Offsetting store closures due to bankruptcies and rationalization at several of its core department store partners, Perry Ellis International Inc. reported sales rose 2.5 percent in the second quarter on healthier margins. The combination helped earnings handily top guidance.

Shares of Perry Ellis rose $2.50, or 14.4 percent, to $19.82 in late trading Thursday on the over-the-counter market.

Among its segments, the company’s core brands – Perry Ellis, Original Penguin, Golf Lifestyle Sportswear and Nike Swim – represented 77 percent of its total revenue in the quarter and collectively saw revenues climb 10 percent.

Golf Lifestyle Sportswear’s sales increased by mid teens in the second quarter with strong contributions from Callaway, PGA Tour, Jack Nicklaus and Ben Hogan.

On a conference call with analysts, Oscar Feldenkreis, president and CEO, said the gains were driven by heightened interest in golf apparel, both for work and casual purposes.

Callaway apparel’s sales globally jumped over 28 percent, fueled by new international growth and further expansion into authentic channels. Callaway’s sales in Europe were up 25 percent and spring bookings there were “very strong.” Said Feldenkreis, “We are very proud to be associated with the strongest and most dominant authentic golf brand in the world.”

PGA Tour sales grew high single digits and continued to gain market share in Q2, driven by trend-right selections. Performance fabrics and tops and bottoms were particularly strong. Added Feldenkreis, “We are very excited about the future growth and prospects in PGA Tour driven by new technology in bottoms and enhanced new fashion tops.”

Jack Nicklaus performed “equally strong” with the rollout into a prominent retailer exceeding expectations, driven by fashion and performance products. Stated Feldenkreis, “We expect that Jack Nicklaus brand to continue its favorable performance.”

Ben Hogan continued its strong performance at Walmart globally, with sales up double digits and further growth expected with the arrival of new styles. Added Feldenkreis, “We expect our momentum to continue positively within PEI Golf Business as we capitalize on further market share opportunities with wear now product and new initiatives.”

Nike Swim’s gross sales were up double digits.

“The swim season, which ended in June, was extremely strong across all genders and most geographies,” said the CEO. “We saw growth across all channels. In the sporting goods channel consumers responded well to Nike’s performance swim and swim accessory line and extended sizes, which both grew by double digits.”

Nike Swim’s recreational sports line also performed well at major department stores such as Nordstrom’s, Macy’s and Kohl’s. Nike Swim’s online business with brick-and-mortar retailers as well as with pure player retailers such as Zappos was another driver of Nike’s swim strong results.

Nike Swim was recently introduced to Europe as part of an expanded licensing agreement and is seeing “very strong sell-throughs in the few channels where we deliver this year and we expect this to be a great growth opportunity for the company in the future,” said George Feldenkreis, executive chairman, on the call. He added, “We feel that in the next couple of years our global Nike Swim business will exceed $100 million and have the potential to grow further as we penetrate deeper into Europe and Latin American markets.”

Feldenkreis also noted that while the U.S. market is still the largest part of Nike Swim’s revenues, the brand is making significant headway with the expansions in Europe and Latin America. He added, “We’re currently taking orders for the new swim season and are very excited about the early bookings. We expect store and market share expansions across all product, genders and swim accessories. We believe we are set up nicely to have another banner Nike Swim season year.”

Companywide, total revenues reached $207 million, exceeding guidance of $202 million to $205 million and rising 2.5 percent (3 percent in constant currency).

The disciplined management of inventory along with increased sales of higher margin core brands led to a 40 basis point expansion in GAAP gross margin to 37 percent in the second quarter from 36.6 percent in the second quarter of fiscal 2017.  Adjusted gross margin was also 37 percent compared with adjusted gross margin of 36.6 percent in the comparable period of the prior year.

Adjusted EBITDA totaled $8.5 million as compared to $7.1 million in the comparable period of the prior year.

On a reported basis, net income was $1 million, or 6 cents per share, compared to a net loss of $3.6 million, or 24 cents, in the prior year period. On an adjusted basis, income rose 8.7 percent to $2.5 million, or 16 cents per diluted share, from $2.3 million, or 15 cents, a year ago. Adjusted results exceeded guidance of 7 cents to 10 cents.

Looking ahead, Perry Ellis reiterated its guidance for fiscal year 2018 for revenues in a range of $870 million to $880 million and diluted earnings per share in a range of $2.07 to $2.17.

On the call, George Feldenkreis said the company’s overall top-line growth came despite a planned decline in its women’s business (Laundry by Shelli Segal, Rafaella) as well as declines at its owned retail due to the closing of 12 locations over the last 18 months.

He said the company overall is seeing strong demand across many international markets although the gains are being impacted by currency headwinds.

“It looks that this is coming to an end,” said Feldenkreis of the devaluation pressures. “The British pound, the Mexican pesos as well as the Canadian dollar have strengthened against the dollar. Europe’s retail is doing much better than a couple of years ago and now our brands are resonating strongly with consumers.”

Overall, he believes the company’s core brands, citing Original Penguin, Cubavera, Perry Ellis, Nike and Callaway, are resonating with millennials and “this has allowed us to stay strong as an open doors to many more channels and distribution.”

Specifically, in the North America, the executive chairman applauded the moves by many of its retail partners to rationalize their stores’ bases as well as push for faster turnaround on delivery to quicken turns and reduce the need for markdowns.

Said Feldenkreis, “Generally speaking, we believe that less retail space in America is a positive development, especially in light of the demographic implication of generation C and Y compared to generation X and the unstoppable growth of e-commerce. These seismic changes are creating condition which manufacturer and retailer have to learn to navigate if they want to stay in business.”

Photo courtesy Nike Swim