Combined growth in golf lifestyle brands - Perry Ellis

20 Aug '09

5 min read

Perry Ellis International, Inc. reported results for the second quarter ended August 1, 2009 (“second quarter of fiscal 2010”).
Second Quarter Results from Operations
Oscar Feldenkreis, President and COO commented, “We are proud of delivering a second quarter slightly ahead of last year's net earnings, particularly under very challenging times. Perry Ellis International's management has acted decisively to reduce costs and respond to the challenges created by the current macroeconomic environment. We are pleased with the progress we have made and we remain laser focused on improving the performance of our divisions.”

Net loss for the second quarter of fiscal 2010 at $5.3 million represents a slight improvement to a loss of $5.4 million during the quarter ended July 31, 2008 (“second quarter of fiscal 2009”). Despite this improvement, and driven by a reduced number of shares outstanding, the Company reported a loss of $0.42 per fully diluted share compared to a loss of $0.36 for the same period last year. This compares positively to Thomson's First Call consensus of a loss of $0.57 for the Company during the second quarter of fiscal 2010.

Driven by strict cost controls as well as the cost cutting initiatives announced during the fourth quarter of last year, the Company's second quarter operating expenditures decreased by $12.9 million to $51.1 million, compared to $64.0 million for the second quarter of fiscal 2009. These reductions led to an EBITDA for the quarter of $1.5 million. A table showing the reconciliation of EBITDA and EBITDA-as-adjusted to net income is attached.

During the second quarter of fiscal 2010, gross margins at 30.9% decreased by 120 bps impacted by the planned exit and inventory liquidation of the licensed PING golf and Dockers outerwear businesses, compared to 32.1% for the second quarter of fiscal 2009. Margins were also challenging in swimwear products and bottoms private label programs.

“Close collaboration with our retail partners, better mark-down management through our sophisticated planning systems and acute strategic door management provided for a reduction in markdowns and sales allowances from 9% of gross sales in Q2 last year to approximately 7% this year,” Mr. Feldenkreis continued.

For the second quarter of fiscal 2010, total revenues decreased by 17.8%, or $34.5 million, to $159.2 million compared to $193.7 million reported in the second quarter of fiscal 2009. Compared to second quarter last year, the Company increased revenues in several of its core businesses including:
(i) Continued strong performance at mid-tier retailers across the modern, golf and Hispanic lifestyles;
(ii) Combined growth in golf lifestyle brands - Champions Tour, Pro Player and Links Edition brands; and
(iii) Successful introduction of the Merona swim program and Hispanic lifestyle brand Café Luna.

“We have seen acceleration in order demand for these categories for the fall season and the second half of the year.

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