Perry Ellis International, Inc. third quarter revenues increased 6.7% to $227.5 million, compared to $213.2 million in the third quarter of fiscal 2007. Revenue increases were driven by several of the Companys growth initiatives primarily by an outstanding performance in golf, continuous gains in Perry Ellis, strong growth in action sports and direct retail.
“The successful implementation of our key strategies along with the growing demand for our brands drove the results we expected, including strong organic sales growth and a record quarter for revenues and profitability. We accomplished this in spite of unseasonably warm weather and a challenging retail environment, a strong testament to the power of our business model and execution abilities,” Oscar Feldenkreis, president and chief operating officer remarked.
Gross profit was $76.9 million – an increase of $4.5 million compared to third quarter last year – resulting in gross margins even with last year, at 34.0%. Meanwhile, operating expenses increased 9.0% attributable to further investment in the companys retail and active sports divisions; start-up expenses for boyswear and other initiatives; and increased costs associated with the implementation of our Oracle Retek system.
Mr. Feldenkreis commented, “Continued funding of both growth opportunities and state-of-the-art systems that better serve our customers are paramount for Perry Ellis Internationals long term strategy. We are confident that these investments will bear strong returns for our shareholders in the near future and beyond.”
Net Income for the third quarter of fiscal 2008 was $8.5 million and grew 3.6% compared to the third quarter of fiscal 2007. Earnings per fully diluted share were 55 cents compared to earnings per fully diluted share of 53 cents for the same period last year.
The company ended third quarter with a strong balance sheet. Robust cash flow allowed the Company to significantly reduce its debt level. As of October 31, 2007, overall long term debt decreased to $198.3 million, a reduction of $38.6 million compared to the beginning of fiscal 2008. As a result, long term debt declined to 34% of total assets as compared to 40% on January 31, 2007.
For the first nine months of fiscal 2008, revenues increased by 8.9% to $651.5 million from $598.3 million for the first nine months of fiscal 2007 while improving gross profit margin by 33 basis points compared to the same period last year. The Company also improved EBITDA margin by 48 basis points compared to the first nine months of fiscal 2007.
Net income increased to $18.3 million from reported net income of $11.7 million and pro forma net income of $13.7 million during the same period last year. Finally, earnings per fully diluted share for the first nine months of fiscal 2008 grew 52.6% to $1.16 compared to reported earnings per fully diluted share of 76 cents for the same period last year, and 30.3% compared to pro forma earnings per fully diluted share of 89 cents for the same period last year.
George Feldenkreis, chairman and chief executive officer, commented, “We are extremely satisfied with our performance for the first nine months of this fiscal year and remain positive about our overall Q4 expectations, especially compared to most of the industry. However we recognize that both the warm October and its impact on retail sales, as well as the general deterioration of consumer confidence – driven by the effect of oil prices and lower real estate values in certain states have impacted certain replenishment programs, especially on bottoms. Based on those factors, we have decided to update our guidance accordingly.”
However, based on a more conservative outlook for the upcoming Christmas season, the Company has decided to update its previous fiscal 2008 earnings guidance from the range of $1.87 to $1.91 per fully diluted share to $1.78 to $1.82 per fully diluted share and its fiscal 2008 revenue guidance to the range of approximately $870 to $880 million, from $900 to $910 million.
“We are proud of our accomplishments in fiscal 2008. Compared to fiscal 2007, we estimate that Perry Ellis International will be growing earnings between 13% and 15% and revenues between 5% and 6%. We remain committed to delivering outstanding results to our shareholders and feel extremely positive about the opportunities ahead of us with our Perry Ellis brand, swimwear, licensing and retail divisions for fiscal 2009 and beyond,” Mr. Feldenkreis concluded.