Perry Ellis International reported earnings and sales both exceeded internal guidance in the first quarter with “particular strength in Golf Lifestyle Apparel and Nike Swim.”

Key Fiscal First Quarter 2018 Financial Accomplishments And Operational Highlights

  • Total revenues of $242 million, ahead of guidance of $230 million to $235 million and compared to $261 million reported in the first quarter of fiscal 2017.
  • GAAP diluted EPS of 83 cents, ahead of guidance of 70 cents to 75 cents per diluted share and compared to GAAP diluted EPS of 95 cents per share and adjusted diluted EPS of $1.01 in the first quarter of fiscal 2017.
  • GAAP gross margin expanded 120 basis points to 37.6 percent. Adjusted gross margin expanded 90 basis points.
  • The company had a solid start to the year but noted the retail environment remains tenuous. As such, it is reiterating guidance for fiscal year 2018 including revenues in a range of $870 million to $880 million and adjusted diluted earnings per share in a range of $2.07 to $2.17.

Oscar Feldenkreis, chief executive officer and president, commented, “We are pleased to report a solid start to Fiscal 2018 with both our top and bottom line results surpassing guidance, reflecting solid growth in our core brands driven by the earlier shipment of Spring merchandise and strong gross margin expansion. Our razor sharp focus on maximizing the potential of our core global brands by delivering a continuous flow of new innovative products while maintaining tight inventory discipline continued to serve us well in a difficult U.S. retail environment, with particular strength in Golf Lifestyle Apparel and Nike Swim. During the quarter, we also continued to make progress on our speed-to-market initiatives, which position us to bring new innovation to store faster at increasing margins and replenish the most sought after products in season.”

Fiscal 2018 First Quarter Results

Total revenue was $242 million, a 7.3 percent decrease (6.5 percent decrease on constant currency) compared to $261 million reported in the first quarter of fiscal 2017. This reflected a planned decrease in shipments given a reduction of customers’ doors and inventory discipline to drive higher margin sales. The disciplined management of inventory across channels, along with increased sales of higher-margin core brands, led to a 120 basis point expansion in GAAP gross margin to 37.6 percent in the first quarter from 36.4 percent in first quarter of fiscal 2017. Adjusted gross margin was 37.6 percent compared with adjusted gross margin of 36.7 percent in the comparable period of the prior year.

Selling, general and administrative expenses totaled $71.2 million as compared with $69.9 million in the comparable period of the prior year. SG&A in the first quarter of fiscal 2018 included $1 million of unanticipated costs that are not expected to continue. Excluding this, SG&A was in line with prior year.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of fiscal 2018 totaled $19.9 million, as compared to $25.2 million in the comparable period of the prior year. Adjusted EBITDA totaled $19.9 million as compared to $26.1 million in the comparable period of the prior year.

As reported under GAAP, the first quarter of fiscal 2018 net income was $12.8 million or 83 cents per diluted share, compared to GAAP net income of $14.3 million, or 95 cents per diluted share and adjusted net income of $15.2 million, or $1.01 per diluted share, in the first quarter of fiscal 2017.

Balance Sheet

The company’s financial position continues to get stronger. Cash and investments at the end of the first quarter of fiscal 2018 totaled $43 million with $148 million of long-term debt. The company’s net debt to total capitalization stood at 24.3 percent at the end of first quarter fiscal 2018 as compared to 30.5 percent at the end of first quarter fiscal 2017. Working capital management continues to be a critical focus across the organization as inventory turned at approximately 4 times for the first quarter of fiscal 2018.

George Feldenkreis, executive chairman, Perry Ellis International, commented, “We continue to successfully navigate the changing U.S. retail environment, as demonstrated by our solid first quarter performance. Our investment in talent, marketing and our digital platform is elevating our brands around the world. We are committed to delivering stockholder value and believe our strong balance sheet and cash flow generation along with the continued focus on our strategy will support the long-term growth potential of Perry Ellis International.”

The company owns a portfolio of brands, including: Perry Ellis, An Original Penguin by Munsingwear, Laundry by Shelli Segal, Rafaella, Cubavera, Ben Hogan, Savane, Grand Slam, John Henry, Manhattan, Axist, Jantzen and Farah. Licensed brands include Nike and Jag for swimwear and Callaway, PGA Tour and Jack Nicklaus for golf apparel.

Photo courtesy Perry Ellis