,599   Stockholders' equity   1,550   1,379 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 13,345 $ 11,978   Phoenix Footwear Group, Inc. Consolidated Statements of Operations (In thousands, except per share data)       (Unaudited) Three Months Ended   March 29, 2014 March 30, 2013 Net sales $ 5,717 100 % $ 5,797 100 % Cost of goods sold   3,606 63 %   3,659   63 %   Gross profit 2,111 37 % 2,138 37 %   Operating expenses: Selling, general and administrative expenses   1,770 31 %   1,678   29 % Total operating expenses   1,770 31 %   1,678   29 %   Operating income 341 6 % 460 8 %   Other (income)/expense, net - 0 % - 0 % Interest expense, net   170 3 %   192   3 %   Earnings before income taxes and discontinued operations 171 3 % 268 5 %   Income tax expense   - 0 %   -   - %   Earnings from continuing operations 171 3 % 268 5 %   Loss from discontinued operations, net of tax   - 0 %   (9 ) 0 %   Net earnings $ 171 3 % $ 259   5 %   Earnings (loss) per share:   Basic: Continuing operations $ 0.02 $ 0.03 Discontinued operations   -   -   Net earnings $ 0.02 $ 0.03     Diluted: Continuing operations $ 0.01 $ 0.02 Discontinued operations   -   -   Net earnings $ 0.01 $ 0.02     Weighted-average shares outstanding: Basic 8,298 8,238 Diluted 14,585 14,108

Phoenix Footwear Group, Inc.Greg W. SlackChief Financial Officer(760) 602-9688