Perry Ellis International reported that Q1 net income profit jumped 46% to $8.2 million for the quarter. EPS was up 11.3% to 89 cents per diluted share. Total revenue surged 82.4% to $197 million from $108 million in the year-ago period. Gross margin inched up 10 basis points to 29.9% of sales. The acquisition of Salant Corp. contributed approximately $65 million to the increase in revenue, with the balance of the sales gain coming from the company's swim and core wholesale businesses. The $23 million organic sales increase was pegged at 21% versus the year-ago period.
The company said Nike swim was exceeding plan in all channels and said they were “pleased” with bookings and sell through of both the Jantzen and Nike brands. Swim division revenues increased 53% for the period, but management said profitability “fell short” of expectations to get it through the next two quarters when the division historically sees losses.
Management said they made a “big push” with Jantzen this year, spending $2.5 million to promote the brand, or roughly three to four times what they spent in Q1 last year.
PERY is making changes to its sourcing model to help on the margin side to boost profits in swim. When PERY bought the Jantzen business from VFC, 100% of the goods were cut in the U.S. and sewn in the Caribbean and it was losing $7 million a year. They said they were able to get Asian sourced goods to 30% of the total last year and posted a $1 million loss for the year. They expect to see 90% to 100% coming out of Asia next year.
Management said the shift will “substantially change” the expense structure of the company.
In other PERY news, the company has set the price of its previously announced public offering of 1.65 million shares of common stock at $24.00 per common share, raising approximately $21.2 million to repay the balance on its senior credit facility and fund working capital and general corporate purposes. The company granted the underwriters a 30-day option to purchase an additional 247,500 common shares to cover over-allotments. The closing of the offering is scheduled to occur on or about June 1, 2004.
