- Company reports adjusted diluted EPS of $0.55 for first quarter ahead of guidance range of $0.25 to $0.30 in adjusted diluted EPS.
- Net revenues total $257 million as compared to guidance range of $230 million to $240 million.
- Diluted GAAP EPS of $0.52 as compared to $0.74 in prior year.
MIAMI, May 22, 2014 (GLOBE NEWSWIRE) -- Perry Ellis International, Inc. (Nasdaq:PERY) today reported results for the first quarter ended May 3, 2014 ("first quarter of fiscal 2015").
Oscar Feldenkreis, president and chief operating officer of Perry Ellis International commented, "We were encouraged by the results of the quarter which were ahead of our expectations. Despite a slow start to the spring season, we experienced positive momentum beginning in April with particular strength in golf lifestyle apparel, Original Penguin as well as our Nike swim businesses. We were also encouraged by the expansion in gross margin, which increased to 34.1% from 33.8% in the prior year."
Solid performance in our direct-to-consumer business resulted in a 5.6% comparable same store sales increase driven by Perry Ellis as well as by our direct e-commerce, which posted a 43% sales increase.
Fiscal 2015 First Quarter Results
Total revenue for the first quarter of fiscal 2015 was $257 million, a 2% decrease compared to $262 million reported in the first quarter of fiscal 2014. As anticipated, revenues were impacted by planned exits of certain private and retailer exclusive branded programs. These exits were almost entirely offset by increases in golf lifestyle apparel, Nike swim and Original Penguin as well as stronger direct-to-consumer revenue results.
During the first quarter of fiscal 2015, gross margin expanded to 34.1% as compared to 33.8% in the same period of the prior year. The expansion reflected a favorable business mix as well as better sell-through at retail in our Perry Ellis and Rafaella collection businesses. The margin expansion also reflected reduced freight costs as a result of the infrastructure rationalization program initiated last year.
Selling, general and administrative expenses totaled $69.7 million as compared to $71.0 million in the prior year. The positive benefit from the Company's infrastructure rationalization began to be realized during the first quarter of fiscal 2015. This was partially offset by additional investment in Europe associated with the introduction of Callaway in golf apparel as well as the expansion of Original Penguin across the European Continent.
As reported under GAAP, the fiscal 2015 first quarter profit was $7.8 million, or $0.52 per diluted share, compared to $11.3 million, or $0.74 per diluted share, in the first quarter of fiscal 2014 which included $3.4 million or $0.22 per share for the gain on the sale of the John Henry trademark in certain international territories in Asia. On an adjusted basis, the fiscal 2015 first quarter earnings per diluted share were $0.55 as compared to adjusted earnings per diluted share of $0.62 in the first quarter of fiscal 2014. Adjusted earnings per diluted share excludes certain items as outlined in Table 1 Reconciliation of GAAP net income and adjusted diluted earnings per share to adjusted net income and diluted earnings per share.
Balance Sheet and Business Update
The balance sheet ended the quarter in solid shape. Inventories decreased to $177 million from $207 million at fiscal year-end with continued emphasis on increasing turn. The Company continues to focus on its core businesses and brands: a strong branded golf lifestyle portfolio, Original Penguin, Perry Ellis and Rafaella collections as well as Laundry and Savane.
The Company also continues to focus on the strategic infrastructure rationalization program, which includes a review of its processes and systems and initiatives aimed at streamlining its supply chain to realize greater efficiencies.
George Feldenkreis, chairman and chief executive officer of Perry Ellis International stated, "We are quite pleased with the positive momentum in our businesses. We expect our expenses to continue to downtrend versus prior year over the next several quarters. I believe that we have made solid progress in our international expansion both through our direct operations in Canada, Mexico and Europe as well as in new licensing relationships around the globe. Together with our partners, we are opening new doors and stores, which we expect will drive business and brands going forward."
Fiscal 2015 Guidance
The Company continues to expect total revenues to be in a range of $910 to $920 million. Given the stronger performance in the first quarter, the Company now expects adjusted earnings per diluted share for fiscal 2015 in a range of $0.80 to $0.95 as compared to the previous guidance range of $0.75 to $0.90.
