Economic challenges continue to plague Phoenix Footwear Group Inc. The Carlsbad, Calif.-based company widened its net loss by 81 percent in the first quarter.
On Tuesday, Phoenix reported a net loss of $2.7 million, or 33 cents a share, for the first quarter, compared with a loss of $500,000, or 5 cents, in the year-ago period. Revenue dropped 35 percent to $6.1 million, from $9.4 million in the first quarter of last year.
During the quarter, the company exited its Tommy Bahama and Chambers Belt Co. businesses, as previously reported by Footwear News. The license for the Tommy Bahama business was terminated, resulting in the sale of all products and the dismissal of related staff in the first quarter. Meanwhile, the Chambers business — not including Phoenix’s accounts receivable, Wrangler mass license, or cash on hand — was sold to Tandy Brands Accessories. The transaction is expected to close during the second quarter.
As of May 16, Phoenix’s bank debt totaled $7.9 million, down from $13.1 million on April 4, 2009, but the company continues to be in default under its revolving line of credit. Phoenix is seeking amendments, waivers and increased borrowing availability, and expects the Tommy Bahama and Chambers transactions to generate more than $14 million in net cash when fully completed.
“Our focus has been on taking significant actions to ensure we have both a capital structure and cost structure that allow us to exit this downturn as a viable and healthy enterprise,” Phoenix CEO Rusty Hall said in a statement. “Toward that end, we have made very measurable progress; the benefits of which will be visible in the upcoming quarters.”