Growth in its Perry Ellis men’s and Rafaella women’s collections wasn’t sufficient to offset weakness in its retail operations as Perry Ellis International Inc. logged wider second-quarter losses.
For the three months ended Aug. 3, the Miami-based sportswear firm’s net loss hit $2.8 million, or 19 cents a diluted share, versus a loss of $2.4 million, or 17 cents, in the 2012 quarter. The adjusted loss was 15 cents a share, 1 cent greater than the 14-cent loss expected, on average, by analysts.
Revenues grew 1.1 percent to $211.7 million from $209.4 million a year ago, below analysts’ consensus estimate of $214.5 million. Included in the revenue figure was a 13.6 percent increase in royalty income, to $7.2 million.
However, PEI’s direct-to-consumer operations registered an 8.8 percent decline, to $19.6 million, including a 5.9 percent dip in same-store sales versus a 12.4 percent increase in the second quarter of last year.
“In addition to the difficult comparison, we attribute the negative comp to having lighter than optimal inventories in the Original Penguin stores, which was driven by tighter plans,” said Anita Britt, chief financial officer, on a Thursday morning conference call. “We have increased the units per door into August, and we believe that we are in a solid position to drive sales in the third quarter.”
The weakness in its retail operations contributed to a 70 basis point decline in gross margin, to 32.4 percent of sales in the most recent quarter from 33.1 percent in the year-ago period. The company said the erosion was blunted by the better results at Perry Ellis and Rafaella.
PEI ended the quarter with 69 U.S. stores and five in Europe. Perry Ellis accounted for 43 of the units, Original Penguin for 24 and other concepts for the remainder.
As the company has moved to put its e-commerce operations in a less-promotional posture, Web sales were off 18 percent. Britt said the anniversary of those efforts will come in the third quarter. Additionally, same-store sales are expected to return to positive territory in the second half, with midsingle-digit increases in the third quarter and high-single-digit increases in the fourth.
Britt noted that the company had exited private-label programs in men’s wholesale, eliminating about $20 million in annual volume, the bulk of it in the first half of the year.
The company reiterated its expectations for full-year earnings per share of between $1.50 and $1.60 despite a reduction in sales guidance, to a range of $988.9 million to $998.6 million from the previous estimate of $998.6 million to $1.02 billion. Britt said the adjustments reflect both the first-half weakness in its own stores and caution among its wholesale partners, particularly in the midtier channel.
Oscar Feldenkreis, president and chief operating officer, told analysts during the call that the company was “looking at additional brands and potential acquisitions” within the golf market, where, he said, the company already enjoys a U.S. market share of between 75 and 80 percent. The company owns the Ben Hogan brand, and is planning to introduce a premium edition of it, and licenses the Callaway and PGA Tour brands as well.
Feldenkreis said the company is exploring opportunities “not only in golf apparel, but also in other product categories that might become an opportunity to enhance our current lifestyle brands, as we feel this is a niche where we have continued to perform. And we feel that not only domestically but internationally, it creates a lot of opportunities.”
George Feldenkreis, chairman and chief executive officer, noted that, despite weakness in its own e-commerce efforts, year-to-date Web sales through brick-and-mortar retail customers were up 12 percent and sales with pure-play e-tailers such as Amazon and Zappos moved ahead 30 percent.
“Our growth in e-commerce validates the strength of our brands and the connection with the consumer,” the ceo said. “Brands are more important than ever in this highly evolving Internet age. You need brands to be found on search engines, and that is precisely what we will continue to build — solid, recognizable, searchable brands.”
For the six months, net income grew 18.4 percent, to $8.5 million, or 55 cents a diluted share, while revenues declined 0.2 percent to $474 million.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty