Perry Ellis Boosts Guidance on Strong Margins and Uptick in Men’s Apparel

Perry Ellis International's second quarter sales increased to $161.8 million, up 2% from $159.2 million in the prior year quarter, driven primarily by men’s direct-to-consumer apparel and accessories. The company’s men’s segment, up 23% in the quarter, currently contributes 85% of the company’s business. PERY also said it continues to focus on developing licensed accounts, specifically for golf.

In a recent conference call with analysts, George Feldenkreis, company chairman and CEO, offered his insight on the quarter, stating that the company, “continue[s] to see growth in all business segments and we are very optimistic about all the initiatives we launched in the last 18 months, which are now starting to ship to our retail partners. Among the new initiatives is the licensing of Callaway, which is having a very successful year…”

In the quarter, increases were driven by higher-margin branded business such as Perry Ellis and Callaway Golf, among others, feeding into a healthier direct-to-consumer business which flourished up 12% in Q2. Overall, retail sales rose 18.4%, while gross margins expanded to 36.0% of sales from 30.9% of sales in prior-year quarter.

Contributing to the bump in gross margin was Perry Ellis’ men's apparel and accessories performance, an exodus from mass-market private-label programs and prior golf licenses, improved sales in contemporary women's and Original Penguin businesses, as well as direct-to-consumer and e-commerce business. In line with that perspective, swimwear also saw increases, growing 13% for the quarter on the back of Jantzen and Nike brands who showed double-digit revenue growth in Q2.  For swimwear, PERY expects to move forward in the high-single-digits. “We feel that our biggest opportunity is expansion in swimwear,” maintained Feldenkreis.

As result of the uptick in performance, PERY is boosting guidance for the remainder of the year. The company expects gross margins to maintain around 35%, while earnings per share to range from $1.53 to $1.68 as compared to prior estimates in the range of $1.45 to $1.60.