Perry Ellis Q2 Sales Helped by Golf Business

Perry Ellis International, Inc. second quarter of fiscal 2008 revenues grew to $195.3 million, a 14.2% increase compared to $171.0 million in the second quarter ended July 31, 2006. Revenue increases were driven by several of the Company's growth platforms – Perry Ellis, golf and Hispanic lifestyles, direct retail and international. As anticipated, the shift in the retail calendar moved some of the shipments from April into May, thus positively impacting revenue growth during the second quarter of fiscal 2008. Additionally, the Company experienced a favorable shift in sales from August into July.

“We are very satisfied with the 14% organic growth achieved this quarter. The power of our brands and the validity of our multi-brand, multi-channel, multi-product strategy, are clearly evidenced in our record second quarter and first half results. During the first half of fiscal 2008, we achieved solid growth across all platforms and excellent sell-throughs,” Oscar Feldenkreis, President and Chief Operating Officer commented. “Our unique ability to interpret different lifestyles and position them in specific channels is a core competency of Perry Ellis International.”

Strong revenue growth along with gross profit margin expansion and a 185 basis point reduction in operating expenses as a percent of sales fueled a significant increase in operating income to $5.1 million compared to $1.1 million for the same period last year.

EBITDA for the second quarter of fiscal 2008 grew 113% to $8.3 million, a $4.4 million increase over the same period last year. A table showing the reconciliation of EBITDA to net income is attached. Net income was $267,000 compared to a net loss of $2.5 million for the same period last year. Earnings per share were $0.02 per fully diluted share, compared to a loss per share of $0.17 for the same period last year.

The Company ended the quarter with a strong balance sheet. Strong cash flow allowed the Company to significantly reduce its debt level. As of July 31, 2007, overall long term debt decreased to $175.6 million, a reduction of $61.4 million compared to the beginning of fiscal 2008. As a result, long term debt declined to 32% of total assets as compared to 40% on January 31, 2007.

First half results for fiscal 2008 were in line with management's expectations, increasing revenues by 10.2% to $424.1 million from $385.0 million during first half of fiscal 2007 while improving gross profit margin by 62 basis points for the same period last year. The Company also improved EBITDA margin by 106 basis points compared to first half of fiscal 2007. Net income increased to $9.8 million from reported net income of $3.5 million and pro forma net income of $5.4 million during the same period last year. Last year's pro forma results exclude the impact of $3.0 million in debt extinguishment costs ($1.9 million net of taxes or $0.13 per fully diluted share) incurred as a result of the March 2006 repayment of the Company's $57 million senior secured notes. Pro forma results are presented solely as a supplemental disclosure because management believes it is useful to compare the Company's current results to the prior year results without the charge incurred during fiscal 2007. A table showing the reconciliation of actual to pro forma results is attached.

George Feldenkreis, Chairman and Chief Executive Officer, commented, “We feel confident about the second half of the year. Strong results across all our business platforms during the first half of fiscal 2008 have positioned our Company in the best financial shape in its history and confirmed our view of a record year for Perry Ellis International.”

The Company increased its previously announced fiscal 2008 earnings guidance from the range of $1.81 to $1.84 per fully diluted share, to $1.87 to $1.91 per fully diluted share and confirmed its previously announced fiscal 2008 revenue guidance with total revenues expected to be in the range of approximately $900 to $910 million.

“We are pleased to increase our earnings guidance. We feel that for the second half of the year we will continue to do well according to plan,” Mr. Feldenkreis concluded.