Perry Ellis finishes fiscal 2010 in outstanding liquidity position
Perry Ellis International, Inc reported results for the fourth quarter and the fiscal year ended January 31, 2010.
Fiscal 2010 Results
Fiscal 2010 revenues were in line with company guidance at $754.2 million versus $851.3 million reported in the prior year ended January 31, 2009 ("fiscal 2009"). The company reported net income of $13.2 million or $1.01 per fully diluted share, compared to a net loss of $12.9 million or $.89 per fully diluted share, for the comparable period last year.
"Fiscal 2010 was a turnaround year for Perry Ellis International," commented Oscar Feldenkreis, President and Chief Operating Officer. "We delivered earnings ahead of expectations during a very challenging economic downturn. We also took the initiative to seek out new business opportunities such as the Callaway & Pierre Cardin license agreements. We expect to see 2011 as a breakout year to capitalize on these opportunities as well as our core growth platforms."
Overall gross margins for fiscal 2010 improved 30 bps to 33.0% compared to 32.7% in fiscal 2009. The margin expansion was mainly driven by a mix of higher margin branded product, the exiting of several low profit private label programs, the exit of some underperforming businesses, the introduction of Callaway Golf direct sales and reduced sales and operational allowances resulting from strong product performance and improved operational efficiencies.
Cost reduction initiatives and strict expense controls throughout fiscal 2010 resulted in selling, general and administrative expense reductions of $36 million. Selling, general and administrative expenses at $200.4 million represented a 15% reduction compared to $236.8 million for fiscal 2009. As a result of these cost reductions, the company achieved fiscal 2010 earnings before interest, tax, impairments, depreciation and amortization ("adjusted EBITDA") of $48.7 million, a $3.2 million or 7% increase over fiscal 2009. A table showing the reconciliation of EBITDA to net income is attached.
Fourth Quarter Fiscal 2010 Results
Overall, fourth quarter results were ahead of internal plans and above analyst consensus in adjusted EBITDA and EPS. Total revenue for the quarter was $196.4 million, a 3% increase compared to $191.2 million reported in the fourth quarter of fiscal 2009. The increase is attributable to a turnaround of Perry Ellis Collection at department stores, initial shipments of Callaway and TOP-FLITE(R) spring product, as well as improved performance in direct to consumer businesses, primarily the Perry Ellis and Original Penguin retail stores. These increases were slightly offset by the planned exit of certain mass merchant programs and the exit of licenses in outerwear and green grass golf.
Reduced levels of markdown support coupled with strong performance of branded businesses at retail positively impacted gross margins, improving them to 35.5% during the quarter compared to 29.0% for the comparable quarter last year, representing a 650 bps improvement. Fourth quarter adjusted EBITDA was $20.1 million compared to $2.4 million, a $17.7 million dollar improvement, over the same period last year. A table showing the reconciliation of adjusted EBITDA to net income is attached. Net income was $8.5 million, or $.64 per fully diluted share, compared to a loss of $21.6 million or $1.58 per fully diluted share during the forth quarter of fiscal 2009.