Perry Ellis International Inc. posted third-quarter results in which adjusted EPS beat Wall Street’s consensus estimate by 8 cents.
For the three months ended Oct. 29, the net loss was $5.2 million, or 34 cents a diluted share, against net income of $2.3 million, or 15 cents, a year ago. The GAAP loss included pension plan termination costs of 55 cents a share. On an adjusted basis, diluted EPS was 23 cents, easily beating Wall Street’s consensus estimate of 15 cents. Total revenues fell 5.6 percent to $194 million from $205.4 million, which included a 5.7 percent decline in net sales to $185.3 million. The balance of revenues was from royalty income.
The company said gross margin expanded 100 basis points to 36.7 percent from 35.7 percent last year. Inventory in the quarter fell 23 percent to $112 million from $145 million at the end of the year-ago quarter.
Oscar Feldenkreis, chief executive officer, said that third-quarter results were ahead of company expectations. ‘Revenues declined in total, reflecting the balance of the impact of the exit of noncore brands and negative currency exchange rates,” he said. The ceo also noted growth in the Perry Ellis and Golf Lifestyle brands, as well as in Nike swim.
As for strategic priorities for fiscal 2017, George Feldenkreis, executive chairman, said, “We have continued to focus on our high margin branded businesses. This coupled with strong inventory management and solid retail performance has driven consistent margin expansion…. We feel that with the elections over, consumer confidence continues to increase and we expect to see increased consumer spending during the holiday season.”
Since fiscal 2014, the company has exited over 30 brands, which accounted for $100 million in lower margin revenues. It also converted some smaller brands to licensed-only brands. The company has also concentrated on brand positioning at retail for its menswear brands. And it has expanded internationally and through the direct-to-consumer channel. The company said during the third quarter of fiscal 2017, it has realized $1.8 million in savings costs in selling, general and administrative expense, helping to bring the savings total for the year to $5.8 million.
The company reaffirmed its guidance for fiscal 2017, with adjusted EPS at $1.95 to $2.00 on a revenue range of $885 million to $890 million.
Shares were up around 4 percent to $22.78 in early morning trading.