Perry Ellis International, Inc. (NASDAQ:PERY) today reported
results for the fourth quarter (“fourth quarter of fiscal 2011”)
and the fiscal year ended January 29, 2011 (“fiscal 2011”).
Fiscal 2011 Results
Fiscal 2011 revenues were $790.3 million, which was in line with
Company guidance, compared to $754.2 million reported in the prior
year ended January 30, 2010 (“fiscal 2010”). This represents a 5%
revenue increase over fiscal 2010. Excluding planned exited
businesses associated with mass market programs and an exited
license agreement totaling $36 million in fiscal 2010, fiscal 2011
revenues increased by 10% over fiscal 2010.
The Company reported an 83% increase in net income attributed to
Perry Ellis International, Inc. for fiscal 2011 of $24.1 million,
or $1.70 per fully diluted share compared to net income attributed
to Perry Ellis International, Inc. of $13.2 million, or $1.01 per
fully diluted share, for fiscal 2010.
Net income attributed to Perry Ellis International, Inc. per
share (“EPS”), diluted, as adjusted for fiscal 2011 was $1.85
compared to EPS, diluted, as adjusted of $1.02 in fiscal 2010. EPS,
as adjusted excludes costs associated with the recent acquisition
of certain assets of Rafaella Apparel Group, Inc. (“Rafaella”) and
impairment charges of certain retail store leaseholds for fiscal
2011 and 2010. (See attached reconciliation “Table 1”).
“Fiscal 2011 was an outstanding year for Perry Ellis
International. The results we delivered and our current positioning
in the market place remains a testament to the strength of our
brand portfolio and business model,” commented Oscar Feldenkreis,
President and COO. “Our key growth platforms led by women’s and
contemporary with the recent acquisition of Rafaella, as well as
Perry Ellis Collection, Golf, Hispanic, and direct to consumer, are
all very well positioned to show strong organic growth and capture
additional market share in fiscal 2012,” continued Mr.
Feldenkreis.
Overall gross margin for fiscal 2011 improved to 35.7% compared
to 33.0% in fiscal 2010, an increase of 270 basis points. Improved
profitability within the Company’s direct-to-consumer businesses,
increased full price sell-throughs at retail, and a continued mix
of higher margin branded product all contributed to the significant
expansion in gross margin over fiscal 2010.
Earnings before interest, tax, Rafaella acquisition costs,
impairments, depreciation, and amortization (“adjusted EBITDA”) for
fiscal 2011 was $64.7 million, or 8.2% of total revenues. This
represents a 33% increase over fiscal 2010 adjusted EBITDA of $48.7
million.(See attached reconciliation “Table 2”).
Fourth Quarter 2011 Results
Total revenue for the fourth quarter of fiscal 2011 was $206.9
million, a 5% increase compared to $196.4 million reported in the
fourth quarter of fiscal 2010. The increase is attributable to
strong performance within Perry Ellis Collection at department
stores, as well as the direct to consumer and women’s and
contemporary businesses.
As reported under GAAP, fourth quarter fully diluted EPS was
$0.54 compared to $0.64 in the fourth quarter of fiscal 2010.
Excluding the above mentioned costs associated with the Rafaella
acquisition and impairment charges of certain leaseholds for fiscal
2011 and 2010, fully diluted EPS, as adjusted, for the fourth
quarter was $0.69 compared to $0.65 in the prior year period. (See
attached reconciliation “Table 1”).
Balance Sheet Update
The Company remained in outstanding financial position at year
end. With a strong focus on working capital management, the Company
generated $21 million in cash from operations and free cash flow of
$14 million for year. The Company reported $18.5 million in cash
and cash equivalents at year end.
Inventory was $178.2 million at year end compared to $112.3
million in the prior year period. Of the $65.9 million increase,
$22.7 million was related to inventory associated with the
acquisition of Rafaella. In addition, inventory rose to support the
planned growth of the business and included strategic purchases to
secure pricing and capacity and was in-line with Company
expectations.
Accounts receivable, decreased 7% to $129.5 million at year end
compared to $139.9 million in fiscal 2010. Excluding $4.9 million
related to the Rafaella acquisition, accounts receivable decreased
11% as compared to $139.9 million in fiscal 2010.
