Perry Ellis International, Inc. third quarter revenues were $213.2 million, compared to $220.0 million, a 3.1% decline from the comparable period a year ago. For the third quarter of fiscal 2007, net earnings were $8.2 million compared to $8.1 million for the comparable quarter last year and per share results were equal to last year at 80 cents per fully diluted share.
The decline in total revenues during the quarter was anticipated as a part of management's fiscal 2007 plan and is primarily attributable to the final impacts of retailer consolidation and elimination of certain private label sportswear programs. Total revenues for the nine month period ended October 31, 2006 were $598.3 million, compared to $635.5 million, a 5.9% decline versus the comparable period last year.
Third quarter earnings were above last year's levels as improved gross profit margin performance and lower interest costs offset the impact of lower total revenues. Additionally, the third quarter of fiscal 2007 results include expenses of $0.02 per share for the adoption of Statement of Financial Accounting Standards (“SFAS”) 123R requiring the expensing of stock options. These costs are not reflected in prior year results.
Overall third quarter results were ahead of management's previously announced plans, and included a 200 basis point improvement in gross profit margin and a 29 basis point improvement in EBITDA margin.
For the nine months ended October 31, 2006, earnings were $1.14 per fully diluted share compared to earnings of $1.45 per fully diluted share for the comparable period last year. However, proforma earnings for nine months of fiscal 2007 were $1.33 per fully diluted share. Proforma results exclude the impact of $3.0 million in debt extinguishment costs ($0.19 per fully diluted share) incurred as a result of the March 2006 repayment of the Company's $57 million senior secured notes.
The Company believes that proforma results provide a more meaningful comparison of financial performance. A table showing the reconciliation of actual to proforma earnings per share results is attached. Additionally, both proforma and reported earnings per share results for the nine months of fiscal 2007 include expenses of $0.06 per share related to the adoption of SFAS 123R, requiring the expensing of stock options. These costs are not reflected in prior year results.
Looking forward for the balance of fiscal 2007, Perry Ellis indicated it anticipates annual revenue in the range of $840 – $850 million, and confirmed it's previously announced proforma earnings view range of $2.30 – $2.40 per fully diluted share.
In a separate release today Perry Ellis International also reported a 3-for-2 stock split effected in the form of a stock dividend payable on December 29, 2006 to stockholders of record as of December 12, 2006. All earnings per share references in this release do not include the impact of the stock dividend.
George Feldenkreis, Chairman and Chief Executive Officer commented: “We are pleased with our strong gross profit margin improvement both during the third quarter and on a year to date basis. This is a consequence of our products continuing to perform exceptionally well at retail, as well as improved production planning and sourcing. We are also pleased to announce a 3-for-2 stock split which reflects the confidence we have in our future business growth.”
Oscar Feldenkreis, Vice-Chairman, President and Chief Operating Officer stated: “Third quarter results reflect the end of the impact of retail consolidation and other factors that have impacted top line growth. We are well positioned for record sales and gross margins in our upcoming fourth quarter with our diversified growth platforms including swim, outerwear, Perry Ellis sportswear, international and direct retail. We expect these and other growth platforms to continue to show strong growth as we enter fiscal 2008.”
PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(amounts in 000's, except per share information)
INCOME STATEMENT DATA:
Three Months Ended Nine Months Ended
October 31, October 31,
-------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues
Net sales $207,794 $214,665 $581,747 $619,357
Royalty income 5,445 5,290 16,512 16,182
--------- --------- --------- ---------
Total revenues 213,239 219,955 598,259 635,539
Cost of sales 140,781 149,595 401,506 438,414
--------- --------- --------- ---------
Gross profit 72,458 70,360 196,753 197,125
Operating expenses
Selling, general and
administrative expenses 51,746 49,648 151,514 150,754
Depreciation and
amortization 2,900 2,436 8,350 6,899
--------- --------- --------- ---------
Total operating
expenses 54,646 52,084 159,864 157,653
--------- --------- --------- ---------
Operating income 17,812 18,276 36,889 39,472
Costs on early extinguishment
of debt - - 2,963 -
Interest expense 5,000 5,621 15,650 16,402
--------- --------- --------- ---------
Income before minority
interest and income taxes 12,812 12,655 18,276 23,070
Minority interest 92 59 236 427
Income tax provision 4,479 4,503 6,342 8,063
--------- --------- --------- ---------
Net income $8,241 $8,093 $11,698 $14,580
========= ========= ========= =========
Net income per share
Basic $0.85 $0.85 $1.21 $1.53
========= ========= ========= =========
Diluted $0.80 $0.80 $1.14 $1.45
========= ========= ========= =========
Weighted average number of
shares outstanding
Basic 9,692 9,471 9,645 9,516
Diluted 10,360 10,090 10,218 10,039
