Perry Ellis International reported its golf segment revenues increased 20 percent in the second quarter, with gains across most channels and brands. Margin expansion was also found in the golf business.
However, Perry Ellis also indicated that it expects transition expenses related to its new Callaway Golf deal will hurt 2012 earnings by 15 cents per share. The company also expects promotional activity in the fall season to dampen its full-year profit. As a result, Callaway cut its EPS target for 2012 by 20 cents a share to a range of $1.75 to $1.80.
In April, Perry Ellis assumed responsibility for Callaway apparel's distribution channels in the western hemisphere.
On a conference call with analysts, Oscar Feldenkreis, president and COO, said the company is expanding the Callaway license agreement into new channels of distribution and expects to begin shipping product to the additional channels in September. He said Callaway would particularly help Perry Ellis expand in the sporting goods channel.
“With all the distribution channels in the USA, Canada and Latin America, we will be able to considerably increase the footprints of the Callaway lifestyle brand,” said Feldenkreis. “It is an opportunity to grow the brand to new heights and make it the number one golf brand in apparel.”
The recently-acquired Ben Hogan brand will be relaunched in the fourth quarter. PGA Tour is performing better at JC Penney since being repositioned as a collections business versus classification.
Feldenkreis the overall golf segment has also been enhanced by the introduction of new technical and innovative products, such as its Weather Series, as well as efforts to make golf an active lifestyle collection for all seasons. Its other golf brands include Grand Slam and Champions Tour.
Feldenkreis said the company's swim business, including Nike, Jag and Jantzen, “”wrapped up a solid performance in what was a challenging swim season.” A positive reception was seen for new resort lines shown at the Swimwear Show in Miami in July.
“Nike remains the anchor of the business and continues its momentum across all channels of distribution and product categories,” said Feldenkreis. He also noted that Perry Ellis recently launched a Nike women's surf collection.
For the full year, golf segment revenues are expected to be up double-digits. Swim revenues this year are expected to increase in the high-single-digit range to a range of $85 million to $90 million
Overall, Perry Ellis lost $2.4 million, or 17 cents per share, in the second quarter compared with a profit of $1.8 million, or 11 cents, a year earlier. Quarterly revenue at the company, whose brands also include Perry Ellis, Axis, Cubavera and Laundry by Shelli Segal, fell 2.3 percent to $209.4 million.
