Company Generates 24.2% Revenue Growth for the Second
Quarter
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
- 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.
- 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.
- 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.
- 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.
- 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 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) June 28, 2014 December 28, 2013
ASSETS Current assets: Cash and cash equivalents $
201 $ 141 Accounts receivable, net 2,180 2,671 Inventories, net
9,191 7,646 Other current assets 661 753 Income taxes receivable
32 30 Total current assets 12,265 11,241
Property, plant and equipment, net 69 73 Capital leased asset 569
589 Capital leased asset - 75 TOTAL ASSETS $ 12,903 $
11,978
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Notes payable, current $ 4,153 $ 4,169
Accounts payable 3,908 2,733 Accrued expenses 731 646 Current
portion of long term debt 188 220 Total current
liabilities 8,980 7,768 Convertible notes payable 1,350
1,350 Term notes payable 573 618 Capital lease obligation 563 577
Other non-current liabilities 262 286 Total
liabilities 11,728 10,599 Stockholders' equity 1,175
1,379 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 12,903 $
11,978
Phoenix Footwear Group, Inc. Condensed
Consolidated Statements of Operations (In thousands, except
per share data)
(Unaudited) Three Months Ended June 28, 2014 June 29, 2013
Net sales $ 4,271 100% $ 3,440 100% Cost of goods sold 2,863
67% 2,163 63% Gross profit 1,408 33.0%
1,277 37.1% Operating expenses: Selling, general and
administrative expenses 1,587 37% 1,451 42% Goodwill and intangible
impairment charges - -% - 0% Total
operating expenses 1,587 37% 1,451 42%
Operating loss (179 ) -4% (174 ) -5% Interest
expense, net 187 4% 185 5% Loss
before income taxes and discontinued operations (366 ) -9% (359 )
-10% Income tax (benefit) expense - 0%
- -% Loss from continuing operations (366 ) -9% (359
) -10% Loss from discontinued operations, net of tax
(9 ) 0% (9 ) 0% Net loss $ (375 ) -9% $ (368 ) -11%
Loss per share: Basic Continuing operations $
(0.05 ) $ (0.05 ) Discontinued operations - -
$ (0.05 ) $ (0.05 )
Diluted Continuing operations $
(0.05 ) $ (0.05 ) Discontinued operations - -
Net loss $ (0.05 ) $ (0.05 )
Weighted-average
shares outstanding: Basic 8,338 8,298 Diluted 8,338 8,298
Phoenix Footwear Group, Inc. Consolidated
Statements of Operations (In thousands, except per share
data) (Unaudited) Six
Months Ended June 28, 2014 June 29, 2013 Net sales $ 9,989
100% $ 9,237 100% Cost of goods sold 6,469 65%
5,822 63% Gross profit 3,520 35% 3,415 37%
Operating expenses: Selling, general and administrative expenses
3,357 34% 3,129 34% Total operating
expenses 3,357 34% 3,129 34%
Operating Income
163 2% 286 3% Interest expense, net 358 4%
377 4% Loss before income taxes and
discontinued operations (195 ) -2% (91 ) -1% Income tax
(benefit) expense - 0% - -% Loss
from continuing operations (195 ) -2% (91 ) -1% Loss from
discontinued operations, net of tax (9 ) 0% (18 ) 0%
Net loss $ (204 ) -2% $ (109 ) -1%
Loss per share: Basic and diluted Continuing
operations $ (0.03 ) $ (0.02 ) Discontinued operations -
- Net loss $ (0.03 ) $ (0.02 )
Weighted-average shares outstanding: Basic and diluted 8,318
8,268
Phoenix Footwear Group, Inc.Greg W. SlackChief Financial
Officer760-602-9688
Phoenix Footwear (PK) (USOTC:PXFG)
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