Perry Ellis Posts Steep Q4 Loss

Perry Ellis International, Inc. reported a loss of $42.9 million, or
$2.90 a share, in the fourth quarter, impacted by a tax valuation
allowance against the company's U.S. deferred tax assets. As warned, the
results were impacted by the West Coast ports congestion that also
contributed to a valuation reserve.

Key Fiscal 2015 Financial and Operational Highlights:

• Adjusted diluted EPS increased 47 percent to $0.56;
• GAAP
  net loss of $2.50 per share includes costs associated with strategic
  initiatives and a $42.7 million or $2.88 per diluted share non-cash
  income tax valuation allowance against the company's U.S. deferred tax
  assets. The allowance does not restrict the company's ability to utilize
  the deferred tax assets in future years;
• Revenues total $890
  million as compared to $912 million in the prior year period reflecting
  this strategic portfolio rationalization;
• International revenues increased 15 percent representing 12 percent of total revenues up from 10 percent in fiscal 2014;
• Direct-to-Consumer revenues increased 13 percent representing 10 percent of total revenues, up from 9 percent in fiscal 2014;
• Licensing revenues increased 7 percent with 27 new licenses signed in fiscal 2015;
• Gross margin expanded 80 basis points to 34 percent;
• Cost savings generated were $12 million;
• company
  expanded its credit facility from $125 to $200 million with plans to
  redeem $100 million of its 7 7/8 percent senior subordinated notes.
  Annual interest savings will approximate $6 million or $0.25 per share.

Oscar
Feldenkreis, President and Chief Operating Officer, commented, “During
the quarter and throughout the year, we took actions to support and
advance our core global brands, grow margins and generate cost
efficiencies. In fiscal 2015, we experienced stronger demand for our
products, resulting in improved performance at retail. Our international
business also performed well underscoring the global appeal of our
brands and supporting our margin expansion. As previously discussed, the
unexpected labor disputes at the West Coast ports significantly
disrupted our supply chain and our ability to deliver products to
customers in the fourth quarter. Moving into 2016, we are confident in
our forward path. Many of the external challenges of the prior year are
behind us and we are focused on meaningfully improving results and
operations by establishing momentum through the continued execution of
our growth and profitability plan.”

Fiscal 2015 Fourth Quarter Results

Total
revenue for the fourth quarter of fiscal 2015 was $218 million, a 1
percent increase compared to $216 million reported in the fourth quarter
of fiscal 2014. As previously disclosed, revenues were adversely
impacted by disruption at the West Coast ports. While the labor dispute
has been resolved, the company continues to anticipate an impact on
shipments throughout the first quarter due to the backlog of containers
at the port.

During the fourth quarter of fiscal 2015, overall
gross margins held at 34.3 percent. Margin expansion was generated in
our direct-to-consumer business, as well as in the Rafaella and Perry
Ellis collections businesses.

On an adjusted basis, the fiscal
2015 fourth quarter earnings per diluted share were $0.07 as compared to
adjusted earnings per diluted share of $0.06 in the fourth quarter of
fiscal 2014.

As reported under GAAP, the fiscal 2015 fourth
quarter loss was $42.9 million or $2.90 per share compared to a loss of
$28.2 million or $1.91 per share in the fourth quarter of fiscal 2014.
The company's fourth quarter 2015 results included a $42.7 million or
$2.89 per diluted share non-cash reserve associated with its deferred
tax assets. The financial results were impacted by the West Coast ports
congestion and contributed to a valuation reserve being required for the
company's domestic deferred tax assets. The position does not impact
the company's ability to use its deferred tax assets in the future. In
addition the company experienced $1.0 million or $0.05 per share in
negative foreign currency exchange, similar to many enterprises
operating a global business.

Fiscal 2015 Results

Fiscal 2015 revenues were $890 million as compared to $912 million reported in the prior year (“fiscal 2014”).

Adjusted
earnings per diluted share for fiscal 2015 were $0.56 compared to
adjusted earnings per diluted share of $.38 in fiscal 2014.

On a
GAAP basis, net loss for fiscal 2015 was $37.2 million, or $2.50 per
diluted share compared to GAAP net loss of $22.8 million, or $1.52 per
diluted share for fiscal 2014. Net loss for fiscal 2015 included $2.88
per diluted share in non-cash income tax valuation reserve as described
previously.

The gross margin for fiscal 2015 was 34.0 percent
compared to the gross margin of 33.2 percent in fiscal 2014. Gross
margin was positively impacted by a reduction in promotional activity in
the sportswear collection businesses, a more favorable revenue mix
between branded and private label revenues, as well as a stronger
contribution from the company's higher margin international and
licensing units. These margin improvements were partially offset by
liquidation of exited programs in golf and sportswear.

Selling,
general and administrative expenses totaled $268.8 million for fiscal
2015 as compared to $272.7 million in fiscal 2014. The decrease reflects
cost reductions associated with the company's infrastructure review
which were partially offset by investments in the company international
growth strategy as well as $1.8mm of unfavorable foreign exchange.

Earnings
before interest, taxes, depreciation, amortization and impairments, as
adjusted (“adjusted EBITDA”) for fiscal 2015 totaled $39.8 million, or
4.5 percent of total revenue. This compares to adjusted EBITDA of $34.8
million for fiscal 2014.

Balance Sheet

The
company's financial position continues to be very strong. Year-end cash
and investments totaled $63.5 million with no borrowings under the
credit facility. This compares to $42.4 million in the prior year and
$8.2 million drawn under the credit facility. The company has increased
its credit facility to $200 million and plans to redeem $100 million of
its senior subordinated notes. The annualized interest savings will
approximate $6 million or $.25 per diluted share.

Update on Strategic Priorities for Fiscal 2015 to Enhance Profitability

As
previously announced, the company continues to focus on specific
strategic priorities that it believes will deliver sustainable growth in
revenues and profits.

George Feldenkreis, Chairman and Chief
Executive Officer, Perry Ellis International, commented, “We have made
significant progress improving our core business and I am pleased with
our team's efforts to execute our growth and profitability plans. I am
confident that the actions we are taking combined with the global
strength of our operating brands, Perry Ellis, Original Penguin,
Rafaella and Golf lifestyle business, solidly position the company for
improved operational and financial performance.”

The company's focused strategy includes:

• Ongoing
  strategic review of the company's portfolio of brands as it exits
  underperforming, low growth brands and businesses. Since Fiscal 2014,
  the company exited 30 brands which generated approximately $80 million
  in revenues. Most recently the company announced the divestiture of its
  C&C California brand.
• Driving international and licensing
  growth through direct investment in North America and Europe as well as
  strategic partnerships with licensees and other partners. During fiscal
  2015, the company signed 27 new licenses that extended eight of the
  company's brands across geographies and product categories. The company
  realized 15 percent revenue growth internationally, while also enhancing
  the licensing division's earnings power.
• Expanding the
  Direct-to-Consumer channel. During fiscal 2015, the company focused on
  enhancing profitability in its Direct-to-Consumer platform in order to
  accelerate future growth. The company streamlined its internal team and
  reporting processes to simplify the business and improve operating
  performance. This initiative will continue to be a focal point for the
  company in fiscal 2016.
• Continuing to optimize its competitive
  positioning in the menswear arena through the wholesale, retail and
  licensing of its core brands. In fiscal 2015, the global reach of the
  Perry Ellis and Original Penguin brands expanded both through direct and
  licensed activities, which the company expects to continue in fiscal
  2016.
• Driving efficiencies and generating cost savings through
  process enhancements, inventory management and sourcing improvements.
  During fiscal 2015, the company executed $12 million in cost reductions
  that reduced both the cost of goods and SG&A during the year. A
  portion of these savings was reinvested into the company's international
  platform to drive further growth. The company will continue executing
  this review, as well as its supply chain focus in fiscal 2016.

Fiscal 2016 Guidance

The
company reiterated its guidance for fiscal 2016. It expects total
revenues to be in the range of $925 to $935 million. Gross margins for
fiscal 2016 are expected to expand 50 to 60 basis points to a range of
34.5 percent to 34.6 percent. The company expects adjusted EBITDA in the
range of $55 to $58 million and EBITDA margin of 6.0 percent to 6.25
percent. These projections translate to a range of $1.25 to $1.35 in
diluted earnings per share and do not include the impact of the
company's redemption of $100 million in senior subordinated notes.

Perry
Ellis International, Inc., through its wholly owned subsidiaries, owns a
portfolio of nationally and internationally recognized brands,
including: Perry Ellis, Jantzen, Laundry by Shelli Segal, Rafaella,
Cubavera, Ben Hogan, Savane, Original Penguin by Munsingwear, Grand
Slam, John Henry, Manhattan, Axist, 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.