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.
My character, Dinah Madani, is just the coolest, [most] badass woman imaginable," says @amberroserevah. The actress stars in @marvel's newest series on @netflix, @thepunisher. To prepare for her role, Revah sat down with Homeland agents to get a real sense of with Dinah's day-to-day life is really like. Read our full interview on WWD.com. #wwdeye (📷: @jilliansollazzo)
A scene from the 91st annual @macys Thanksgiving Day Parade. The parade, which boasts 50 million TV viewers and 3.5 million on-site spectators, is considered one of the largest and most watched parades in the world. (📷: Jason Szenes/EPA-REX)
The circus came to @bloomingdales 59th Street on Tuesday night and lit up Lexington Avenue with acrobatic dancers, death-defying knife throwing, sword swallowing and aerial acts with no net. The 45 minutes of theatrics built up to unveiling the holiday windows depicting @swarovski crystal-encrusted circus pieces and scenes from “The Greatest Showman” – songs from the soundtrack included. See the rest of the photos on WWD.com #wwdfashion (📷: Joshua Scott)
The psychedelic fashion that pervaded the ’60s is back with an exhibit at the @museumofcityny. “Mode New York: Fashion Takes a Trip” chronicles the changing styles from 1960 through 1973 and features designers such as @ysl, @oscardelarenta and more. The exhibition, which is on display through April 1, is organized into four periods: First Lady Fasion, Youthquake, New Bohemia and New Nonchalance. Pictured here is model Pat Bardonella during the Garvey Day Parade in 1968. (📷: @kwamebphoto) #wwdeye #wwdfashion
“People should be a lot more honest in expressing both the dark and light of themselves. We need to give each other the space to do that because it’s the only way we can grow and evolve,” says @noelwells of her new film “Mr. Roosevelt,” which is largely based on her own struggles. Unexpectedly leaving @nbcsnl in 2014 after just one season, Wells felt set back in her self-esteem and career trajectory. She quickly refocused her energy to more personal projects, which led to the completion of “Mr. Roosevelt.” Read the rest of WWD’s interview with the “Master of None” actress on WWD.com #wwdeye (📷: @jilliansollazzo)
@barbrastreisand is giving fans a chance to see her perform up close in a new concert series, which makes its debut on @Netflix today. From behind-the-scenes takes to her concert performance in Miami last December, the two-hour streaming special captures Streisand in her element. Pictured here is the singer/actress photographed for WWD in 1963. (📷: Palmieri Tony) #wwdeye #wwdarchive
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)