Perry Ellis saw sales and revenue decline in the fourth quarter and during the year as a whole, but the brand managed to pull its bottom line out of the red.
While fourth-quarter net revenue declined by 5 percent to $204.2 million from $214.4 million, Perry Ellis posted a net income of $9 million, up from a net loss of $17.7 million a year ago.
For all of 2016, the company posted a 4.3 percent drop in revenue, to $861.1 million from about $900 million, but managed net income of $14.5 million, compared with a net loss of $7.3 million the prior year.
Perry Ellis chief executive officer Oscar Feldenkreis noted that $12 million in revenues were “held back” at the end of the year due to lowered shipments from certain retailers, but said “our sell-through rates enabled us to recapture the majority of these sales shipments at the start of fiscal 2018.”
Feldenkreis also attributed the decrease revenue to a 6.2 percent drop in comparable-store sales within the company’s direct-to-consumer business, related to a 15 percent decline in store foot traffic.
Nevertheless, Feldenkreis said Perry Ellis managed “assortments and inventory well” and that the company’s core men’s brands, including Original Penguin and Golf Lifestyle, grew by 1.6 percent.
“From a working capital perspective, we were able to reduce our inventory to $151 million, compared with $103 million at the end of last year,” Feldenkreis said during a call with analysts. “This is our lowest inventory in the last six years. Strategic reduction in inventory allows [us] to drive more profitable top line and allow the company to enter the new fiscal year in a very healthy condition.”
Women’s sportswear sales fell to $108 million from $127 million and Perry Ellis closed 10 stores over 2016 and plans to close another five in the coming months and another 10 over two years.
Despite these setbacks, the company’s new chief financial officer, David Rattner, who hails from Elizabeth Arden, said Perry Ellis is still “in great position to continue our global expansion in our key businesses.”
Going forward, Feldenkreis said the brand will be investing more in its digital platform and licensing agreements, working to expand its international distribution and continuing with efficiency efforts, which cut about $7 million in costs last year.
The company also expects total revenues to be in the range of $870 million to $880 million for 2017. While that represents an increase of up to more than 2 percent, Perry Ellis characterized the outlook as “conservative” considering “retail store closures across the industry continue to be a consistent theme.”
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