Perry Ellis International, Inc. (NASDAQ:PERY) today reported
results for the first quarter ended May 1, 2010 (“first quarter of
fiscal 2011”).
First Quarter Results From Operations
“We are extremely pleased to report very strong results for the
first quarter of fiscal 2011. Our multibrand, multichannel
diversification strategy which is the foundation for our business
platforms continues to prove successful in today’s retail
environment,” commented Oscar Feldenkreis, President and COO of
Perry Ellis International. “As the economy continues to show signs
of a recovery, consumers are responding positively across our brand
portfolio, reflecting our increased product focus. Our strong
performance at retail has driven solid increases in our gross
margins and positions us for continued revenue growth in the
future.”
For the first quarter of fiscal 2011, total revenues were $220.3
million compared to $220.0 million reported in the prior year
period, and slightly ahead of Company expectations. Throughout the
quarter the Company increased revenues by $17 million as a result
of organic growth in several key core businesses as well as
deliveries of the new brands that were launched during the quarter.
However, this growth was offset by the previously announced exit of
certain unprofitable businesses which represented $17 million of
revenue for the first quarter ended May 2, 2010 (“first quarter of
fiscal 2010”). With the increased mix of branded revenue, gross
margins expanded by 420 basis points to 35.7% compared to 31.5% for
the comparable period in fiscal 2010.
Mr. Feldenkreis, added, “We continue to see the consumer
returning to more normal shopping patterns, which is contributing
to increased shipments of our brands at most retailers. In
addition, conservative inventory planning at retail combined with a
favorable response to our offerings has translated into increased
sell through rates at retail and less markdown assistance for our
company. This has been a healthy development for all of us in the
industry and in our case resulted in a substantial increase in our
gross margin rate for the quarter.”
Earnings before interest, tax, depreciation, and amortization
(“EBITDA”) for the first quarter of fiscal 2011 grew 56% to $23.1
million compared to $14.9 million during the first quarter of
fiscal 2010. A table showing the reconciliation of EBITDA to net
income is attached. In addition, net income for the first quarter
ended May 1, 2010 increased 92% to $11.2 million compared to $5.8
million for the period ending May 2, 2009.
For the three months ended May 1, 2010, earnings per fully
diluted share at $.81 represented an increase of $.35 or 76%
compared to $.46 for the first quarter ended May 2, 2009. This
compares positively to Thomson’s First Call consensus earnings of
$.60 for the quarter.
Balance Sheet Update
The Company ended the first quarter of fiscal 2011 with $31.8
million in cash compared to $7.1 million at the end of the first
quarter of fiscal 2010. In addition, the Company continues to
strengthen its balance sheet and remains in an outstanding
financial position. The continued focus and discipline in working
capital management along with strong retail planning allowed the
Company to reduce its inventory position by $10.2 million or 9% to
$104.3 million compared to $114.5 million at the end of the first
quarter of fiscal 2010. Inventory turnover improved to 4.8 times
versus 4.4 times in the prior year period. Accounts receivables
were reduced to $134.0 million compared to $154.7 million. This
represents a $20.7 million or 13% reduction.
At quarter end, the Company generated $9.8 million in cash from
operations and ended the quarter with no borrowings against its
$125 million senior credit facility. The Company continued to
reduce its overall debt position bringing its total net debt to
capitalization ratio to 30% as of May 1, 2010 compared to 34% as of
January 30, 2010 and 44% as of May 2, 2009.
Fiscal 2011 Guidance
“As we look ahead we expect our trends to continue favorably,”
commented George Feldenkreis, Chairman and CEO. “The men’s business
continues to be strong and for most retailers, performed
substantially better than other parts of their businesses. “We have
successfully managed the turnaround of several of our
underperforming businesses and this has resulted in an improvement
in our gross margin. We believe this will be a good year for the
Company and consequently have increased our guidance for revenues
and earnings for the full year.”
The Company expects fiscal 2011 net revenues and earnings per
share will be in a range of $775 - $795 million and $1.45 - $1.60,
respectively, compared to its previous guidance of $770 - $790
million and $1.25 - $1.40 in EPS.