Fiscal 2012 Guidance
As previously announced on March 8, 2011, the Company completed
a concurrent offering of two million shares of its common stock and
$150.0 million of senior subordinated notes due 2019. As a result
of these two transactions, the Company further strengthened its
financial condition, and remains positioned to continue utilizing
the strength of its capital structure to drive strong organic
growth and also maximize new initiatives derived by the recent
acquisition of Rafaella.
Both transactions will have a dilutive effect on the Company for
the twelve months ending January 28, 2012 (“fiscal 2012”), and the
Company now anticipates fully diluted EPS in the range of $2.30 to
$2.40, which represents growth of 27% at the mid-point of the range
from adjusted diluted EPS of $1.85 in fiscal 2011. This compares to
the Company’s pre-common stock and senior subordinated note
offering EPS guidance of $2.50 to $2.65.
“We are extremely pleased with our two recent capital market
transactions, which serve as an integral part of our overall growth
strategy and strong financial condition,” commented George
Feldenkreis, Chairman and CEO of Perry Ellis International. “As we
continue to see the momentum from fiscal 2011 within many of our
businesses, we feel confident in our ability to offset a
significant portion of the dilutive impact from these transactions
and deliver earnings per share in the range of $2.30 - $2.40, for
this fiscal year,” continued Mr. Feldenkreis.
The Company reaffirmed guidance for revenues to reach $1 billion
dollars for fiscal 2012.
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 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), 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) and Rafaella(R). The Company
enhances its roster of brands by licensing trademarks from third
parties, including: Pierre Cardin(R) for men's sportswear, Nike(R)
and Jag(R) for swimwear, and Callaway(R), TOP-FLITE(R), PGA TOUR(R)
and Champions Tour(R) 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" 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, 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 Years
Ended January 29, 2011 January 30, 2010
January 29, 2011 January 30, 2010 Revenues Net
sales $ 199,164 $ 190,045 $ 763,884 $ 729,217 Royalty income
7,744 6,393 26,404 24,985 Total revenues
206,908 196,438 790,288 754,202 Cost of sales 132,933
126,769 507,829 505,104 Gross profit 73,975 69,669
282,459 249,098 Operating expenses Selling, general and
administrative expenses 56,430 49,578 220,018 200,356 Depreciation
and amortization 3,101 3,320 12,211 13,625 Impairment on long-lived
assets 392 254 392 254 Total operating
expenses 59,923 53,152 232,621 214,235
Operating income 14,052 16,517 49,838 34,863 Cost on early
extinguishment of debt - 357 730 357 Interest expense 2,914
4,076 13,203 17,371 Income before
income taxes 11,138 12,084 35,905 17,135 Income tax (benefit)
provision 3,427 3,508 11,393 3,615 Net
income 7,711 8,576 24,512 13,520 Less: net income attributed
to noncontrolling interest - 88 400 353
Net income attributed to Perry Ellis International, Inc. $ 7,711 $
8,488 $ 24,112 $ 13,167 Net income attributed to Perry Ellis
International, Inc. per share Basic $ 0.58 $ 0.67 $ 1.84 $ 1.04
Diluted $ 0.54 $ 0.64 $ 1.70 $ 1.01 Weighted average number
of shares outstanding Basic 13,214 12,730 13,110 12,699 Diluted
14,342 13,351 14,149 13,005
PERRY ELLIS
INTERNATIONAL, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA
(UNAUDITED) (amounts in 000's) BALANCE SHEET
DATA: As of January 29, 2011 January 30,
2010 Assets Current assets: Cash and cash
equivalents $ 18,524 $ 18,269 Accounts receivable, net 129,534
139,934 Inventories 178,217 112,315 Other current assets
36,785 24,822 Total current assets 363,060
295,340 Property and equipment, net 55,077 60,467 Intangible
assets 262,647 200,315 Other assets 4,946 5,194
Total assets $ 685,730 $ 561,316
Liabilities and
equity Current liabilities: Accounts payable $ 73,890 $
65,203 Accrued expenses and other liabilities 30,650 31,597 Accrued
interest payable 3,744 4,482 Unearned revenues 4,438
6,002 Total current liabilities 112,722 107,284
Long term liabilities: Senior subordinated
notes payable 105,221 129,870 Senior credit facility 97,342 - Real
estate mortgages 25,793 13,712 Deferred pension obligation 13,120
17,237 Unearned revenues and other long-term liabilities
28,592 23,097 Total long-term liabilities 270,068
183,916 Total liabilities 382,790
291,200
Equity: Total stockholders' equity
302,940 270,116 Total liabilities and stockholders'
equity $ 685,730 $ 561,316
PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES Table
1
Reconciliation of fiscal 2011 and 2010
and fourth quarter of fiscal 2011 and 2010 earnings per
shareto adjusted earnings per share.
(UNAUDITED) (amounts in 000's) Three Months
Ended Years Ended January 29, 2011 January 30,
2010 January 29, 2011 January 30, 2010 Net income
attributed to Perry Ellis International, Inc. $ 7,711 $ 8,488 $
24,112 $ 13,167 Plus: Impairment on long-lived assets 392 254 392
254 Acquisition costs 2,227 - 2,227 - Less: Tax benefit (504 ) (97
) (504 ) (97 ) Net income attributed to Perry Ellis International,
Inc., as adjusted $ 9,826 $
8,645 $ 26,227 $ 13,324
Three
Months Ended Years Ended January 29, 2011
January 30, 2010 January 29, 2011 January 30,
2010 Net income attributed to Perry Ellis International, Inc.
per share, diluted $ 0.54 $ 0.64 $ 1.70 $ 1.01 Plus: Net per share
impairment on long-lived assets $ 0.02 $ 0.01 $ 0.02 $ 0.01 Net per
share acquisition costs $ 0.13 $ - $ 0.13 $ - Net income attributed
to Perry Ellis International, Inc., as adjusted, per share, diluted
$ 0.69 $ 0.65 $ 1.85
$ 1.02 "Adjusted net income
attributed to Perry Ellis International Inc. per share, diluted"
consists of "net income attributed to Perry Ellis International
Inc. per share, diluted" adjusted for the impact of the acquisition
cost associated with the recent acquisition of certain assets of
Rafaella and the impairment on long-lived assets associated with
certain retail store leaseholds. These costs and impairment are not
indicative of our ongoing 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 ADJUSTED EBITDA(1)
(UNAUDITED) (amounts in 000's) Three Months
Ended Years Ended January 29, 2011 January 30,
2010 January 29, 2011 January 30, 2010
Net income attributed to Perry Ellis International, Inc. $
7,711 $ 8,488 $ 24,112 $ 13,167 Plus: Depreciation and amortization
3,101 3,320 12,211 13,625 Interest expense 2,914 4,076 13,203
17,371 Net income attributable to noncontrolling interest - 88 400
353 Cost on early extinguishment of debt - 357 730 357 Income tax
(benefit) provision 3,427 3,508
11,393 3,615 EBITDA $ 17,153 $ 19,837
$ 62,049 $ 48,488 Acquisition costs 2,227 -
2,227 - Impairment on long-lived assets 392
254 392 254 EBITDA, as adjusted
$ 19,772 $ 20,091 $ 64,668 $ 48,742
Gross profit $ 73,975 $ 69,669 $ 282,459 $ 249,098 Less:
Selling, general and administrative expenses, less Rafaella
acquisition costs (54,203 ) (49,578 ) (217,791
) (200,356 ) EBITDA, as adjusted $ 19,772 $ 20,091
$ 64,668 $ 48,742 Total revenues
$ 206,908 $ 196,438 $ 790,288 $ 754,202 EBITDA, as adjusted,
margin percentage of revenues 9.6 % 10.2 % 8.2 % 6.5 %
(1) "EBITDA" consists of earnings before
interest, taxes, depreciation, amortization, cost on early
extinguishment of debt 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.
"EBITDA as adjusted" consists of EBITDA adjusted for the
impact of the non-cash impairment on long-lived assets and the
acquisition costs associated with the Rafaella transaction These
charges are not indicative of our ongoing operations and thus to
get a more comparable result with the operating performance of the
apparel industry, they have been removed from the calculation.
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