Perry Ellis International Inc. increased total revenues and gross margin expansion in the third quarter, which led to a more than doubling of pre-tax income versus the prior year third quarter.

Key Fiscal Third Quarter 2018 Financial Accomplishments and Operational Highlights:

  • Total revenues were $199 million, at the high end of guidance of $195 to $200 million, an increase of 2.5 percent on a GAAP basis (2.1 percent in constant currency) from $194 million reported in the same quarter last year
  • GAAP gross margin expanded 60 basis points to 37.3 percent as compared to 36.7 percent in the prior year period reflecting increases in margin across core brands and direct-to-consumer
  • Adjusted pre-tax income of $4.4 million, rose 165 percent from adjusted pre-tax income of $1.6 million in the third quarter of fiscal 2017
  • GAAP pre-tax income was $3.7 million compared to a pre-tax loss of $7.0 million in the comparable period of the prior year
    Adjusted diluted EPS was $0.25 compared to adjusted diluted EPS of $0.23 in the third quarter of fiscal 2017. Results came at the higher end of guidance calling for earnings in the range of 23 to 26 cents.
  • GAAP diluted EPS was $0.21 compared to a diluted EPS loss of $0.34 in the comparable period of the prior year
    company reiterates revenues guidance for this fiscal year in a range of $870 million to $880 million and diluted earnings per share in a range of $2.07 to $2.17.

Oscar Feldenkreis, chief executive officer and president, commented, “Our powerful portfolio of global brands combined with the disciplined execution of our growth strategies by our team led to another strong quarter at Perry Ellis International, continuing our positive momentum from the first half of the year. The third quarter was highlighted by strength across key financial metrics with increased revenues, expansion in gross margin and expense leverage, which drove a 165 percent increase in adjusted pre-tax income versus the prior year. On the topline, we saw strength across our core brands including Perry Ellis, Original Penguin, Nike swim, Golf, as well as Rafaella. The robust performance of our brands at our retail partners along with the increasing percentage of international and direct-to-consumer revenues drove a 50 basis point increase in adjusted gross profit for the quarter. We attribute our consistent strength to our ability to appeal to today’s consumer.”

Fiscal 2018 Third Quarter Results

Total revenue was $199 million, a 2.5 percent increase (2.1 percent increase in constant currency) compared to $194 million reported in the third quarter of fiscal 2017. This reflected growth in our core brand sales and strong sales throughout the fall season. The disciplined management of inventory along with increased sales of higher margin core brands led to a 60 basis point expansion in GAAP gross margin to 37.3 percent in the third quarter from 36.7 percent in the third quarter of fiscal 2017. Adjusted gross margin was also 37.3 percent compared with adjusted gross margin of 36.8 percent in the comparable period of the prior year.

Adjusted EBITDA totaled $9.6 million as compared to $6.9 million in the comparable period of the prior year.

Adjusted pre-tax income was $4.4 million. GAAP pre-tax income was $3.7 million compared to a pre-tax loss of $7.0 million in the comparable period of prior year.

As reported under GAAP, the third quarter of fiscal 2018 net income was $3.2 million, or $0.21 per diluted share, compared to a GAAP net loss of $5.2 million, or $0.34 per diluted share, in the prior year period. On an adjusted basis, the fiscal 2018 third quarter net income was $3.9 million, or $0.25 per diluted share, as compared to adjusted net income of $3.5 million, or $0.23 per diluted share in the third quarter of fiscal 2017.

Balance Sheet and Cash Flows

The company’s financial position continues to be strong. Cash and investments at the end of the third quarter of fiscal 2018 totaled $52 million and the company’s net debt to total capitalization stood at 10.5 percent at the end of the third quarter of fiscal 2018 as compared to 17.9 percent at the end of the third quarter of fiscal 2017. Working capital management continues to be a critical focus across the organization as inventory turned at approximately 4 times as of the end of the third quarter of fiscal 2018. Cash flow from operations approximated $33 million for the first nine months of fiscal 2018.

Perry Ellis International’s brands include: Perry Ellis, An Original Penguin by Munsingwear, Laundry by Shelli Segal, Rafaella, Cubavera, Ben Hogan, Savane, Grand Slam, John Henry, Manhattan, Axist, Jantzen and Farah. The company enhances its roster of brands by licensing trademarks from third parties, including: Nike and Jag for swimwear, and Callaway, PGA TOUR, and Jack Nicklaus for golf apparel and most recently Guy Harvey for performance fishing and resort wear.