Perry Ellis International Q3 FY'14 sales fall 5.96%

Highlights:

- Total revenue of $222.1 million in line with Company updated guidance
- GAAP loss per fully diluted share of $0.20
- Adjusted loss per fully diluted share of $0.15
- Company maintains updated full fiscal 2014 adjusted diluted EPS guidance in a range of $0.95 to $1.01
- Company sees full fiscal 2014 GAAP diluted EPS guidance in a range of $0.97 to $1.03

Third Quarter Results from Operations

In the third quarter of fiscal 2014, total revenues were $222.1 million compared to $236.2 million in the quarter ended October 27, 2012 ("third quarter of fiscal 2013") and in-line with the Company's updated guidance. The Company noted that continued growth within golf lifestyle apparel, the Nike Swim and the licensing business was offset by reductions in private and proprietary branded businesses in the mid-tier channel as well as negative comparable store sales in its own direct retail channel.

Gross margin for the third quarter of fiscal 2014 was 32.1%, same as the comparable period last year. The lighter than plan direct to consumer mix impacted gross margin negatively. In addition, lower closeout margins in fashion swim also impacted gross margins. On the positive side, Rafaella collection business posted gross margin improvement over the prior year.

Selling, general and administrative ("SG&A") expenses for the third quarter of fiscal 2014 increased $4.0 million to $68.4 million compared to $64.4 million in the third quarter of fiscal 2013. The increase reflects a larger investment in marketing and ecommerce along with the recently consolidated New York offices. The increase also reflects approximately $1.1 million of strategic costs associated principally with streamlining efforts within various business components, which we anticipate will lead to improved productivity in the future.

As reported under generally accepted accounting principles ("GAAP"), net loss for the third quarter of fiscal 2014 was $3.0 million, or a loss per fully diluted share of $0.20, compared to net income of $3.2 million, or $0.21 per fully diluted share in the third quarter of fiscal 2013.

After considering the costs associated with strategic initiatives, the sale of long-lived assets and tax impact, loss per fully diluted share, as adjusted, for the third quarter of fiscal 2014 was $0.15 compared to earnings per fully diluted share, as adjusted, of $0.25 in the third quarter of fiscal 2013.

Perry Ellis International