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Apparel firm Perry Ellis to review its brands portfolio
18
Feb '12
Perry Ellis International Inc provided an update on expected fourth quarter (“fourth quarter fiscal 2012”) and full fiscal year ended January 28, 2012 (“fiscal 2012”).

For fourth quarter fiscal 2012, the Company expects to report an 11% increase in total revenue to $229 million as compared to $207 million last year. Adjusted earnings per share (“EPS”) are expected in the range of $0.35 - $0.38.

The Company noted that revenues and gross margin in the fourth quarter were pressured due to retail partners requesting later deliveries of goods, as well as a significant increase in promotional markdowns and sales allowances for the holiday season. On a positive note, the Company saw strength in its golf lifestyle, women's dresses and swim businesses. In addition, the Company maintained expense discipline and saw a favorable impact from reversing long-term incentive compensation expense. The Company also anticipates a higher effective tax rate for the year due to an increased mix of domestic versus international income.

The Company noted that it expects to end fiscal 2012 with $24 million in cash. Total inventory at January 28th, 2012 is expected to be approximately $198 million, an 11% increase, compared to $178 million in the comparable prior year period and in line with the Company's expectation of $200 million.

“This holiday season, the entire retail industry was faced with a highly promotional environment meant to drive customer purchases, and we were not immune to this activity,” said Oscar Feldenkreis, president and chief operating officer of Perry Ellis International.

“While we experienced increased traffic in our direct to consumer business, we also increased promotions to be in line with the environment to remain competitive. As a result, the positive momentum in revenue came at the expense of profitability and we acknowledge the environment remains challenging. With that backdrop, we are streamlining our operations and eliminating less productive overhead. We have begun a strategic brand review that will maximize profitability in our core businesses: men's and ladies sportswear, golf and Hispanic lifestyle, and swim.”

The Company has launched a strategic review of its brand portfolio that will be completed during the first half of fiscal 2013 with a goal of rationalizing brands and businesses to position the Company for long-term growth. The Company anticipates it will begin to implement initiatives during the second half of fiscal 2013.

“We will focus more intently on those businesses that offer the best value and the greatest potential for profitable growth.” commented Oscar Feldenkreis.

In addition, the Company expects to increase efficiency by consolidating distribution facilities and foreign sourcing offices and streamlining operational support functions.

“Our goal is to further reduce expenses from non-core infrastructure areas and redeploy part of that capital to marketing and direct-to-consumer infrastructure, continued Mr. Feldenkreis. Our new collaboration of Perry Ellis menswear and Duckie Brown is a perfect example of the type of investments that we will make to elevate our businesses.”

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