Perry Ellis International, Inc. reported revenue for the fourth quarter of fiscal 2011 was $206.9 million, a 5% increase compared to $196.4 million reported in the fourth quarter of fiscal 2010. The increase is attributable to strong performance within Perry Ellis Collection at department stores, as well as the direct to consumer and women's and contemporary businesses.
As reported under GAAP, fourth quarter fully diluted EPS was 54 cents compared to 64 cents in the fourth quarter of fiscal 2010. Excluding costs associated with the Rafaella acquisition and impairment charges of certain leaseholds for fiscal 2011 and 2010, fully diluted EPS, as adjusted, for the fourth quarter was 69 cents compared to 65 cents in the prior year period.
Fiscal 2011 revenues were $790.3 million, which was in line with company guidance, compared to $754.2 million reported in the prior year ended January 30, 2010 (“fiscal 2010”). This represents a 5% revenue increase over fiscal 2010. Excluding planned exited businesses associated with mass market programs and an exited license agreement totaling $36 million in fiscal 2010, fiscal 2011 revenues increased by 10% over fiscal 2010.
The company reported an 83% increase in net income attributed to Perry Ellis International, Inc. for fiscal 2011 of $24.1 million, or $1.70 per fully diluted share compared to net income attributed to Perry Ellis International, Inc. of $13.2 million, or $1.01 per fully diluted share, for fiscal 2010.
Net income attributed to Perry Ellis International, Inc. per share (“EPS”), diluted, as adjusted for fiscal 2011 was $1.85 compared to EPS, diluted, as adjusted of $1.02 in fiscal 2010. EPS, as adjusted excludes costs associated with the recent acquisition of certain assets of Rafaella Apparel Group, Inc. (“Rafaella”) and impairment charges of certain retail store leaseholds for fiscal 2011 and 2010. (See attached reconciliation “Table 1”).
“Fiscal 2011 was an outstanding year for Perry Ellis International. The results we delivered and our current positioning in the market place remains a testament to the strength of our brand portfolio and business model,” commented Oscar Feldenkreis, President and COO. “Our key growth platforms led by women's and contemporary with the recent acquisition of Rafaella, as well as Perry Ellis Collection, Golf, Hispanic, and direct to consumer, are all very well positioned to show strong organic growth and capture additional market share in fiscal 2012,” continued Mr. Feldenkreis.
Overall gross margin for fiscal 2011 improved to 35.7% compared to 33.0% in fiscal 2010, an increase of 270 basis points. Improved profitability within the company's direct-to-consumer businesses, increased full price sell-throughs at retail, and a continued mix of higher margin branded product all contributed to the significant expansion in gross margin over fiscal 2010.
Earnings before interest, tax, Rafaella acquisition costs, impairments, depreciation, and amortization (“adjusted EBITDA”) for fiscal 2011 was $64.7 million, or 8.2% of total revenues. This represents a 33% increase over fiscal 2010 adjusted EBITDA of $48.7 million.(See attached reconciliation “Table 2”).
Fourth Quarter 2011 Results
Balance Sheet Update
The company remained in outstanding financial position at year end. With a strong focus on working capital management, the company generated $21 million in cash from operations and free cash flow of $14 million for year. The company reported $18.5 million in cash and cash equivalents at year end.
Inventory was $178.2 million at year end compared to $112.3 million in the prior year period. Of the $65.9 million increase, $22.7 million was related to inventory associated with the acquisition of Rafaella. In addition, inventory rose to support the planned growth of the business and included strategic purchases to secure pricing and capacity and was in-line with company expectations.
Accounts receivable, decreased 7% to $129.5 million at year end compared to $139.9 million in fiscal 2010. Excluding $4.9 million related to the Rafaella acquisition, accounts receivable decreased 11% as compared to $139.9 million in fiscal 2010.
Fiscal 2012 Guidance
As previously announced on March 8, 2011, the company completed a concurrent offering of two million shares of its common stock and $150.0 million of senior subordinated notes due 2019. As a result of these two transactions, the company further strengthened its financial condition, and remains positioned to continue utilizing the strength of its capital structure to drive strong organic growth and also maximize new initiatives derived by the recent acquisition of Rafaella.
Both transactions will have a dilutive effect on the company for the twelve months ending January 28, 2012 (“fiscal 2012”), and the company now anticipates fully diluted EPS in the range of $2.30 to $2.40, which represents growth of 27% at the mid-point of the range from adjusted diluted EPS of $1.85 in fiscal 2011. This compares to the company's pre-common stock and senior subordinated note offering EPS guidance of $2.50 to $2.65.
“We are extremely pleased with our two recent capital market transactions, which serve as an integral part of our overall growth strategy and strong financial condition,” commented George Feldenkreis, Chairman and CEO of Perry Ellis International. “As we continue to see the momentum from fiscal 2011 within many of our businesses, we feel confident in our ability to offset a significant portion of the dilutive impact from these transactions and deliver earnings per share in the range of $2.30 – $2.40, for this fiscal year,” continued Mr. Feldenkreis.
The company reaffirmed guidance for revenues to reach $1 billion dollars for fiscal 2012.
The company, through its wholly owned subsidiaries, owns a portfolio of nationally and internationally recognized brands, including: Perry Ellis, Jantzen, Laundry by Shelli Segal, C&C California, Cubavera, Centro, Solero, Munsingwear, Savane, Original Penguin by Munsingwear, Grand Slam, Natural Issue, Pro Player, Havanera Co., Axis, Tricots St. Raphael, Gotcha, Girl Star, MCD, John Henry, Mondo di Marco, Redsand, Manhattan, Axist, Farah and Rafaella. The company enhances its roster of brands by licensing trademarks from third parties, including: Pierre Cardin for men's sportswear, Nike and Jag for swimwear, and Callaway, TOP-FLITE, PGA TOUR and Champions Tour for golf apparel.
