Phoenix Footwear reports Royal Robbins brand sales strong in Q3

05 Nov '05

4 min read

Gross margin in the third quarter of 2005 was 36.7 percent of net sales, compared to 42.4 percent in the third quarter of 2004. The decrease in the gross margin percentage was due to the recent acquisitions which generate lower gross margins than the Company's other branded products and a higher level of footwear close-out and mark down sales in the Trotters, Softwalk and H.S. Trask brands as compared to the prior year period.

Operating costs increased 41.2 percent to $9.8 million, compared to $6.9 million in the third quarter of 2004. This increase is due to $3.3 million in operating costs associated with the recently acquired Chambers and Tommy Bahama brands, and $270,000 in increased intangible asset amortization costs related to the recent acquisitions, offset by net operating expense reductions totaling $700,000 related to reduced marketing, advertising and other selling expenses.

Operating expenses as a percentage of sales were 28.5 percent in the third quarter of 2005, down from 29.8 percent of net sales in the comparable quarter a year ago.

Operating income for the third quarter was $2.8 million, down slightly from $2.9 million in the third quarter of 2004. Additionally, the operating margin of 8.2 percent decreased compared to an operating margin of 12.6 percent for the comparable quarter a year ago.

During the third quarter of 2005, interest expense totaled $1.2 million, compared to $199,000 in the comparable prior year period. This increase is primarily related to increased acquisition and working capital debt associated with brand acquisitions and higher interest rates.

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