Perry Ellis Q2 FY'13 sales up 1.1%

Highlights:

- Total revenue increased by 1.1% to $211.7 million compared to $209.4 in prior year
- GAAP loss per share of $0.19
- Adjusted loss per share of $0.15, in line with Company guidance
- Improvements in Rafaella and Perry Ellis collection businesses beginning to take hold
- Company maintains full fiscal 2014 adjusted EPS guidance in a range of $1.50 - $1.60. Company expects fiscal 2014 revenue to increase in a range of 2%-3% as compared to prior year

Second Quarter Results from Operations

Total revenue increased 1.1% to $211.7 million compared to $209.4 million in the quarter ended July 28, 2012 ("second quarter of fiscal 2013") and in line with Company guidance for a low single digit increase.

The Company experienced revenue increases in its Rafaella women's sportswear and Perry Ellis menswear collections driven by its product and assortment initiatives. In addition, revenues rose in Nike swim as well as in licensing. These increases were partially offset by a decrease in direct to consumer revenue and the anticipated reduction in men's classification private label bottoms revenue.

Oscar Feldenkreis, President and Chief Operating Officer, commented, "We are seeing solid progress in our Perry Ellis and Rafaella collection businesses, which is encouraging as we move into the second half of the year. We are pleased with the strength of our brands and their growing lifestyle appeal, which is best evidenced by our licensing revenue increase of 14% for the period. While performance in direct to consumer was disappointing, our inventory and assortments are well positioned moving into the fall and have seen a positive improvement for the month to date."

Gross margin decreased by 70 basis points to 32.4% compared to 33.1% last year primarily due to a mix shift away from higher margin direct to consumer and mid-tier channel revenues. This impact was partially offset by margin improvement in the Company's collection businesses driven by improved product performance at retail.

Selling, general and administrative ("SG&A") expenses totaled $66.5 million compared to $66.1 million in the second quarter of fiscal 2013. Second quarter fiscal 2014 included $836,000 of costs associated with the Company's New York City office consolidation efforts. In the second quarter of fiscal 2013, SG&A included $3.5 million in costs associated with the Company's strategic initiatives.

As reported under generally accepted accounting principles ("GAAP"), the net loss for the second quarter of fiscal 2014 was $2.8 million, or $0.19 per share. This compares to a net loss of $2.4 million, or $0.17 per share, in the second quarter of fiscal 2013.

Adjusting for the costs associated with strategic initiatives, the adjusted loss per share was $0.15 for the second quarter of fiscal 2014 and compared to an adjusted profit per share of $0.01 in the second quarter of fiscal 2013.

Adjusted EBITDA for the second quarter totaled $2.9 million or 1.4% of revenue.

Perry Ellis International