Phoenix Footwear Reports First Quarter 2011 Results
Phoenix Footwear Group (PL) (USOTC:PXFG)
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Today : Saturday 28 May 2011
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Phoenix Footwear Group, Inc. (Pink Sheets: PXFG) today reported results for the first quarter ended April 2, 2011.
First Quarter 2011
Net loss of $339,000, or $0.04 per share for the quarter.
Net Sales from continuing operations decreased to $4.8 million or 8.5%, while gross margins improved 190 basis points to 35.5%
SG&A expense decreased $454,000 or 18.4% compared to the first quarter of 2010.
SG&A included $236,100 non-recurring expense related to the deregistration of the Company’s shares and relocation of its Corporate Offices.
For the quarter ended April 2, 2011, net sales totaled $4.8 million compared to $5.3 million in the prior year comparative period. This decrease is primarily attributable to significant production delays the Company experienced from one of its primary vendors and to a lesser degree, poor sell through of the Company’s HealthGlide product also contributed to lower sales as the market for “toning” and similar footwear became highly promotional during the quarter.
Gross profit was $1.7 million for the quarter, decreased $60,000 compared to the prior year’s comparable quarter, while gross margin improved 190 basis points to 35.5%, compared to 33.6% in the first quarter of 2010.
Selling, general and administrative expenses, or SG&A, totaled $2.0 million, a decrease of 18.4% compared to $2.5 million in the first quarter of 2010. SG&A as a percentage of net sales was 42% for the first quarter of 2011 compared to 47% in the prior year comparative period. SG&A for the period include $164,000 in expense related to its migration from the NYSE Amex to the OTC Markets in addition to $72,100 in expense related to the downsizing of its headquarters as the last phase of the Company’s downsizing efforts. Also included in SG&A is $53,000 of depreciation expense.
Interest expense for the quarter totaled $179,000 compared to $61,000 for the first quarter of 2010.
In the first quarter, our net loss totaled $339,000. Operating loss from continuing operations for the quarter totaled $436,000 or $0.05 a share compared to an operating loss of $760,000 or $0.09 a share in the prior year comparative period.
Other Events
During the first quarter of this year, the Company entered into discussions for the sale of its H.S. Trask brand reflecting the Company’s focus on growing the Trotters and SoftWalk brands. As a result, operating results for H.S. Trask have been reclassified to discontinued operations beginning in fiscal 2011 and for all periods presented.
On May 13, 2011, the Company entered into an Asset Purchase Agreement with Genesco, Inc. whereby the Company agreed to sale the intellectual property and related assets of the H.S. Trask brand. As part of the Agreement, Genesco has provided the Company with a 90 day royalty free license to sell all remaining H.S. Trask inventory in its possession. As of the closing, the Company had approximately $150,000 of H.S. Trask inventory on hand.
The Company also announced today, the addition of Stephanie Pianka to its Board of Directors. With this addition the Board is expanded to four directors including Messrs. Steven Deperrior, Frederick Port and James Riedman. Ms. Pianka is presently a principal with MPT Advisors and has held a number of financial executive positions, including 15 years within the General Electric organization.
