Perry Ellis International reported revenues slid 1.2 percent in the first quarter, to $262.3 million from $265.5 million. Revenues were in line with guidance and included increases across several of the company’s core businesses, including golf lifestyle apparel, men’s accessories and Nike performance swim. These increases were offset by anticipated reductions in men’s classification private label pants, as well as softness in its direct-to-consumer channel.

Oscar Feldenkreis, President & Chief Operating Officer of Perry Ellis International, commented, “We had a solid start to the year and are pleased with our first quarter results. Our results were delivered even as we faced challenges created by unseasonal weather and economic budgetary measures that impacted consumer spending. During the quarter, we made strong progress on our Perry Ellis and Rafaella collections and managed our inventory tightly to maximize profitability. We expanded gross margin as a total company and in our retail stores reflecting the strong acceptance of our products despite reduced store traffic that impacted overall transactions and total sales. We were also pleased with the strength of our business in Mexico and Canada, which benefited from a favorable response to our golf apparel and Perry Ellis collection businesses.”

Gross margin expanded to 33.8 percent as compared to 33.0 percent in the first quarter last year. The expansion was driven by improved performance in the company’s collection sportswear businesses, as well as higher gross margins in the golf apparel and direct-to-consumer which favorably impacted the mix for the quarter.

Selling, general, and administrative (“SG&A”) expenses were $70.7 million, compared to $66.3 million in the first quarter last year and included $2.0 million and $0.8 million of strategic initiatives costs, respectively. The remaining increase in SG&A versus the prior year reflects incremental investment in marketing and employee expenses.
Operating income of $21.5 million included the sale of the John Henry trademark in certain international territories in Asia resulting in a gain of $6.3 million or $0.22 per share. Mr. Feldenkreis commented, “This transaction highlights the strength our brands carry internationally as well as domestically. We will continue to review our portfolio and take advantage of strategic opportunities.”

Net income was $11.3 million, or $0.74 fully diluted earnings per share (“EPS”), compared to $9.7 million, or $0.64 EPS in the comparable prior year period.

EPS, as adjusted, was $0.62 compared to EPS as adjusted of $.71 in the comparable prior year period. EPS, as adjusted, excludes certain items as outlined in the attached reconciliation “Table 1” Reconciliation of GAAP net income and diluted earnings per share to adjusted net income and diluted earnings per share.

Balance Sheet Update

George Feldenkreis, Chairman and CEO of Perry Ellis International commented, “Within a very challenging environment, we did an exceptional job at managing the business with tremendous discipline. We possess a strong balance sheet and cash flow driven by our efficient management of working capital, which will provide us with the tools to execute across all of our critical businesses.”

The focus and discipline in working capital management along with strong retail planning allowed the company to end the quarter with inventory that was well controlled. At quarter end inventory was $168 million, essentially flat with $167 million at April 28, 2012 and represented an 8 percent reduction in inventory, as compared to fiscal year-end. The company’s net debt to total capital totaled 26.3 percent as of May 4, 2013.

Accounts receivable was $174 million compared to $175 million at April 28, 2012. The composition of the customer base remains healthy and current.

Fiscal 2014 Guidance

The company reaffirmed that for the twelve months ending February 1, 2014 (“fiscal 2014”) it anticipates revenue to increase in a range of 3-5 percent for the year.

The company also continues to anticipate adjusted fully diluted earnings per share to be in a range of $1.50 – $1.60. On a GAAP basis, the company’s diluted earnings per share is expected to be in a range of $1.58 – $1.68 versus its previous guidance in the range of $1.60 to $1.70.

About Perry Ellis International
Perry Ellis International, Inc. is a leading designer, distributor and licensor of a broad line of high quality men’s and women’s apparel, accessories and fragrances, as well as select children’s apparel. The company’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, Jantzen, Laundry by Shelli Segal, C&C California, Rafaella, Cubavera, Ben Hogan, Centro, Solero, Munsingwear, Savane, Original Penguin by Munsingwear, Grand Slam, Natural Issue, Pro Player, the Havanera Co., Axis, Gotcha, Girl Star, MCD, John Henry, Mondo di Marco, Redsand, Manhattan, Axist, Farah, Anchor Blue and Miller’s Outpost. The company enhances its roster of brands by licensing trademarks from third parties, including: Nike and Jag for swimwear, and Callaway, PGA TOUR and Champions Tour for golf apparel.