Perry Ellis’ Q1 Earnings Jump on 31 Percent Revenue Gain

“We are extremely pleased with our results for the first quarter. Our ability to successfully capitalize on the positive momentum for our brands and business from prior year coupled with the addition of the new Rafaella women’s sportswear business drove record revenue and net income for Perry Ellis International,” commented Oscar Feldenkreis, President and COO. “Throughout fiscal 2012 we will continue to invest in and focus on our niche businesses such as golf and Hispanic as well as in Perry Ellis Collection, women�€�s sportswear, direct -to-consumer, and international where we believe we can further maximize our operating model and drive significant growth and earnings for our shareholders.”

For the first quarter of fiscal 2012 Rafaella contributed $38.9 million in total revenue. Organic revenue grew 13 percent, to $249 million, which excludes the recently acquired Rafaella business. Increases were driven by strong performance within the golf and Hispanic lifestyle brands, as well as in Perry Ellis Collection. Furthermore, incremental growth of $11 million in program business which was opportunistically driven by forward inventory positions added to the quarter.

Overall gross profit for the quarter increased 23 percent to $97.0 million compared to $78.7 million in the comparable prior year period. Gross margin was 33.6 percent of total revenues compared to 35.7 percent in the comparable prior year period. The Rafaella business, acquired at the end of January, which has lower gross margins than the company’s core businesses, impacted first quarter gross margin by 110 basis points. Furthermore, as previously noted, incremental program business and the effect of converting licenses for small leather goods and dress shirts into wholesale businesses impacted first quarter gross margin by approximately 100 basis points.

“Our first quarter results demonstrate the successful expansion of our growth strategies and the addition of Rafaella, which we believe provide us with a sustained platform for expansion in the current year and beyond,” stated George Feldenkreis, chairman and CEO. “During the quarter this led to a 31% increase in revenue and a 45 percent increase in EBITDA with our EBITDA margin rising 120 basis points to 11.7 percent. We continue to successfully navigate a challenging product cost environment and expect to continue our strong sales and earnings performance given the strength of our products and business model which is providing us with market share expansion in existing retail doors as well as creating new opportunities for growth.”

As reported under generally accepted accounting principles the company reported a 37 percent increase in net income attributed to Perry Ellis International, Inc. of $15.3 million, or 99 cents per fully diluted share compared to net income attributed to Perry Ellis International, Inc. of $11.2 million, or 81 cents per fully diluted share in the comparable prior year period.

Net income attributed to Perry Ellis International, Inc. per diluted share as adjusted for the first quarter of fiscal 2012 was $1.08. Net Income, as adjusted, excludes the impact of the cost on early extinguishment of the senior subordinated 2013 notes and duplicated interest from March 8, 2011 to April 6, 2011 associated with the interest during the time that the retired debt and the new senior subordinated 2019 notes were simultaneously outstanding.

Earnings before interest, taxes, depreciation, amortization, cost on early extinguishment of debt, and non-controlling interest (�€�EBITDA�€�) for the first quarter increased 45% to $33.6 million, or 11.7% of total revenues compared to $23.1 million, or 10.5 percent of total revenue for the comparable prior year period. For the first quarter of fiscal 2012, Rafaella delivered $5.8 million in EBITDA, significantly contributing to the 120 basis point improvement in EBITDA margin for the quarter.

Balance Sheet Update

The company ended the first quarter of fiscal 2012 with $21.7 million in cash and cash equivalents. In addition, accounts receivable increased 41% to $182.5 million compared to $129.5 million as of January 29, 2011. The quality of the receivables from a customer base is very strong and the company is pleased with the financial strength of its current partners.

Inventories were $181.7 million at quarter end representing a 2% increase compared to $178.2 million as of January 29, 2011. The company also noted that the opportunistic inventory purchases it made throughout fiscal 2011 to support ongoing replenishment and program businesses represented incremental sales growth within the first quarter of fiscal 2012.

Fiscal 2012 Guidance

The company reaffirmed its revenue guidance of reaching $1.0 billion for full fiscal year 2012. In addition, core organic growth is expected to add 8% to 10% from prior fiscal year total revenues, and the newly acquired Rafaella women�€�s sportswear business is expected to add approximately $125.0 million in revenue for full fiscal year 2012.

Furthermore, total EBITDA for the year is expected to be in a range of $88 – $90 million with Rafaella contributing $15-$16 million, thereby approaching a 9.0% EBITDA margin for fiscal 2012.

Based on first quarter of fiscal 2012 performance and current business trends the company now expects earnings per share, diluted, for full year fiscal 2012 in a range of $2.40 – $2.50 compared to previous guidance of $2.30 – $2.40.