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 and casual pants and shorts, jeans wear, active wear 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®, Cubavera®, Centro®, Solero®,
Munsingwear®, Savane®, Original Penguin® by Munsingwear®, Grand
Slam®, Natural Issue®, Pro Player®, the Havanera Co.®, Axis®,
Tricots St. Raphael®, Gotcha®, Girl Star®, MCD® John Henry®, Mondo
di Marco®, Redsand®, Manhattan®, Axist® and Farah®. 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 Golf®, TOP-FLITE®, PGA TOUR® and
Champions Tour® 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," "could," "may," "might," "potential," "predict,"
"should," "estimate," "expect," "project," "believe," "plan,"
"envision," "continue," "intend," "target," "contemplate," or
"will" 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, 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 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, 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 1, 2010
May 2, 2009 Revenues Net sales $ 214,242 $ 214,038
Royalty income 6,107 6,006 Total revenues
220,349 220,044 Cost of sales 141,605 150,810
Gross profit 78,744 69,234 Operating expenses Selling, general and
administrative expenses 55,626 54,374 Depreciation and amortization
3,119 3,623 Total operating expenses
58,745 57,997 Operating income 19,999 11,237 Interest
expense 3,747 4,618 Net income before
income taxes 16,252 6,619 Income tax provision 4,876
827 Net income 11,376 5,792 Less: net (loss) income
attributed to noncontrolling interest 177 (57 ) Net
income attributed to Perry Ellis International, Inc. $ 11,199 $
5,849 Net income attributed to Perry Ellis
International, Inc. per share Basic $ 0.87 $ 0.46 Diluted $
0.81 $ 0.46 Weighted average number of shares
outstanding Basic 12,867 12,701 Diluted 13,884 12,710
PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES SELECTED
FINANCIAL DATA (UNAUDITED) (amounts in 000's)
BALANCE SHEET DATA: As of May 1, 2010 January 30, 2010
Assets Current assets: Cash and cash equivalents $
31,827 $ 18,269 Accounts receivable, net 133,973 139,934
Inventories 104,281 112,315 Other current assets 25,453
24,822 Total current assets 295,534
295,340 Property and equipment, net
57,875 60,467 Intangible assets 200,315 200,315 Other assets
5,291 5,194 Total assets $ 559,015
$ 561,316
Liabilities and stockholders'
equity Current liabilities: Accounts payable $ 43,637 $
65,203 Accrued expenses and other liabilities 35,911 31,597 Accrued
interest payable 1,553 4,482 Unearned revenues 5,668
6,002 Total current liabilities 86,769
107,284
Long term liabilities:
Senior subordinated notes payable, net 129,933 129,870 Senior
credit facility - - Real estate mortgages 13,589 13,712 Deferred
pension obligation 16,700 17,237 Unearned revenues and other long
term liabilities 25,468 23,097 Total
long term liabilities 185,690 183,916
Total liabilities 272,459 291,200
Stockholders' equity Preferred stock -
- Common stock 165 161 Additional paid in capital 112,546 107,527
Retained earnings 191,037 179,838 Accumulated other comprehensive
loss (3,614 ) (3,655 ) Common stock in treasury (17,415 )
(17,415 ) Total Perry Ellis International, Inc.
stockholders' equity 282,719 266,456 Noncontrolling interest
3,837 3,660 Total stockholders' equity 286,556
270,116 Total liabilities and
stockholders' equity $ 559,015 $ 561,316
PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA(1) (UNAUDITED)
(amounts in 000's) Three Months Ended May
1, 2010 May 2, 2009 Net income attributed
to Perry Ellis International, Inc. $ 11,199 $ 5,849 Plus:
Depreciation and amortization 3,119 3,623 Interest expense 3,747
4,618 Net (loss) income attributable to noncontrolling interest 177
(57 ) Income tax provision 4,876 827 EBITDA $
23,118 $ 14,860
(1) EBITDA consists of earnings
before interest, taxes, depreciation, amortization and
noncontrolling interest. 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. EBITDA is presented solely as a supplemental disclosure
because management believes that it is a common measure of
operating performance in the apparel industry.
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