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Phoenix Footwear Group, Inc. January, 2007. 2 Safe Harbor Statement These forward-looking statements include, but are not limited to, statements relating.

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Presentation on theme: "Phoenix Footwear Group, Inc. January, 2007. 2 Safe Harbor Statement These forward-looking statements include, but are not limited to, statements relating."— Presentation transcript:

1 Phoenix Footwear Group, Inc. January, 2007

2 2 Safe Harbor Statement These forward-looking statements include, but are not limited to, statements relating to our anticipated financial performance, business prospects, new developments, new merchandising strategies and similar matters, and/or statements preceded by, followed by or that include the words "believes,'' "could,'' "expects,'‘ "anticipates,'' "estimates,'' "intends,'' "plans,'' "projects,'' "seeks,'' or similar expressions. We have based these forward-looking statements on our current expectations and projections about future events, based on the information currently available to us. These forward- looking statements are subject to risks, uncertainties and assumptions, including those described in the prospectus under the heading "Risk Factors,'' that may affect the operations, performance, development and results of our business. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this prospectus. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or any other reason, except as we may be required to do under applicable law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this presentation may not occur.

3 3 Our Brands Product Focus Brands Lifestyle (apparel and footwear) Institutional footwear (military, public safety and duty) Traditional comfort footwear Accessories (belts, hosiery and other)

4 4 Company Objectives Develop a core of operations centered around execution excellence rather than simply product categories Develop a core of operations centered around execution excellence rather than simply product categories Invest in activities and brands in a way that will create long term sustained value Invest in activities and brands in a way that will create long term sustained value Make acquisitions that maximize expected value even at the expense of lowering near term earnings Make acquisitions that maximize expected value even at the expense of lowering near term earnings Reward leadership for delivering superior long term results Reward leadership for delivering superior long term results

5 5 Profitability and Growth Initiatives for 2007  Growth Drivers Tommy Bahama Relaunch Tommy Bahama Relaunch American Red Cross Footwear American Red Cross Footwear Wal- Mart and K Mart accessories expansion Wal- Mart and K Mart accessories expansion  Profitability Drivers  Inventory clearance completed by year end  China office now operational to support sourcing shift  Consolidation of 5 distribution facilities utilizing Third Party solutions

6 6 Tommy Bahama Relaunch  Well known brand with a parent committed to apparel growth particularly in women's  10 year license negotiated in 8/05 with the acquisition of Paradise Shoe for footwear and accessories  Distribution includes company stores (60), better department doors (Nordstrom's) and specialty outlets (i.e., Gary’s )

7 7 Tommy Bahama Relaunch ACCOMPLISHED TO DATE ACCOMPLISHED TO DATE  New organization built – Leadership/ Designers/ Sales force  New line designed and in production  December first shipments / $2.5 mill in orders in first month  Old inventory liquidated - third quarter charge

8 8 Tommy Bahama Relaunch Old Tommy Bahama Dated styling – Older demographic Stiffer leathers Italian manufacture 24 % Gross Margin New Tommy Bahama Contemporary relaxed styling Younger appeal Supple burnished leathers Indian manufacture 45%+ Gross Margin

9 9 License entered into in late 2005 is now operational Product designed and developed for the healthcare market Sales force is actively engaged in building distribution

10 10 Tightly focused cause marketing Healthcare market is large and fragmented Utilizing our proprietary Softwalk footbed 10,000 orders on hand for February delivery

11 11 Accessories sales growth 38% in Q3 Gaining market share at Wal- Mart, Kmart and TSC Tommy Bahama accessories to add to ’07 Significant additional programs still pending with majors

12 12 Financial Overview

13 13 Trailing Twelve Month Net Sales $M 50% CAGR

14 14 Trailing Twelve Months EBITDA and EAT EAT EBITDA

15 15 Third Quarter Earnings In excess of $1.2 mill loss in Tommy Bahama for Q3 In excess of $1.2 mill loss in Tommy Bahama for Q3 Accelerated design and development costs Accelerated design and development costs Inventory losses of $700k as old styles cleared to make way for new line Inventory losses of $700k as old styles cleared to make way for new line Third Quarter EPS Reported Tommy Bahama Pro Forma Q3 06 Q3 05 $.04$.09 $0.13$0.12

16 16 Third Quarter Growth Organic growth totaled 8.8% for the quarter Organic growth totaled 8.8% for the quarter Royal Robbins reported its 11 th consecutive quarter of growth at 28.6% Royal Robbins reported its 11 th consecutive quarter of growth at 28.6% Our accessories business grew at a rate of 38.7% for the quarter as we began to deliver on the previously announced new business wins Our accessories business grew at a rate of 38.7% for the quarter as we began to deliver on the previously announced new business wins Trotters and Softwalk both grew at modest rates and show strong backlogs entering the spring ’07 season Trotters and Softwalk both grew at modest rates and show strong backlogs entering the spring ’07 season

17 17 Pending Developments  A significant loss will generated in the 4 th quarter as inventory cleanup in Tommy Bahama and Trask is completed  The search committee of the Board is actively engaged with Korn Ferry and expects a CEO hire to be announced in the current quarter

18 18 Credit Facility $58 mill Outstanding; $62 mill Capacity Revolving facility Revolving facility $24 mill outstanding $24 mill outstanding $28 mill capacity $28 mill capacity Term Note 5 year $24 million outstanding Term Note 5 year $24 million outstanding Term loan 15 months $10 mill outstanding Term loan 15 months $10 mill outstanding LIBOR plus 3.5% LIBOR plus 4.0% LIBOR plus 7.0%

19 19 Near Term Outlook 2007 – 2009  Earnings Improvements as Tommy and Red Cross become positive contributors  Underlying brands enjoying solid backlogs and positive ’07 outlooks  Accessories expected to continue market share gains  Margin enhancements by way of sourcing and logistics improvements to come online in 2008  Altama contract renewal uncertain and a risk for ’07 earnings  SOX requirements will increase corporate costs considerably in ‘07


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