Perry Ellis International reported “solid” gains in both its golf apparel business and Nike Swim in the fourth quarter.

On a conference call with analysts, Oscar Feldenkreis, president and CEO, said the company’s commitment to innovation led to a “solid increase in our core golf brands at wholesale and retail” in both the fourth quarter and year.

“Our technology-infused product assortments help ensure our customers be well-prepared to handle the temperature ranges in Q4 from cold to warm,” said Feldenkreis. “This new innovative product led to strong performances in our lightweight layering programs, Elements and Weather series as well as in our Opti-Therm series, which has a thermal insulation, stretch, water and wind resistance.”

Warm-weather zones benefited from its Motion Flow 360 stretch knits coupled with new expandable waistband bottoms and lightweight water repellent shorts, which also drove solid sales.

“In fiscal 2018 our core golf business will continue to expand in distribution with key specialty retailers,” said Feldenkreis. “The Callaway brand has taken on a more focused approach to grow our revenues and market share within the authentic golf channel. We will expand our growth to include Golf Galaxy, PGA Tour Superstores, Academy and Golf Town, just to name a few, as well as other fine golf courses.”

In Europe, Callaway apparel is in more than 2,500 to 3,000 doors in the authentic channel and the region remains a “continued growth opportunity” for the brand.

Jack Nicklaus apparel will debut at Target in the second quarter. Said Feldenkreis, “We feel that this is an excellent opportunity for Target to showcase a world-class brand with top-notch lifestyle products. We plan to launch in 1,650 doors as well as an online for the summer of 2017.”

The company’s other golf brands include Grand Slam, PGA Tour and Ben Hogan. Beyond Nike Swim, the company’s other brands include Perry Ellis, Original Penguin by Munsingwear, Laundry by Shelli Segal, Rafaella, Cubavera, Savane, Farah, Jag and Jantzen.

Nike Swim likewise delivered a “solid performance.” Feldenkreis added, “We were very pleased not only with North America but the initial early reads in our new markets of Latin America and Europe. We are pleased with our international expansion and the see more growth to come. In fact, at year end approximately 13 percent of our business was represented outside of the USA.”

For the key spring season, encouraging trends show “solid interest” in women’s, which is a major growth category to complement the Nike Swim men’s business. Said Feldenkreis, “Our product initiatives in stretch swim trunks, UV protection and tops, Dri-Fit and Hydro T’s are off to a strong start for the season.”

Nike Swim also delivered “very strong sell through” in the few international channels it reached this year. Said Feldenkreis, “We expect this to be a great growth opportunity for the company in the future. We feel that in the next few years our Nike Swim will be $100 million business and have the potential to grow further as Nike Corporation extends our distribution territories.”

Companywide, adjusted earnings jumped 87 percent to $10.1 million, or 66 cents a share. Results beat guidance calling for earnings between 57 and 62 cents. Adjusted earnings exclude costs to exit brands and the costs of streamlining efforts.

As reported under GAAP, the fourth quarter of fiscal 2017 net income was $9 million, or 59 cents per diluted share, compared to a loss of $17.7 million, or $1.18 per diluted share, in the fourth quarter of fiscal 2016.

Total revenue was $204 million, a 4.7 percent decrease and down 3.3 percent on a currency-neutral basis. This reflected a 1.4 percent (3.2 percent on constant currency) increase in men’s business including Perry Ellis, Original Penguin, Golf Lifestyle Apparel and Nike, offset by a number of factors, including a comparable sales decline of 6.2 percent within its direct-to-consumer (DTC) business as store traffic dropped by 15 percent, and at wholesale, industry softness, which impacted wholesale shipments and replenishment deliveries during the second half of January.

In the full year, sales slid 4.6 percent to $825.1 million. Net earnings reached $14.5 million, or 95 cents a share, against a loss of $7.3 million, or 49 cents, a year ago. On an adjusted basis, earnings improved to $2.04 from $1.81.

For the current year, Perry Ellis expects sales in the range of $870 million to $880 million and EPS on an adjusted basis between $2.07 to $2.17.

“Even while we think this is very achievable, we are concentrated on a focused approach to our valued global core brands and businesses, which are Perry Ellis, Original Penguin, Golf Lifestyle, Farah, Nike, Cubavera and the Women’s brands,” said Feldenkreis.

The department store channel, which has been struggling with many closing doors, represents 25 percent of the company’s business. But the chairman believes the challenged retailers “have taken the right steps” to rationalize its store base and close underperforming doors. He added, “We are also applauding the changes that retailers are making to receipt flows ensuring their goods are hitting the selling floor when customers are shopping thereby driving faster turns and reduced markdowns. This will provide a more level flow for our quarterly reporting as well on a quarter-by-quarter basis.”

At the same time, Perry Ellis is more aggressively pursuing distribution through third-party e-commerce partners, specialty distribution and international regions.

“Generally speaking, we believe that the new reduced retail space in America is a positive development in the long run, especially in light of the way in which retailers moving these days and the demographic implication of Generation Z, Generation Y versus Generation X,” said George Feldenkreis. “These generations are really creating a new paradigm, which manufacturers and retailers have to learn to navigate if they want to succeed.”

Photo courtesy Callaway Apparel