Phoenix Footwear, the highly acquisitive American company that owns the Trotters, Softwalk, H.S. Trask, Strol, Altama and Tommy Bahama footwear lines, seems to have grown beyond its limits. In reporting a net loss of $20.4 million for the year ended Dec. 30, which compares with a profit of $1.2 million in 2005, the company admitted that it was uncertain whether it would be able to pay off debt if it rises much further. Phoenix has been negotiating with its bank to amend financial covenants and to make them more feasible for the company’s full-year expectations.
The group may have to sell off one of its assets to pay for its debts, leading some within the industry wondering if it might sell Royal Robbins, which was one of the only solid performers for the company last year. In the meantime Phoenix is focused on two initiatives: strengthening its balance sheet and complementing its management team with the appointment of a new chief executive. Today the company announced the appointment of a vice president of sales for the Softwalk and Trotters divisions, Michael Crosno. Crosno was previously national sales manager for the USA at Munro & Company.
In 2006, Phoenix’ sales rose by 28.7 percent to $140.6 million, but operating costs nearly doubled to $68.4 million, as compared to $35.7 million for 2005. Organic sales – not including turnover from Chambers Belt and Tommy Bahama footwear, both of which were acquired in 2005 – increased by 3.9 percent. Organic growth was driven by a rise of 27.8 percent in net sales for Royal Robbins, and was partially offset by declines for the other brands.
For the 4th quarter, the company’s net loss was $23.4 million, compared with a profit of $71,000 in the year-ago period. The period included an extraordinary charge of $23.5 million associated with the premium footwear and military boot segments. Net turnover fell by 12.9 percent to $28.9 million, as increases of 26.2 percent for Royal Robbins and of 11.5 percent for H.S. Trask were offset by decreases for the other labels.