Perry Ellis International will be downplaying its private-label offering as it works to reverse a loss in the fourth quarter and year.
In the quarter ended Feb. 1, PEI posted a net loss of $28.2 million, or $1.91 a diluted share, against net income of $4.4 million, or 28 cents, in the year-ago period. The company said the quarter included a $42.9 million noncash writedown of certain intangible assets following a review of noncore brands and businesses. On an adjusted basis for both quarters, including the writedown and other charges, fourth-quarter diluted earnings per share were 6 cents, compared with 50 cents a year ago. Total revenues fell 16.4 percent to $216.1 million from $258.3 million and included a 17.2 percent decline in net sales to $207.9 million. The company said revenues were impacted by inclement weather and a cautious consumer, which resulted in part from a lack of replenishment orders across many of its business platforms.
In a conference call with analysts on Thursday, George Feldenkreis, chairman and chief executive officer, said private and exclusive brands now account for 18 percent of sales, down from 22 percent in fiscal 2013, and are expected to decline to 16 percent by the end of the year.
Oscar Feldenkreis, president and chief operating officer, said that during fiscal 2014, the company exited 20 private-label and exclusive brand programs, representing a “$62 million decline in revenues. The strategy will continue to unfold in fiscal 2015 as we plan to exit four additional programs resulting in an additional $20 million in revenue loss.”
He stressed, however, that the company’s owned and licensed brands — which include Perry Ellis, Rafaella, Original Penguin, Laundry and Ben Hogan — grew “slightly” in the year and the company will “direct our energy and capital towards international, multiretail or lifestyle brands across our core platforms, which consists of men’s sportswear, golf lifestyle apparel and women’s sportswear.”
The quarter, impacted by inclement weather, resulted in store closures and declines in traffic that hurt sales and gross margins. The company’s own stores also posted a 4.8 percent decline in sales during the period, according to George Feldenkreis.
He did, however, say he was “encouraged” by the performance of the e-commerce business, pointing to a 20 percent sales gain in wholesale e-commerce sales to $40 million.
George Feldenkreis said the company signed 13 new domestic and five international licenses last year and licensing revenue overall increased 10 percent to $29.6 million from $27 million last year.
Internationally, he pointed to growth in Canada, Mexico and the U.K. and said the company is investing “in people and platforms” in the European Union as well as Canada and Latin America to fuel further growth. He said early results in Asia are also encouraging.
For the year, the company said the net loss was $22.8 million, or $1.52 a diluted share, against net income of $14.8 million, or 97 cents, in 2013. Total revenues slipped 5.9 percent to $912.2 million from $969.6 million, which included a 6.4 percent decrease in net sales to $882.6 million.
The company in February had reported preliminary fourth-quarter results that were sharply below previous guidance due to weather, poor traffic and heavy promotions in some product categories.
The company said it expects adjusted diluted EPS for fiscal year 2015 in the range of 75 cents to 90 cents on a revenue projection of $910 million to $920 million. Guidance includes its expense rationalization initiative net of reinvestment in new businesses.
Shares of PEI on Thursday rose 3.1 percent to close at $14.69 in Nasdaq trading.