The story has become legend within the apparel industry.
When Fidel Castro overthrew the Cuban government in 1961, a young George Feldenkreis escaped the island nation with only $700 in his pocket. He settled in Miami and his pregnant wife followed him a month later, toting along their toddler son, Oscar.
“I was 26 years old and I didn’t know anybody,” said the now-82-year-old George. “I spoke English poorly and my grammar was terrible.”
But he knew he had to find a way to support his family, so he took the skills he had acquired working with his father in Cuba and started distributing motorcycle and automotive parts. Within two years, he began traveling to the Far East, importing everything from car parts to textiles.
In 1967, George teamed with his brother Isaac who had settled in Puerto Rico, to create Supreme International, selling school uniforms and Latin-flavored four-pocket linen guayabera shirts. Success soon followed and it wasn’t long before George acquired his nickname: The Guayabera King.
Growing from those humble beginnings, the company that is now called Perry Ellis International today boasts $3.1 billion in global retail sales, $861 million in revenues and counts more than 150 licensees around the world.
“To survive 50 years in the schmatta business is pretty good,” George said with a laugh.
To celebrate this milestone, George and Oscar, who is now chief executive officer, will ring the closing bell at the Nasdaq exchange on Friday flanked by a few special guests: Carlos Ponce, a musician and television star, and the Miami Heat’s Justise Winslow.
Although they’re celebrating now, it hasn’t been all fun and games over the past half-century. Like everything in George’s life, it has required a lot of fancy footwork and maneuvering to survive and prosper.
In the early years, Supreme’s success centered around the popular guayabera as well as an innovative reactive printed polo program that the company had created for jersey fabrics.
By the early Seventies, both J.C. Penney Co. Inc. and Sears Roebuck & Co. had picked up the brand and Kmart was also a major customer.
Supreme was also an international pioneer, opening its first office in Asia in 1970 and moving into Panama, Curacao and Margarita Island (off Venezuela) in 1973.
By 1981, the company had $5 million in revenue and seven years later, it created Natural Issue, an apparel brand featuring its innovative reactive printing process.
In 1993, Supreme had achieved sales of $33 million and it went public on the Nasdaq exchange.
Under the scrutiny that comes with being a public company, Supreme started to add to its stable and in 1996, acquired Munsingwear and Grand Slam. George recalled that by purchasing Munsingwear, it marked the “first time we had an honest department store brand, and it paved the way for our growth.”
In 1999, Supreme added the brand that would mark the beginning of a new era for the company: Perry Ellis. By that time, the brand that was created by the American designer in the mid-Seventies had become a leader in the men’s market with its new patterns and proportions.
The Virginia-born Ellis founded his label in 1978 with the backing of Manhattan Industries and his distinct aesthetic — soft tailoring, oversize shoulders and natural fabrics with lots of drape — soon led to a parade of licenses and sales of more than $260 million by 1986, the year that he died from AIDS-related causes. (It also was the brand where Marc Jacobs launched his famed “grunge” women’s collection, only to be fired in 1993 and women’s wear discontinued.)
By acquiring the Perry Ellis brand, George said Supreme “now had a designer brand,” catapulting the company into a new realm — so much so that the corporation changed its name to Perry Ellis International.
But having acquired the famed label, it took some time for the Feldenkreises to figure out its position in the market. While they continued to successfully build the brand in men’s wear, the women’s category proved to be more problematic. In 2002, PEI relaunched women’s wear in a license with Public Clothing Inc., which hired Patrick Robinson to design it. While garnering good reviews, Robinson’s designs were more in the contemporary than the better market — and didn’t perform that well at retail. He subsequently was fired after only two collections. Women’s was subsequently discontinued again.
Since 2014, designer Michael Maccari has controlled the brand’s creative reins, and his collection, which is men’s only, keeps one eye on Ellis’ heritage and the other on updating the offering with a modern aesthetic.
Its fall marketing campaign features Mexican actor and singer Aaron Diaz and emphasizes the brand’s versatility by showcasing its layering options, and there are lots of performance fabrics that speak to the needs of today’s man.
After buying the Perry Ellis brand at the end of the Nineties, PEI continued its acquisition spree, adding Jantzen in 2002, Laundry by Shelli Segal in 2008, the Rafaella Apparel Group in 2011 and Ben Hogan in 2012.
“There have been nine acquisitions since going public in 1993,” George said. “When I was growing up in Havana, I always said I wanted to build a company with a lot of businesses.”
Oscar added that since Perry Ellis is the company’s largest brand, it is “treated with the utmost integrity, but all our brands are nice and plump and well taken care of.”
But not everyone agreed.
A BUMPY ROAD
In 2014, when the company was underperforming and its stock price depressed, outside pressures on the family started mounting. Activist investment firm Legion Partners took a 6 percent stake in the firm in tandem with the California State Teachers’ Retirement System, and sought to separate the roles of chairman and ceo that were both held by George. Oscar at the time was president and chief operating officer.
The next year, it got uglier, and a proxy battle ensued with Legion alleging: “We have serious concerns that the Feldenkreis family has chosen to run Perry Ellis in a manner that benefits its own interests rather than in the best interests of all shareholders,” said Chris Kiper of Legion in an SEC filing. “We believe maintaining the status quo under the leadership and control of the Feldenkreis family creates an unnecessarily high risk that Perry Ellis will continue to underperform, causing irreparable value destruction for shareholders.”
The situation was resolved the next year when George became executive chairman and Oscar ceo and president. The new structure positioned George to work on strategic planning, mergers and acquisitions, licensing and other areas of growth. Oscar, who officially joined the company in 1979, runs the day-to-day operations.
