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Perry Ellis International posts 5 percent decline in Q2 revenue

By Prachi Singh

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Business

Total second quarter revenue at Perry Ellis International was 202 million dollars, a 5 percent decrease compared to 213 million dollars in the second quarter of fiscal 2016. Increased sales across the company's core global brands were offset by 3 percent planned business exits as well as 2 percent reductions in special market revenues. The company also experienced negative currency headwinds of approximately 1.4 percent on total revenues.

"We are pleased to report revenue and adjusted earnings per diluted share above guidance driven by the strength of our authentic brands, our commitment to innovation and product excellence combined with the continued success of our five point growth and profitability plan. The quarter included a 4.1 percent sales increase in our core global businesses and solid expansion in gross margin," said Oscar Feldenkreis, CEO of Perry Ellis International.

Detailed review of the quarter

Gross margin expanded 100 basis points to 36.6 percent, from gross margin of 35.6 percent and 90 basis points from adjusted gross margin of 35.7 percent in the 2016 second quarter, reflecting stronger margin in men's sportswear, golf lifestyle and Nike businesses as well as expansion in direct to consumer margins.

As reported under GAAP, the fiscal 2017 second quarter loss was 3.6 million dollars, or 0.24 dollar per diluted share, as compared to a loss of 1.3 million dollars, or 0.09 dollar per diluted share, in the second quarter of fiscal 2016. On an adjusted basis, earnings per diluted share were 0.15 dollar as compared to 0.31 dollar in the second quarter of fiscal 2016. Adjusted EBITDA totalled 7.1 million dollars as compared to 8.9 million dollars in the comparable period of the prior year.

Priorities for fiscal 2017 to enhance profitability

The company continues to focus on implementing its growth and profitability plan. George Feldenkreis, Executive Chairman, Perry Ellis International, commented, "As we look ahead to the remainder of the year, we are maintaining our guidance for adjusted earnings per share in a range of 1.95 dollars to 2 dollars for fiscal 2017. While we feel confident with our business, we do believe that the strength of the US dollar and the changing consumer spending patterns for international tourists in the US, along with the volatility in the global environment, remain headwinds."

The company’s growth strategy includes continuing to optimize competitive positioning as evidenced by growth achieved across the company's global growth brands led by Perry Ellis, Original Penguin, and Golf Lifestyle, accelerating international expansion through direct investment in the North America and Europe as well as strategic partnerships with licensees and other partners, and continued focus on controlling costs and expenses through process enhancements, inventory management and sourcing improvements.

The company plans to close 15 of its retail store locations that are underperforming over the next 18 months. These retail closures are expected to reduce revenues in the current year by 2.8 million dollars and next year by 8.3 million dollars with an improvement in annual operating income of approximately 1.3 million dollars.

Picture:Perry Ellis International

Perry Ellis International