Perry Ellis International, Inc. reported Q1 revenues grew 6.4% to $243.5 million from $228.8 million a year ago. Revenue increases were driven by the Perry Ellis collection, swimwear/action sports  (Nike Swim, Gotcha, Redsand), Hispanic & golf lifestyles, and direct retail plus initial shipments of the recently acquired women’s contemporary brands – Laundry and C&C California.


Gross profit increased by $6.8 million to $84.6 million compared to $77.8 million during the first quarter of fiscal 2008 with gross margin rising 72 basis points to 34.7% of net revenues. This improvement was driven by growth initiatives that focus on higher margin platforms such as the Perry Ellis retail division and the branded business – particularly Perry Ellis, Nike Swim, Hispanic, golf lifestyle brands, women’s contemporary – and the reduction in bottoms private label programs, particularly at the mass distribution channel.


“Our diversification strategy has proven its validity once again, as we delivered increased revenues and gross profit while exceeding analysts’ expectations despite a difficult domestic retail environment. We attribute our continued strength to the advantages of our business model,” said Oscar Feldenkreis, President and Chief Operating Officer. “Our brands continue to perform strongly at retail, and we remain very optimistic about achieving the goals we set for Perry Ellis International this year,” Mr. Feldenkreis continued.


First quarter of fiscal 2009 operating expenditures grew by $7.7 million due to expenses related to the integration of women’s contemporary brands – Laundry and C&C California in February of 2008 and the closing of the company’s distribution facility in Winnsboro, S.C. The company also incurred incremental costs related to the Perry Ellis retail expansion strategy, with two new stores, and investment in the European and boys wear divisions. As a result, EBITDA was $22.3 million for the first quarter of fiscal 2009, compared to $23.2 million, representing a reduction of $0.9 million over the same period last year. A table showing the reconciliation of EBITDA to net income is attached. Net income was $9.1 million, a 4.3% reduction compared to $9.5 million reported in the first quarter of fiscal 2008. Earnings at $0.60 per fully diluted share were flat compared to $0.60 for the same period last year.


“The investments we have made in our new businesses and in our strengthened infrastructure are a reflection of the many opportunities that lie ahead for our company and our confidence in our future growth prospects,” Mr. Feldenkreis concluded.


The company strengthened its financial position for yet another quarter. Proactive retail planning and strong sell-throughs led to a decrease in inventories of $10.9 million compared to the same period last year, and at quarter end were $140.8 million. This decrease is in spite of a 6.5% revenue growth.


Strong cash flow and disciplined cash management also allowed the company to reduce its senior credit facility by $3.0 million to $65.3 million, compared to $68.3 million at April 30, 2007. The company’s total debt was $240.1 million at the end of first quarter of fiscal 2009. Debt to total capital ratio decreased to 46% from 49% compared to April 30, 2007. Excluding the contemporary women’s acquisitions, funded by its senior credit facility in the amount of $33.1 million, the company’s total debt would be $207.0 million and its debt to total capital ratio would be 42% as adjusted.


“We delivered yet another extraordinary quarter of profitable growth, strong cash flow and disciplined management to our shareholders. Our positive outlook is a testament to the strength of our brands, growth platforms and diversified business model,” George Feldenkreis, Chairman and CEO, commented.


Fiscal 2009 Guidance


The company confirmed its guidance for the twelve months ending January 31, 2009 (“fiscal 2009”) at $910 – $925 million in revenues and at $1.95 – $2.00 per fully diluted share.


“We remain confident in our ability to sustain our positive performance throughout fiscal 2009. Strength across our platforms is providing for our near term growth and we expect our current investments in new initiatives – women’s contemporary, boys and retail expansion – to start delivering results during the second half of the year,” Feldenkreis concluded.