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Phoenix Footwear Narrows Q2 Loss

August 10, 2017 - Newswire

Phoenix Footwear Group Inc., the parent of Trotters and Softwalk, shrank its net loss for the first six months to $612,000 from $737,000 for the first six months of fiscal 2016. The EBITDA loss improved to a loss of $257,400 for the first six months of fiscal 2017.

Net loss for the second quarter of fiscal 2017 improved to $519,000 compared to a net loss of $539,000 for the second quarter of fiscal 2016. The EBITDA loss of $333,000 for the second quarter of 2017 was flat compared to $330,000 for the second quarter of 2016.

Net sales for the first six months of fiscal 2017 decreased 13.4 percent to $8.4 million from $9.7 million when compared to the first six months of fiscal 2016. Of this decline, $713,000, or 55 percent was associated with the loss of two customers that ceased doing business in late 2016.

More recently, the company has made progress expanding its business with several national retail accounts to which it will be shipping this fall, including: Dillard’s, Lord & Taylor and Designer Shoe Warehouse (DSW).

During the third quarter, the company has also begun selling Bueno footwear which it expects will contribute materially to its revenue for 2018. First deliveries of this new product line will take place for Holiday 2017. Interested retailers can see the product at industry shows including: FN Platform, Atlanta Shoe Market, TRU Show, Northwest Market, BSTA and other regional show.

For the quarter ended July 1, 2017, net sales decreased $784,000, or 18.5 percent to $3.46 million compared to $4.24 million for the second quarter of fiscal 2016. The majority of the decrease in net sales for the quarter was associated with internet based customers of which $354,000 was associated with the loss of two large customers who ceased operations in the third quarter of 2016, and first week of January 2017. The balance of the decline in net sales was associated with the independent and catalog channels of distribution.

Net sales for the first six months of fiscal 2017 decreased $1.3 million, or 13.4 percent to $8.4 million compared to $9.7 million for the first six months of fiscal 2016. Internet retailers accounted for the majority of this decrease, of which $713,000 was associated with the loss of two large customers who ceased operations in August of 2016, and the first weeks of January of 2017. Net sales in the independent channel of distribution contributed to the lower net sales volume during the period.

Gross profit decreased $291,000 from $1.6 million to $1.3 million in the second quarter of fiscal 2017. Gross margins as a percentage of net sales for the second quarter of fiscal 2017 and 2016, were 36.8 percent.

Gross profit for the first six months of fiscal 2017 decreased $550,000 to $3.1 million compared to $3.6 million during the first six months of fiscal 2016. Gross margin as a percentage of net sales for the first six months of fiscal 2017, declined to 36.7 percent compared to 37.4 percent for the first six months of fiscal 2016.

Contributing to the lower gross margin for the first six months of fiscal 2017 was a 1.5 percent increase in the net sales volume of lower margin licensed footwear as a percentage of the total net sales volume to 18.3 percent from 16.8 percent together with a lower volume of phased-out and discontinued goods sold during the period.

SG&A for the second quarter and first six months of fiscal 2017 decreased to $1.6 million and $3.45 million compared to $1.9 million and $4.1 million in the three and first six months of fiscal 2016.

Contributing to the decrease in SG&A for the second quarter and first six months of fiscal 2017 were planned reductions in personnel, and marketing expenditures.

The company reported a net operating loss of $519,000 or 4 cents per share for the second quarter, compared to a net operating loss from operations of $539,000 or 4 cents per share for the second quarter of the prior year.

For the first six months of fiscal 2017, the company reported a net operating loss from operations of $612,000 or 5 cents per share, compared to a net operating loss from operations of $737,000 or 6 cents per share for the first six months of fiscal 2016.

The loss before interest, taxes, depreciation and amortization (EBITDA) from operations for the first six months of fiscal 2017 was $257,400 compared to $329,400 for the first six months of fiscal 2016.

Disclaimer: The opinions expressed within this article are the views of the writer and do not necessarily reflect the views and opinions of FDRA.