Retail bankruptcies and weak consumer spending pushed down first-quarter profits at Perry Ellis International Inc., but cost cuts helped the vendor top Wall Street expectations and sent shares higher on Thursday.
In the quarter ended May 2, profits at the Miami-based apparel maker fell 35.8 percent to $5.9 million, or 46 cents a diluted share, from $9.1 million, or 60 cents a share, in the comparable year-ago period.
Revenues in the three months slid 9.7 percent to $220 million from $243.5 million a year ago.
On average, analysts polled by Yahoo Finance expected earnings per share of 23 cents on revenues of $207.5 million.
Gross margins fell 320 basis points to 31.5 percent from 34.7 percent because of increased promotions at retail and the company’s decision to end its license for Ping golf apparel. The firm also closed its Tricots St. Raphael and Axis brands and discontinued its Dockers outerwear program.
“In addition to the issues affecting our economy, this quarter we exited some private brand businesses that were not generating real profits and we were faced with the fact that several of our customers from last year are no longer in existence,” chairman and chief executive officer George Feldenkreis said on a conference call with analysts.
The better-than-expected results lured investors in trading Thursday. Shares of Perry Ellis gained $1.35, or 19.8 percent on the day, to close at $8.16.
Feldenkreis said the company has focused on cost control and expense cuts. It trimmed first-quarter operating expenses by 12 percent overall to $58 million from $65.9 million and expects to reduce expenses by about $15 million in fiscal 2010.
The company said it wouldn’t provide specific guidance for the year, but expects improvements in the second half. It predicted a revenue drop in the “high-single to low-double digits” for the 12 months.