Perry Ellis International's swim division revenues increased sales by 7% with gross margins ahead 237 basis points in Q3. The improvement was driven by Jantzen, Jag, and Nike's performance in swimwear, as well as the growth in accessories and cover-ups.
On a conference call with analysts, management said the division benefited from the bankruptcy last year of Montreal's Maillot Baltex Inc. as well as Warnaco's moves to discard some swimwear brands. Said George Feldenkreis, PERY chairman and CEO, said the changes gave Perry Ellis the opportunity to take over some of the market share as “retailers want to partner up with financially strong companies.”
Golf division sales grew over 20% in Q3, primarily driven by door penetration, Grand Slam grew from 932 to 1,004 doors at Kohl's and nearly doubled in revenues. PGA Tour increased by almost 600 stores at JC Penney to reach 927 this fall. The division also includes Ping.
Oscar Feldenkreis, company vice chair, president and COO, projected “another strong year” for swim based on current orders and strong initial sell-through of its Spring '09 line that has already been delivered to department stores and better swim specialty stores in warm weather areas.
A contemporary swimwear line is also being launched next year. Further expansion of Grand Slam at Kohl's is expected to boost the golf business. While no mention was made of the performance of action sports brands for Q3, the COO was “very optimistic” that strong initial results of the Gotcha brand as an exclusive at Kohl's and the launch of Redsand at surf and regional department stores would lead to gains in 2009.
Overall, Perry Ellis' sales slid 2.1% to $222.8 million as strong results for the Perry Ellis brand, denim, golf and Hispanic categories were offset by increased markdowns and sales allowances as well as the loss of revenues due to retail bankruptcies or liquidations. Net income fell 41.2% to $5 million, or 33 cents a share.
