Perry Ellis Swings Back to Profits - Analyst Blog
August 19 2011 - 9:15AM
Zacks
Perry Ellis International
Inc. (PERY) posted adjusted earnings per share of 11 cents
in the second quarter of fiscal 2012, breezing past the Zacks
Consensus Estimate of 4 cents and the year-ago loss of 11 cents.
GAAP net earnings also came in at 11 cents per share, improving
significantly from a loss of 15 cents in the year-earlier
period.
Perry Ellis' total revenue surged
33% year over year in the quarter to $214.4 million. Sales growth
was aided by improved performances at men’s Golf, dresses under
Laundry by Shelli Segal, International business in the U.K. and
Mexico as well as solid increases in direct to consumer. Organic
revenue grew 18%, excluding the recently acquired Rafaella
business. The Rafaella business injected $22.8 million to the total
revenue.
During the quarter, Perry Ellis'
gross profit leaped 24.2% year over year to $72.3 million. However,
gross margin was 33.7% of total revenue compared to 36.0% in the
comparable prior-year quarter. The decline was due to higher
revenues from lower margin products, converting licenses for small
leather goods and dress shirts into wholesale businesses and a
decrease in higher margin licensing business. The Rafaella business
(acquired in late January) also contributed less to the
margin.
Financials
At quarter end, Perry Ellis had
cash and cash equivalents of $34.1 million. Long-term debt was
$220.3 million.
Outlook
Perry Ellis expects earnings per
share in the range of $2.45–$2.52 for fiscal 2012, compared to
$2.40–$2.50 guided earlier. The earnings guidance was also raised
from the $2.30–$2.40 range last quarter. The expectation for
revenue was reiterated at $1 billion.
Our Take
Perry Ellis, the designer,
distributor and licensor of a broad line of men's and women's
apparel, accessories, and fragrances, remains optimistic about the
performance of Rafaella as well as current business trends.
Management remains committed to integrate its niche businesses such
as Golf and Hispanic as well as the Perry Ellis Collection with
Rafaella’s women’s sportswear. We believe this is a positive step
toward the strength of Perry Ellis’ market share gain.
Additionally, consecutive raise in the earnings guidance affirms
the strength in the company’s fundamentals.
Concerns for the near term include
the inflationary commodity environment, struggling margins and high
amount of debt in the company’s balance sheet.
Perry Ellis currently retains a
Zacks #3 Rank, which translates into a short-term Hold rating. We
are also maintaining our long-term Neutral recommendation on the
stock. Perry Ellis' peers include Polo Ralph Lauren
Corp. (RL) and CROCS Inc. (CROX).
CROCS INC (CROX): Free Stock Analysis Report
PERRY ELLIS INT (PERY): Free Stock Analysis Report
RALPH LAUREN CP (RL): Free Stock Analysis Report
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