About Perry Ellis International
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. 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®, Jantzen®, Laundry by Shelli Segal®, C&C California®, Rafaella®, Cubavera®, Ben Hogan®, Savane®, Original Penguin® by Munsingwear®, Grand Slam®, John Henry®, Manhattan®, Axist®, and Farah®. The Company enhances its roster of brands by licensing trademarks from third parties, including: Nike® and Jag® for swimwear, and Callaway®, PGA TOUR®, and Jack Nicklaus® for golf apparel. Additional information on the Company is available at http://www.pery.com.
Safe Harbor Statement
We caution readers that the forward-looking statements (statements which are not historical facts) in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations rather than historical facts and they are indicated by words or phrases such as "anticipate," "believe," "budget," "contemplate," "continue," "could," "estimate," "expect," "guidance," "indicate," "intend," "may," "might," "plan," "possibly," "potential," "predict," "probably," "proforma," "project," "seek," "should," "target," or "will" or the negative thereof or other variations thereon and similar words or phrases or comparable terminology. We have based such forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, many of which are beyond our control. These factors include: general economic conditions, a significant decrease in business from or loss of any of our major customers or programs, anticipated and unanticipated trends and conditions in our industry, including the impact of recent or future retail and wholesale consolidation, recent and future economic conditions, including turmoil in the financial and credit markets, the effectiveness of our planned advertising, marketing and promotional campaigns, our ability to contain costs, disruptions in the supply chain, our future capital needs and our ability to obtain financing, our ability to protect our trademarks, our ability to integrate acquired businesses, trademarks, trade names and licenses, our ability to predict consumer preferences and changes in fashion trends and consumer acceptance of both new designs and newly introduced products, the termination or non-renewal of any material license agreements to which we are a party, changes in the costs of raw materials, labor and advertising, our ability to carry out growth strategies including expansion in international and direct-to-consumer retail markets, our plans, strategies, objectives, expectations and intentions are subject to change at any time at our discretion, potential cyber risk and technology failures could disrupt operations or result in a data breach, the level of consumer spending for apparel and other merchandise, our ability to compete, exposure to foreign currency risk and interest rate risk, possible disruption in commercial activities due to terrorist activity and armed conflict, and other factors set forth in Perry Ellis International's filings with the Securities and Exchange Commission. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those risks and uncertainties detailed in Perry Ellis' filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are valid only as of the date they were made. We undertake no obligation to update or revise any forward-looking statements to reflect new information or the occurrence of unanticipated events or otherwise.
| PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES | ||
| SELECTED FINANCIAL DATA (UNAUDITED) | ||
| (amounts in 000's, except per share information) | ||
| INCOME STATEMENT DATA: | ||
| Three Months Ended | ||
| May 3, 2014 | May 4, 2013 | |
| Revenues | ||
| Net sales | $ 249,916 | $ 255,484 |
| Royalty income | 7,398 | 6,835 |
| Total revenues | 257,314 | 262,319 |
| Cost of sales | 169,649 | 173,638 |
| Gross profit | 87,665 | 88,681 |
| Operating expenses | ||
| Selling, general and administrative expenses | 69,710 | 70,669 |
| Depreciation and amortization | 2,980 | 2,792 |
| Total operating expenses | 72,690 | 73,461 |
| Gain on sale of long-lived assets | -- | 6,270 |
| Operating income | 14,975 | 21,490 |
| Interest expense | 3,716 | 3,803 |
| Net income before income taxes | 11,259 | 17,687 |
| Income tax provision | 3,484 | 6,367 |
| Net income | $ 7,775 | $ 11,320 |
| Net income, per share | ||
| Basic | $ 0.53 | $ 0.75 |
| Diluted | $ 0.52 | $ 0.74 |
| Weighted average number of shares outstanding | ||
| Basic | 14,782 | 15,024 |
| Diluted | 15,010 | 15,304 |
| PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES | ||
| SELECTED FINANCIAL DATA (UNAUDITED) | ||
| (amounts in 000's) | ||
| BALANCE SHEET DATA: | ||
| As of | ||
