Perry Ellis International Inc. (Nasdaq:PERY) reported adjusted earnings rose slightly in the first quarter. Results were boosted by stronger margin in its men’s sportswear, golf lifestyle and Nike Swim businesses, and cost savings realized through the ongoing infrastructure review.
“Our main core brands, including Perry Ellis, Original Penguin, Nike Swim, and golf brands performed very well,” said Oscar Feldenkreis, president and CEO, on a conference call with analysts.
Perry Ellis’ core national golf brands grew approximately 3 percent, thanks to product innovation and new product initiatives. Its golf brands include Callaway, PGA Tour, Jack Nicklaus, Ben Hogan and Grand Slam.
Feldenkreis believes Perry Ellis’ golf segment is ahead of the marketplace in bringing stretch to golf polos while also bringing new fabrications, including enhanced-flex properties, to bottoms. He said, “The golf short and pants assortment has achieved significant gains in the first quarter relative to both last year and the competition.”
Print graphics, which Feldenkreis considers a strength across the company, “is now translating onto the golf course, and this has recently propelled sales above the golf department’s average sell-in. Finally, the evolution of golf apparel as a lifestyle for men wanting performance product that they could wear both on-course and off-course at the office.”
Nike Swim, the brand’s largest quarter of the year, grew mid-single digits in the first quarter following a 20 percent increase in the fourth quarter.
“A continued focus on women’s bodes very well for the Nike Swim as Nike continues to emphasize this consumer,” said Feldenkreis. “Business has been exceptional. We are seeing success across a host of retailers, including Macy’s, eBay, Kohl’s, to name a few.”
Performance has also been strong in boys across the sporting goods channel, including men’s sport, the brand’s most developed category.
“Consumers responded favorably to our fashion print offering and the expansions of Nike Swim’s UV protection Hydro tees,” said Feldenkreis. “Overall the brand is resonating strongly with both performance and recreational athletes across both genders and multiple channels of distribution.”
Companywide, revenues slid 1.9 percent to $261.3 million. Increased sales for the Perry Ellis brand, Original Penguin, as well as in its Golf Lifestyle apparel business were offset by 3 percent decline tied to planned business exits as well as 2 percent reductions in off-price revenues as planned. Currency headwinds negatively impacted revenues by approximately 70 basis points.
Adjusted earnings inched up 0.6 percent to $15.2 million, or $1.01 a share, exceeding Wall Street’s consensus estimate of 93 cents. Earnings were boosted by a lift in gross margins by over 180 basis points to 36.7 percent due to stronger product margins and reduced markdowns in its men’s collection, golf apparel and Nike businesses.
Adjusted earnings exclude the costs of exiting brands and consolidation operations as well as any losses on sales of assets. Net earnings reached $14.3 million, or 95 cents a share, up from $9.4 million, or 62 cents, a year ago.
The company raised its earnings outlook for the full year, projecting adjusted profit coming in between $1.95 to $2 a share, compared with a prior range of $1.90 to $1.95 a share.
