Perry Ellis Logs Q3 Loss

In the third quarter of fiscal 2014, total revenues were $222.1 million compared to $236.2 million in the quarter ended October 27, 2012 (“third quarter of fiscal 2013”) and in-line with the Company's updated guidance. The Company noted that continued growth within golf lifestyle apparel, the Nike Swim and the licensing business was offset by reductions in private and proprietary branded businesses in the mid-tier channel as well as negative comparable store sales in its own direct retail channel.

Oscar Feldenkreis, president and chief operating officer, commented, “Our third quarter was disappointing as difficult performance in our direct to consumer and mid-tier channel businesses offset improvement in our focus areas of golf and collection sportswear. To this end, we continued with a positive momentum across all channels within our golf lifestyle apparel category, and our Rafaella collection sportswear business experienced a measured improvement in trend for the fall selling season. We did experience lighter traffic patterns and reduced consumer enthusiasm for spending during the quarter — most noticeably in the latter half of the fiscal quarter, which resulted in negative comparable store sales as compared to the three consecutive years of cumulative double digit comparable stores sales growth. We are focusing on a localization strategy for each of our stores in order to return to strong, positive comparable store selling performance as well as enhancing operational management where appropriate.”

Gross margin for the third quarter of fiscal 2014 was 32.1 percent, same as the comparable period last year. The lighter than plan direct to consumer mix impacted gross margin negatively. In addition, lower closeout margins in fashion swim also impacted gross margins. On the positive side, Rafaella collection business posted gross margin improvement over the prior year.

Selling, general and administrative (“SG&A”) expenses for the third quarter of fiscal 2014 increased $4.0 million to $68.4 million compared to $64.4 million in the third quarter of fiscal 2013. The increase reflects a larger investment in marketing and ecommerce along with the recently consolidated New York offices. The increase also reflects approximately $1.1 million of strategic costs associated principally with streamlining efforts within various business components, which we anticipate will lead to improved productivity in the future.

As reported under generally accepted accounting principles (“GAAP”), net loss for the third quarter of fiscal 2014 was $3.0 million, or a loss per fully diluted share of $0.20, compared to net income of $3.2 million, or $0.21 per fully diluted share in the third quarter of fiscal 2013.

After considering the costs associated with strategic initiatives, the sale of long-lived assets and tax impact, loss per fully diluted share, as adjusted, for the third quarter of fiscal 2014 was $0.15 compared to earnings per fully diluted share, as adjusted, of $0.25 in the third quarter of fiscal 2013. (See attached reconciliation “Table 1”)

Adjusted EBITDA for the third quarter of fiscal 2014 totaled $4.0 million, or 1.8 percent of revenue.

Nine Months Operations Review

For the nine months ended November 2, 2013 total revenues were $696.1 million compared to $711.2 million for the nine months ended October 27, 2012. The revenue reduction during the first nine months of the fiscal year, as compared to last year, was primarily attributable to reduction in private branded business.

Adjusted EBITDA for the first nine months of fiscal 2014 totaled $26.9 million, or 3.9 percent of revenue. (See attached reconciliation “Table 2”)

Net income for the first nine months of fiscal 2014 was $5.5 million, or $0.36 per fully diluted share, compared to $10.4 million, or $0.68 per fully diluted share, in the first nine months of fiscal 2013. (See attached reconciliation “Table 1”)

After considering certain costs as outlined in Table 1, earnings per fully diluted share, as adjusted, for the first nine months of fiscal 2014 was $0.32 as compared to $0.95 earnings per fully diluted share, as adjusted, in the first nine months of fiscal 2013.

Balance Sheet Update

George Feldenkreis, chairman and chief executive officer of Perry Ellis International commented, “Despite our disappointing performance, we have an extremely solid balance sheet. We are committed to taking the necessary actions to drive our revenues and margins to enhance profitability. We believe that we have the balance sheet strength to fund growth in our core businesses, as well as to provide capital for our longer term strategic goals.”

Fiscal 2014 Guidance

The Company continues to see updated full year fiscal 2014 revenues in a range of $960 to $970 million and fully diluted earnings per share, as adjusted, in a range of $0.95 to $1.01. GAAP fully diluted earnings per share are forecasted in a range of $0.97 to $1.03.

The Company, through its wholly owned subsidiaries, owns a portfolio of nationally and internationally recognized brands, including: Perry Ellis(R), Jantzen(R), Laundry by Shelli Segal(R), C&C California(R), Rafaella(R), Cubavera(R), Ben Hogan(R), Centro(R), Solero(R), Munsingwear(R), Savane(R), Original Penguin(R) by Munsingwear(R), Grand Slam(R), Natural Issue(R), Pro Player(R), the Havanera Co.(R), Axis(R), Gotcha(R), Girl Star(R), MCD(R), John Henry(R), Mondo di Marco(R), Redsand(R), Manhattan(R), Axist(R), Farah(R), Anchor Blue(R) and Miller's Outpost(R). The Company enhances its roster of brands by licensing trademarks from third parties, including: Nike(R) and Jag(R) for swimwear, and Callaway(R), PGA TOUR(R), Champions Tour(R) and Jack Nicklaus(R) for golf apparel.