Phoenix Footwear Reports Fiscal Year 2012 Results

Phoenix Footwear Group, Inc. (OTCMarkets.com: PXFG) today reported results for the fiscal year ended December 29, 2012.

Fiscal Year 2012

• Operating income for the year totaled $513,000 compared to an operating loss of $1.0 million for the prior year.
• Net sales increased $834,000 or 5.2% to $16.7 million from $15.9 million
• Gross margin as a percentage of net sales improved to 37.5% or 240 basis points from 35.1%
• Net loss from continuing operations decreased to $437,000 or $0.06 per share compared to net loss of $1.7 million or $0.21 per share in fiscal 2011.

For the year ended December 29, 2012 (or “fiscal 2012”), net sales increased to $16.7 million or 5.2% compared to $15.9 million for the year ended December 31, 2011 (or “fiscal 2011”). Net sales for the Company’s SoftWalk® and Trotters® brands grew by 11.6% and 2.0% in fiscal 2012. The improvement in net sales for the year was achieved with a 9.7% increase in the average unit wholesale price on an increased unit sales volume of full priced goods of 2.9%, together with a 27% decrease in the sales volume of closed-out goods.

The gross margin improved 240 basis points to 37.5% from 35.1% when compared to the prior fiscal year. The enhanced gross margin was produced on a higher unit sales volume of full priced goods coupled with an increase in the average unit wholesale of 9.7% and a decrease in the sales volume of closed-out inventory reduced by an increase in the average standard cost per unit.

Selling, general and administrative expenses or SG&A, decreased $835,000 or 12.7% to $5.8 million in fiscal 2012 compared to $6.6 million in fiscal 2011. SG&A as a percentage of net sales for fiscal 2012 was 34.4% compared to 41.4% for fiscal 2011. The decrease in SG&A was mostly due to the reduction in legal, rent and other public company costs incurred during the first quarter of fiscal 2011 associated with the completion of a restructuring plan initiated during the second half of fiscal 2010 and an overall lower operating cost structure.

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