Perry Ellis International, Inc. reported total revenues increased 13% to $201.3 million, compared to $178.6 million in the third quarter ended Oct. 31, 2009.
“Our impressive third quarter results remain a testament to the strength of our brands and the resiliency of our diversified business model,” commented Oscar Feldenkreis, President and Chief Operating Officer of Perry Ellis International. “Focus on brands, product innovation and analytical planning systems have lead to a successful formula. Our partnership with all our major retail customers has enabled us to identify enhancements to drive business opportunities, which is evident in the results we reported today.”
Gross profit for the quarter was $71.6 million – an increase of 17% or $10.6 million compared to third quarter last year- resulting in gross margins improving by 140 basis points to 35.6% compared to 34.2% last year. Gross margin expansion for the quarter was driven by continued focus on inventory planning and optimizing sell through rates across retail doors.
Earnings before interest, tax, depreciation, and amortization (“EBITDA”) for the third quarter of fiscal 2011 grew 37% to $16.9 million compared to $12.3 million during the comparable period last year. This increase represents an EBITDA margin of 8.4% for the quarter. A table showing the reconciliation of EBITDA to net income is attached. In addition, the Company recognized a 73% increase in net income to $7.2 million representing $0.51 per fully diluted share for the quarter, compared to net income of $4.1 million and $0.31 per fully diluted share in the third quarter last year.
Balance Sheet Review
The company remained in an outstanding financial position at quarter end. Disciplined working capital management provided for full availability under the senior credit facility. In addition, the company reported $13.7 million in cash and cash equivalents.
Strategic inventory purchases to secure pricing and capacity resulted in quarter end inventory of $128.5 million, representing a 31% increase over third quarter last year and in-line with Company expectations. The increase was the result of the Company's plan to accelerate the receipt of goods in anticipation of possible price increases. Approximately $15 million or half of the increase is for goods to be shipped in fiscal 2012.
Nine Months Operations Review
For the nine months ended Oct. 30, 2010 total revenue increased 5% to $583.4 million from $557.8 million during the nine months ended Oct. 31, 2009. Throughout the first nine months of fiscal 2011 the company's continued focus and strategy on driving sales of higher margin branded businesses paved the way for a solid 350 basis point improvement in gross margin to 35.7% compared to 32.2% last year.
The company also saw a significant increase in net income to $16.4 million, an increase of almost 250% compared to net income of $4.7 million last year. This reflects a 250 basis point improvement in EBITDA margin to 7.6% for the first nine months of the year compared to last year.
Fiscal 2011 Guidance
The company is increasing its fiscal 2011 earnings guidance based on better than expected year to date results. The Company currently expects diluted earnings per share in the range of $1.72 – $1.80 from the previously announced full fiscal 2011 year range of $1.53 – $1.68.
Revenues are expected to surpass $785 million for the full year.
“We are extremely pleased with our results through the third quarter of fiscal 2011. We have successfully executed in the core platforms as well as the new business initiatives we launched coming into the year. We continue to remain optimistic as to performance of our brands and product categories going into the holiday season,” commented George Feldenkries, Chairman and Chief Executive Officer of Perry Ellis International.
