Perry Ellis International Inc., which owns a number of golf brands and Nike Swim, raised its full-year earnings EPS guidance after reporting stronger than expected second quarter results. The company trimmed its net loss in the quarter to $1.3 million, or 9 cents a share, from $1.6 million, or 11 cents, a year ago. Revenues rose 5 percent.

“Our second quarter was another strong illustration of the ability of our global, diverse and powerful brands to deliver profitable growth,” said Oscar Feldenkreis, President and Chief Operating Officer of Perry Ellis International. “We are pleased with the company's solid performance this quarter across all key metrics including sales, gross margin and EBITDA. Our performance included powerful organic growth across the full range of our wholesale businesses, led by Perry Ellis, Original Penguin and Rafaella.”

Fiscal 2016 Second Quarter Results

Total revenue for the second quarter of fiscal 2016 was $213.3 million, a 5 percent increase compared to $203.5 million reported in the second quarter of fiscal 2015. The company realized increases in its core global brands, Perry Ellis, Original Penguin and Rafaella, across international, licensing and direct-to-consumer (DTC) businesses.

Gross margin was 35.7 percent on an adjusted basis, up 110 basis points compared with the same quarter last year. The expansion reflects the continuing benefit from the shift of revenue mix toward higher margin businesses as well as stronger sell-through at retail in the Perry Ellis and Rafaella collection businesses. GAAP gross margin for the period was 35.6 percent as compared to 34.6 percent for the year ago period.

Selling, general and administrative expenses totaled $68.3 million as compared to $66.9 million in the comparable period of the prior year. Excluding costs associated with streamlining and consolidation of operations, expenses totaled $67.1 million, or 31.5 percent of revenues, as compared to $65.2 million, or 32.0 percent, in the prior year.

As reported under GAAP, the fiscal 2016 second quarter loss was $1.3 million, or $0.09 per diluted share, as compared to a loss of $1.6 million, or $0.11 per diluted share, in the second quarter of fiscal 2015. On an adjusted basis, fiscal 2016 second quarter earnings per diluted share were $0.31 as compared to an adjusted loss per diluted share of $0.08 in the second quarter of fiscal 2015. These results benefited from improved operating results as well as a lower effective tax rate for fiscal 2016.

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) for the second quarter of fiscal 2016 totaled $8.9 million as compared to $5.2 million in the comparable period of the prior year. Adjusted EBITDA margin expanded to 4.2 percent from 2.6 percent in the prior year.

Balance Sheet

At the close of the quarter, the company's balance sheet was solid. Inventories decreased 12 percent to $154.0 million from $174.5 million at the end of the comparable period in the prior year with continued emphasis on increasing turn. As previously reported, the company expanded its credit facility from $125 million to $200 million and utilized this to redeem $100 million of its senior subordinated notes on May 6, 2015. As a result, the company decreased its interest expense to $1.9 million from $3.6 million in the prior year period.

Fiscal 2016 Guidance

The company continues to expect total fiscal 2016 revenues to be in a range of $925 to $935 million, but now expects adjusted earnings per diluted share for fiscal 2016 in a range of $1.78 to $1.85 as compared to the previous guidance range of $1.68 to $1.75.

Perry Ellis International's collection of dress and casual shirts, golf sportswear, sweaters, dress pants, casual pants and shorts, jeans wear, active wear, dresses and men's and women's swimwear is available through all major levels of retail distribution. The company, through its wholly owned subsidiaries, owns a portfolio of nationally and internationally recognized brands, including: Perry Ellis, Original Penguin by Munsingwear, Laundry by Shelli Segal, Rafaella, Cubavera, Ben Hogan, Savane, Grand Slam, John Henry, Manhattan, Axist, Jantzen 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.