At the same time, Bruce Klatsky, the former ceo of Phillips-Van Heusen Corp., and Michael Rayden, the onetime chief of the Justice unit of Ascena Group, joined the company’s board as independent directors.
This led George to say: “For the past two years, we have worked very hard to return Perry Ellis to a more profitable path and have made very substantial progress in our efforts to create value for all our stakeholders.”
As early as 2012 when it reported steep earnings declines, PEI revealed it would restructure its portfolio to focus on its core brands — Perry Ellis, Original Penguin, the golf brands, Nike swim, Rafaella and Savane — while divesting businesses that had small revenue and profits. At that time, it was juggling labels it had owned for many years as well as others it had purchased from competitors or through bankruptcy proceedings. There was also an ill-fated attempt to move into the designer market with a Perry Ellis by Duckie Brown label.
That painful process took several years and opened the firm up to the activist investor problem, but it appears the group is on the right track once again.
According to Oscar, today’s PEI is a “more focused company. Over the past five years, we’ve exited close to $100 million in business and brands. But last quarter, we showed growth again and we expect the third and fourth quarters to show growth as well.”
In the second quarter, PEI reported that total revenues, including royalty income, reached $206.6 million for the three months ended July 29, a 2.5 percent increase over last year and 0.7 percent higher than internal projections.
Net income came in at $979,000 for the quarter, compared to a net loss of $3.56 million a year ago. Earnings per share totaled 6 cents.
As a result, the company reiterated its full-year guidance of revenue between $870 million and $880 million and diluted EPS up to $2.17.
On the earnings call, Oscar said the “ongoing positive performance demonstrates the power of our core brands, the strong response to our product innovations and the intense focus with which we direct our resources to deliver.”
He added that the company is in a “much healthier position” and has “a clean balance sheet.” In fact, he said PEI is looking for additional licensees and acquisitions and is “working on a few.”
Today, the Perry Ellis brand, with $1.3 billion in sales, accounts for 42 percent of the group’s revenue. Original Penguin, a $500 million business, is 16 percent; the PEI Golf brands (Callaway, PGA Tour, Grand Slam, Ben Hogan and Jack Nicklaus) are 15 percent, with $460 million in revenue; Nike swimwear, Savane men’s casualwear and Cubavera, a Latin-inspired men’s label, account for $310 million in sales, or 10 percent, and the Rafaella and Laundry by Shelli Segal women’s labels, with sales of $310 million, are also 10 percent.
Other brands such as Farah, Peony & Me and Axist make up the remainder.
The company also has a robust licensing business with more than 150 active licenses in more than 55 countries, ranging from Belize and Colombia to France, Spain and Italy.
Oscar said PEI expects its future growth to come from international expansion. “We feel that has the biggest opportunity,” he said, pointing to Europe, Canada and Latin America as key markets for its brands.
“We also see continued growth in the digital space and in e-commerce,” he added.
And although the corporation closed 10 stores last year and five this year, Oscar said the thinking is that brick-and-mortar stores continue to be “important for our portfolio.”
Additionally, PEI believes that golf can continue to grow and will launch Original Penguin Golf. That label will also add denim, he said.
In addition to George and Oscar, there are other Feldenkreises who work in the company: George’s daughter, Fanny Hanono, who is the chief administrative officer; Oscar’s daughter Erica, who is brand manager for Original Penguin, and his youngest daughter, Stephanie, who created Peony & Me.
In addition to brands, PEI is investing in its internal infrastructure, opening a state-of-the-art photo studio at its Miami headquarters to provide lifestyle imagery for its marketing platforms. There is also a technical design studio where apparel fittings are done virtually or traditionally and the headquarters boasts a print fabric archive that is valued at more than $2 million. PEI has also implemented 3-D design capabilities to improve and hasten the design process.
IN THE FAMILY
It’s no surprise then that for the Feldenkreis family, PEI is near and dear to their hearts.
“Our family owns in excess of 20 percent of the company, so it’s our livelihood,” Oscar said. “We live and breathe it and we also look at our 2,500 employers as our extended family.”
Giving back is also important to the Feldendreis family, which is active in charities such as the Red Cross, the United Way, Habitat for Humanity and a variety of cancer organizations, as well as apparel industry initiatives including the YMA, KIDS/Fashion Delivers and the Father’s Day Council.
“My father taught us you have to give back to society,” Oscar said. “If the world is good to you, you need to help others — it’s part of our culture on both a personal and corporate level. We believe that you have to support others and you’ll be rewarded with happiness.”
Oscar said he is also grateful for the opportunity of working hand in hand with his father for all these years.
“When he first started, I sent him to Aruba and then Shanghai,” George said. “That really pissed him off. But he survived and now he’s probably the only ceo who knows how to calculate the cost of a garment because he traveled to Asia to do sourcing.”
Oscar said his father keeps threatening to retire, but instead remains very active. “I’m happy to have my father next to me to discuss ideas. He’s my best friend and thanks to him, I get to do what I enjoy.”
George said that if Oscar hadn’t joined the business and moved up the ranks, “I would have sold it years ago.” But with his son firmly at the helm, George sees a bright future for the business he started a half-century ago.
“I love my work more than anything else and as long as Oscar wants me here, I don’t mind doing what I do. I don’t have anything to prove, but I still have an ego that tells me I’ve survived when others have not. I’m proud of the 2,500 people who work for the company, our philanthropy and social responsibility. That’s very important to me.”