Perry Ellis International, Inc. reported results for the first quarter ended May 3, 2014.
Oscar Feldenkreis, president and chief operating officer of Perry Ellis International commented, “We were encouraged by the results of the quarter which were ahead of our expectations. Despite a slow start to the spring season, we experienced positive momentum beginning in April with particular strength in golf lifestyle apparel, Original Penguin as well as our Nike swim businesses. We were also encouraged by the expansion in gross margin, which increased to 34.1 percent from 33.8 percent in the prior year.”
Solid performance in our direct-to-consumer business resulted in a 5.6 percent comparable same store sales increase driven by Perry Ellis as well as by our direct e-commerce, which posted a 43 percent sales increase.
Fiscal 2015 First Quarter Results
Total revenue for the first quarter of fiscal 2015 was $257 million, a 2 percent decrease compared to $262 million reported in the first quarter of fiscal 2014. As anticipated, revenues were impacted by planned exits of certain private and retailer exclusive branded programs. These exits were almost entirely offset by increases in golf lifestyle apparel, Nike swim and Original Penguin as well as stronger direct-to-consumer revenue results.
During the first quarter of fiscal 2015, gross margin expanded to 34.1 percent as compared to 33.8 percent in the same period of the prior year. The expansion reflected a favorable business mix as well as better sell-through at retail in our Perry Ellis and Rafaella collection businesses. The margin expansion also reflected reduced freight costs as a result of the infrastructure rationalization program initiated last year.
Selling, general and administrative expenses totaled $69.7 million as compared to $71.0 million in the prior year. The positive benefit from the company's infrastructure rationalization began to be realized during the first quarter of fiscal 2015. This was partially offset by additional investment in Europe associated with the introduction of Callaway in golf apparel as well as the expansion of Original Penguin across the European Continent.
As reported under GAAP, the fiscal 2015 first quarter profit was $7.8 million, or $0.52 per diluted share, compared to $11.3 million, or $0.74 per diluted share, in the first quarter of fiscal 2014 which included $3.4 million or $0.22 per share for the gain on the sale of the John Henry trademark in certain international territories in Asia. On an adjusted basis, the fiscal 2015 first quarter earnings per diluted share were $0.55 as compared to adjusted earnings per diluted share of $0.62 in the first quarter of fiscal 2014. Wall Street's consensus estimate was $0.27 cents a share.
Balance Sheet and Business Update
The balance sheet ended the quarter in solid shape. Inventories decreased to $177 million from $207 million at fiscal year-end with continued emphasis on increasing turn. The company continues to focus on its core businesses and brands: a strong branded golf lifestyle portfolio, Original Penguin, Perry Ellis and Rafaella collections as well as Laundry and Savane.
The company also continues to focus on the strategic infrastructure rationalization program, which includes a review of its processes and systems and initiatives aimed at streamlining its supply chain to realize greater efficiencies.
George Feldenkreis, chairman and chief executive officer of Perry Ellis International stated, “We are quite pleased with the positive momentum in our businesses. We expect our expenses to continue to downtrend versus prior year over the next several quarters. I believe that we have made solid progress in our international expansion both through our direct operations in Canada, Mexico and Europe as well as in new licensing relationships around the globe. Together with our partners, we are opening new doors and stores, which we expect will drive business and brands going forward.”
Fiscal 2015 Guidance
The company continues to expect total revenues to be in a range of $910 to $920 million. Given the stronger performance in the first quarter, the company now expects adjusted earnings per diluted share for fiscal 2015 in a range of $0.80 to $0.95 as compared to the previous guidance range of $0.75 to $0.90.
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. 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®, Savane®, Original Penguin® by Munsingwear®, Grand Slam®, John Henry®, Manhattan®, Axist®, and Farah®. The company enhances its roster of brands by licensing trademarks from third parties, including: Nike® and Jag® for swimwear, and Callaway®, PGA TOUR®, and Jack Nicklaus® for golf apparel.
