Perry Ellis International, Inc. said adjusted earnings per share are expected in the range of 35 cents to 38 cents a share in its fourth quarter. That compares to year-ago earnings of 47 cents a share and Wall Street's consensus estimate of 47 cents a share.
Perry Ellis also said it expects to report an 11 percent increase in total revenue for fourth quarter to $229 million as compared to $207 million last year.
Fiscal 2012 revenue is expected to approximate $980 million, an increase of 24 percent from the prior year. Reflecting the factors below, the company currently expects full fiscal year 2012 adjusted EPS in a range of $1.91 – $1.94. Adjusted earnings per fully diluted share exclude costs related to the early extinguishment of debt. The company noted that any potential impairment charges or write downs that may arise from its strategic brand review discussed below would reduce the company's EPS to be determined and reported under generally accepted accounting principles (“GAAP”).
The company noted that revenues and gross margin in the fourth quarter were pressured due to retail partners requesting later deliveries of goods, as well as a significant increase in promotional markdowns and sales allowances for the holiday season. On a positive note, the company saw strength in its golf lifestyle, women's dresses and swim businesses. In addition, the company maintained expense discipline and saw a favorable impact from reversing long-term incentive compensation expense. The company also anticipates a higher effective tax rate for the year due to an increased mix of domestic versus international income.
The company noted that it expects to end fiscal 2012 with $24 million in cash. Total inventory at January 28th, 2012 is expected to be approximately $198 million, an 11 percent increase, compared to $178 million in the comparable prior year period and in line with the Company's expectation of $200 million.
“This holiday season, the entire retail industry was faced with a highly promotional environment meant to drive customer purchases, and we were not immune to this activity,” said Oscar Feldenkreis, president and chief operating officer of Perry Ellis International. “While we experienced increased traffic in our direct to consumer business, we also increased promotions to be in line with the environment to remain competitive. As a result, the positive momentum in revenue came at the expense of profitability and we acknowledge the environment remains challenging. With that backdrop, we are streamlining our operations and eliminating less productive overhead. We have begun a strategic brand review that will maximize profitability in our core businesses: men's and ladies sportswear, golf and Hispanic lifestyle, and swim.”
Strategic Brand Review
The company has launched a strategic review of its brand portfolio that will be completed during the first half of fiscal 2013 with a goal of rationalizing brands and businesses to position the company for long-term growth. The company anticipates it will begin to implement initiatives during the second half of fiscal 2013.
“We will focus more intently on those businesses that offer the best value and the greatest potential for profitable growth.” commented Oscar Feldenkreis.
In addition, the company expects to increase efficiency by consolidating distribution facilities and foreign sourcing offices and streamlining operational support functions.
“Our goal is to further reduce expenses from non-core infrastructure areas and redeploy part of that capital to marketing and direct-to-consumer infrastructure, continued Mr. Feldenkreis. Our new collaboration of Perry Ellis menswear and Duckie Brown is a perfect example of the type of investments that we will make to elevate our businesses.”
Fiscal 2013 Outlook
“We believe that the infusion of new management and creative teams along with operations support in our Perry Ellis and Rafaella sportswear businesses will begin to be reflected in second half of fiscal 2013 results,” commented George Feldenkreis, chairman and chief executive officer of Perry Ellis International. “We will take a conservative approach in our financial plan until we see a lessening of the promotional environment.”
Feldenkreis added, “The company believes its balance sheet to be strong. We have reduced our total net debt to capitalization to 31 percent versus 41 percent last year and this strength provides us the opportunity to continue to support our core businesses. During fiscal 2012, we financed senior subordinated notes through 2019 as well as refinanced our credit facility for an additional 5 year term.”
The company expects to report actual full fiscal 2012 results, along with its fiscal 2013 guidance in March 2012.
Perry Ellis International, Inc. is a leading designer, distributor and licensor of a broad line of high quality men's and women's apparel, accessories and fragrances, as well as select children's apparel. The Company's collection of dress and casual shirts, golf sportswear, sweaters, dress pants, casual pants and shorts, jeans wear, active wear, dresses and men's and women's swimwear is available through all major levels of retail distribution. The Company, through its wholly owned subsidiaries, owns a portfolio of nationally and internationally recognized brands, including: Perry Ellis(R), Jantzen(R), Laundry by Shelli Segal(R) , C&C California(R) , Rafaella(R) , Cubavera(R) , Centro(R) , Solero(R) , Munsingwear(R) , Savane(R) , Original Penguin(R) by Munsingwear(R) , Grand Slam(R) , Natural Issue(R) , Pro Player(R) , Havanera Co. (R) , Axis(R) , Tricots St. Raphael(R) , Gotcha(R) , Girl Star(R) , MCD(R) , John Henry(R) , Mondo di Marco(R) , Redsand(R) , Manhattan(R) , Axist(R) , Farah(R) , Anchor Blue(R) and Miller's Outpost(R) . The company enhances its roster of brands by licensing trademarks from third parties, including: Nike(R) and Jag(R) for swimwear, and Callaway(R), TOP-FLITE(R) , PGA TOUR(R) and Champions Tour(R) for golf apparel.