Perry Ellis confirms revenue guidance for fiscal 2009

23 Aug '08

5 min read

Perry Ellis International Inc reported results for the second quarter ended July 31, 2008 ("second quarter of fiscal 2009"). Net loss in the second quarter was $5.4 million, or $0.36 per fully diluted share compared to net income of $267,000, or $0.02 per fully diluted share last year.

Results for the second quarter of fiscal 2009 contain certain significant items totaling $0.27 per share. These items include:
• $0.11 per share in net effect associated with management changes and repositioning in its European division;
• $0.04 per share in incremental net effect related to the acquisition of C&C California and Laundry by Shelli Segal which the company did not operated last year;
• $0.04 per share in incremental expenses related to the opening of three new Perry Ellis stores and one Original Penguin store during this year; and
• $0.08 per share in a non-cash impairment of marketable securities.

The Company also reported a shift in revenue from the second quarter to the third quarter, which negatively impacted results by $0.07 per share. This shift related to delayed shipments as a result of integration issues with a third-party logistics distributor on the West Coast.

In addition, the Company indicated that bankruptcies of certain retail customers in the quarter affected revenues by approximately $6.0 million and earnings per share by approximately $0.08. The Company has been proactive in its risk management with accounts receivable and has mitigated exposure on these customers.

"While revenue and gross profit were in line with our expectations, our results were affected by increased costs and reduced shipments related to the move to third-party distribution from our facility in Winnsboro; a repositioning of our European operations and incremental costs associated with newly acquired businesses.

Combined this led to results that were well below a year ago and overshadowed strong performances for many of our growth platforms, including Perry Ellis Collection, swim, golf lifestyle and Laundry and C&C of California. Importantly, we believe the investments we are making in our brands, businesses and infrastructure position us for increased profitability and growth potential in the near future," Oscar Feldenkreis, President and COO, commented.

Second Quarter Operations Review:
For the second quarter of fiscal 2009, total revenues were $193.7 million, a $1.6 million reduction compared to $195.3 million reported in the second quarter of the fiscal year ended July 31, 2007 ("second quarter of fiscal 2008"). This decline was primarily driven by underperformance of the outlet division, disruptions due to management changes in European operations and the impact of multiple retailers declaring bankruptcy this quarter.

In addition, shipping issues with a third party logistics provider in the West Coast affected deliveries for the Perry Ellis brand, further impacting revenues in excess of $3 million this quarter. The majority of these orders however, were shipped in August.

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