| May 3, 2014 | February 1, 2014 | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 26,609 | $ 26,989 |
| Accounts receivable, net | 183,146 | 146,392 |
| Inventories | 177,150 | 206,602 |
| Investments | 21,221 | 15,398 |
| Other current assets | 28,794 | 29,008 |
| Total current assets | 436,920 | 424,389 |
| Property and equipment, net | 60,113 | 59,912 |
| Intangible assets, net | 211,256 | 211,485 |
| Goodwill | 6,022 | 6,022 |
| Other assets | 4,783 | 4,927 |
| Total assets | $ 719,094 | $ 706,735 |
| Liabilities and stockholders' equity | ||
| Current liabilities: | ||
| Accounts payable | $ 56,331 | $ 112,442 |
| Accrued expenses and other liabilities | 26,082 | 24,642 |
| Accrued interest payable | 1,036 | 4,095 |
| Unearned revenues | 5,114 | 5,013 |
| Total current liabilities | 88,563 | 146,192 |
| Long term liabilities: | ||
| Senior subordinated notes payable, net | 150,000 | 150,000 |
| Senior credit facility | 64,567 | 8,162 |
| Real estate mortgages | 22,651 | 22,844 |
| Deferred pension obligation | 9,271 | 9,862 |
| Unearned revenues and other long-term liabilities | 26,839 | 22,142 |
| Total long-term liabilities | 273,328 | 213,010 |
| Total liabilities | 361,891 | 359,202 |
| Equity | ||
| Total equity | 357,203 | 347,533 |
| Total liabilities and equity | $ 719,094 | $ 706,735 |
| PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES | ||
| Table 1 | ||
| Reconciliation of the three months ended May 3, 2014 and May 4, 2013 net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share. | ||
| (UNAUDITED) | ||
| (amounts in 000's, except per share information) | ||
| Three Months Ended | ||
| May 3, 2014 | May 4, 2013 | |
| Net income | $ 7,775 | $ 11,320 |
| Plus: | ||
| Costs of streamlining and consolidation of operations, and other strategic initiatives | 784 | 2,029 |
| Gain on sale of long-lived assets | -- | (6,270) |
| Tax (benefit) provision | (299) | 2,446 |
| Net income, as adjusted | $ 8,260 | $ 9,525 |
| Three Months Ended | ||
| May 3, 2014 | May 4, 2013 | |
| Net income per share, diluted | $ 0.52 | $ 0.74 |
| Net per share costs of streamlining and consolidation of operations, and other strategic initiatives | 0.03 | 0.10 |
| Net per share gain on sale of long-lived assets | -- | (0.22) |
| Adjusted net income per share, diluted | $ 0.55 | $ 0.62 |
| "Adjusted net income per share, diluted" consists of "net income per share, diluted" adjusted for the impact of costs of streamlining and consolidation of operations, and other strategic initiatives, and gain on sale of long-lived assets. These costs and gain are not indicative of our core operations and thus to get a more comparable result with the operating performance of the apparel industry, they have been removed, net of taxes, from the calculation. | ||
| PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||
| Table 2 | |||||
| RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA(1) | |||||
| (UNAUDITED) | |||||
| (amounts in 000's) | |||||
| Three Months Ended | |||||
| May 3, 2014 | May 4, 2013 | ||||
| Net income | $ 7,775 | $ 11,320 | |||
| Plus: | |||||
| Depreciation and amortization | 2,980 | 2,792 | |||
| Interest expense | 3,716 | 3,803 | |||
| Income tax provision | 3,484 | 6,367 | |||
| EBITDA | 17,955 | 24,282 | |||
| Costs of streamlining and consolidation of operations, and other strategic initiatives | 784 | 2,029 | |||
| Gain on sale of long-lived assets | -- | (6,270) | |||
| EBITDA, as adjusted | $ 18,739 | $ 20,041 | |||
| Gross profit | $ 87,665 | $ 88,681 | |||
| Less: | |||||
| Selling, general and administrative expenses | (69,710) | (70,669) | |||
| Plus: | |||||
| Costs of streamlining and consolidation of operations, and other strategic initiatives | 784 | 2,029 | |||
| EBITDA, as adjusted | 18,739 | 20,041 | |||
| Total revenues | $ 257,314 | $ 262,319 | |||
| EBITDA margin percentage of revenues | 7.3% | 7.6% | |||
| (1) Adjusted EBITDA consists of earnings before interest, taxes, depreciation, amortization, costs of streamlining and consolidation of operations, and other strategic initiatives, as well as the gain on sale of long-lived assets. Adjusted EBITDA is not a measurement of financial performance under accounting principles generally accepted in the United States of America, and does not represent cash flow from operations. Adjusted EBITDA is presented solely as a supplemental disclosure because management believes that it is a common measure of operating performance in the apparel industry. In addition, we present adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across periods on a consistent basis by excluding items that we do not believe are indicators of our core operating performance. | |||||