NEW YORK — The Salant acquisition as well as gross margin erosion pushed Perry Ellis International Inc. to an expected loss in the second quarter.
For the three months ended July 31, the Miami-based multiportfolio sportswear marketer reported a net loss of $2.6 million, or 33 cents a diluted share. By comparison, last year the company had profits of $2.2 million, or 34 cents. Adjusting for the effect of the Salant acquisition in both years, the second-quarter loss would have been 11 cents versus year-ago earnings of 89 cents.
With the inclusion of approximately $31 million in revenue from Salant’s operations, total revenues for the period grew by almost half, or 45 percent, to $92.8 million from $64 million a year ago. However, plunging gross margins and skyrocketing costs from the acquisition more than negated any contribution to the bottom line.
PEI said the minimal gross margins generated by the small seasonal swimwear business were insufficient to offset the associated overhead expense, as well as the hiring of additional corporate accounting and administration staff in anticipation of the Salant deal closing last month.
As such, company-wide gross margin as a percentage of sales retracted 600 basis points to 32.1 percent, while overall selling, general and administrative costs ballooned 750 basis points to 31.4 percent of sales.
Still, the short-term negative impact of the Salant purchase should be more than offset by its strategic benefits, PEI said.
“The company is poised to take advantage of its multiple opportunities, and we expect revenue growth and net income for the remainder of this year and next,” said chief executive George Feldenkreis in a statement.
Feldenkreis was likewise bullish on the prospects of PEI’s swimwear merchandise segment.
“We expect a very strong year for the swim business, with our new Jantzen Ruby and Diving Girl lines, expanded offerings in resort wear and accessories,” he said. “Positive retailer reaction and initial bookings are encouraging indicators.”
Overall, for the first half of the year, PEI said net income fell 56.9 percent to $3 million, or 40 cents a diluted share, from $6.9 million, or $1.08, a year ago. Adjusting for the effect of the Salant buy in both years, the first-half loss would have been 7 cents versus year-ago earnings of $1.01.Net revenues for the half rose 35.2 percent to $201 million from $148.7 million a year ago.
Looking forward, PEI maintained its full-year EPS guidance of $2.50 on revenues of $480 million. For the next full fiscal year, PEI expects EPS of $2.80 and revenues of $600 million.
In a separate development, PEI on Thursday named Martin Diment design director for Tricots St. Raphael sweaters, and Ran Shabani design director for Tricots St. Raphael knit shirts, woven shirts and a segment of sweaters. Diment and Shabani will report to Tricots St. Raphael division president Cecile Platovsky. The Tricots St. Raphael line was acquired by PEI as part of its purchase of Salant.
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)