Buoyed by its namesake brand, a calendar shift and strong outlet sales, Perry Ellis International reversed a year-ago loss while more than tripling its operating income and reducing its debt load in the second quarter.
The company also said it was expanding its overseas business, especially in China and India, as it is in the process of inking deals in those countries.
Net income for the quarter ended July 31 came in at $267,000, or 2 cents a diluted share, which compares to a $2.5 million, or 17 cents, loss in the prior year on a 14.2 percent sales gain to $195.3 million from $171 million. Operating income rose to $5.1 million in the most recent quarter to $1.1 million in the prior year while EBITDA jumped to $8.3 million from $3.9 million.
The company said in a statement that the revenue gain was “driven by several of the company’s growth platforms — Perry Ellis, golf and Hispanic lifestyles, direct retail and international. As anticipated, the shift in the retail calendar moved some of the shipments from April into May, thus positively impacting revenue growth during the second quarter of fiscal 2008. Additionally, the company experienced a favorable shift in sales from August into July.”
Regarding its debt, the company said it was able to strengthen its balance sheet by reducing its long-term debt by $61.4 million at the end of the quarter.
“The power of our brands and the validity of our multi-brand, multi-channel, multi-product strategy are clearly evidenced in our record second-quarter and first-half results,” said Oscar Feldenkreis, president and chief operating officer, in a statement. “During the first half of fiscal 2008, we achieved solid growth across all platforms and excellent sell-throughs.”
George Feldenkreis, chairman and chief executive officer, said on a conference call with analysts that the company’sPerry Ellis retail outlet division “grew revenues by over 60 percent compared to [the second quarter of] last year.” The growth of the brand’s stores was driven by a 44 percent increase in same-store sales, “while store contribution more than doubled compared to last year,” he said.
“Our current productivity is slightly above $350 a square foot, [and] leaves us very optimistic about continuing an expansion strategy,” the CEO said. “We currently have 37 outlet doors and we plan to open 10 more each year provided that we find the right locations.”The CEO went on to say that the company’s Original Penguin retail “also had an outstanding quarter with a 45 percent revenue increase driven by over 20 percent improvement in comp for some of our stores. We now operate five Penguin stores with sales exceeding $700 a square foot and we plan to open 15 to 20 new doors within the next three years.”
The company also said it was in negotiations to bring some of its brands to China and India. “Of course these are very large markets and we must trade very carefully in choosing the right partner under the right conditions,” the CEO said. “We see this as an area of rapid growth as we continue to build consumer awareness and product quality.We feel that international market for well-known American brands will continue to grow at a faster pace than in the past.
”On the international front,” he continued, “we are glad to report that our company in the United Kingdom is doing very well selling for our products as well as selling Original Penguin to 12 countries in Europe.”
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