Shares of Perry Ellis International Inc. shot up 15.6 percent in trading after the company posted third-quarter results that were better than expected.
For the three months ended Oct. 31, the company ended the quarter in the black, with net income of $2.3 million, or 15 cent a diluted share, against a net loss of $437,000, or 3 cents, a year ago. On an adjusted basis, diluted EPS was 16 cents for the quarter, compared with 3 cents last year. Total revenues slipped 2.8 percent to $205.4 million from $211.4 million, which included a 3.4 percent decline in net sales to $196.4 million from $203.3 million. Wall Street analysts were expecting adjusted EPS of 4 cents on revenues of $210.8 million.
Shares on Thursday closed at $20.57 in Nasdaq trading.
George Feldenkreis, chairman and chief executive officer, said during a conference call to Wall Street analysts, “Last quarter was a very challenging period for the apparel and retail sector. This is facing tremendous headwinds that resulted in lower sales for the early fall, September-October months for many of our retail partners. Despite these challenges, our company delivered on our expectations, while simultaneously improving our profitability.”
The ceo said the company continues to “realize the positive results of the restructuring effort we undertook a couple of years ago. It has served us well and it’s positioning us to be a much stronger company in the future than we have been in the past.”
Feldenkreis said inventory levels dropped by $40 million in the quarter, representing the lowest inventory level since fiscal 2011. “A strategic reduction in inventory allows us to drive more profitable top-line sales and allows our company to enter the holiday season in a very healthy stock position,” he said.
Feldenkreis also said its international business has been promising, growing 7 percent during the quarter to represent 12.5 percent of the firm’s total business. He also spoke about the impact of foreign currency fluctuations, noting that the company last year put into place pricing strategies that are “now starting to take effect.”
“Based on existing booking for the fourth quarter, we have raised full-year guidance to a range of $1.81 to $1.88, as we see a promising future across all sectors of our business,” the ceo added.
Oscar Feldenkreis, vice chairman, president and chief operating officer, provided an update on the company’s brands. Among the highlights, he said the core Perry Ellis brand showed strong momentum in the quarter, with the Perry Ellis Travel Luxe initiative a key growth driver. He also noted Perry Ellis 360, the new ath-leisure line that combines active performance with sportswear that is available at Dillard’s and perryellis.com. Original Penguin continues to do well, with the company continuing to expand its footprint in Europe. He said the transitional layering pieces in its golf lifestyle brands have been well-positioned given the current weather pattern.
In the women’s business, Rafaella’s mainline sales grew 13 percent compared with a year ago. Laundry by Shelli Segal saw strong fashion selling in August and September, although October sales activity were muted as women were not buying seasonal items such as velvet or embellished dresses, he said.
The company said it will continue to focus on its high performing, high-growth brands. Since fiscal 2014, the apparel firm exited 30 brands, which the company said accounted for $90 million in lower margin revenues. It is also looking to expand its direct-to-consumer channel, which saw a 1 percent comparable-sales increase in the quarter, representing nearly 11 percent of revenues.