Shares of Perry Ellis International Inc. rose 3.8 percent after the company posted a narrower fourth-quarter loss.
For the three months ended Jan. 30, the company said the net loss was $17.7 million, or $1.18 a diluted shared, down from a net loss of $42.9 million, or $2.90, a year ago. The loss included a $26.6 million non-cash impairment charge to reduce the carrying value of intangible assets related to brands that are part of its strategic portfolio rationalization, as well as negative impact from foreign currency translations.
Total revenues slipped 1.5 percent to $214.4 million from $217.7 million, which included a 1.7 percent decrease in net sales to $205.5 million from $209.0 million. The quarter’s revenues were impacted by foreign exchange, as well as lower sales due to the company exiting certain brands. The firm also migrated two noncore brands to licensed arrangements. Excluding these impacts, revenues for the quarter would have increased 3 percent.
For the year, the net loss was $7.3 million, or 49 cents a diluted share, from a net loss of $37.2 million, or $2.50, in 2014. Total revenues inched up 1 percent to $899.5 million.
George Feldenkreis, chairman and chief executive officer, said that for the year the company was able to increase its organic sales by 4 percent from the year ago figures, and expand gross margin by 170 basis points to 35.8 percent.
He also noted that licensing royalties rose 9 percent to $34.7 million. The company signed 26 new agreements, which the chairman said should “bode well for the next few years.” He explained that as the licenses mature after some build up on the organizational structure, the businesses tend to improve and sales steadily increase.
Fiscal year 2016 direct-to-consumer results from e-commerce were positive, with traffic rising 33 percent and revenue growth up over 20 percent. The company just completed a new 5,000-square-foot state-of-the-art photography studio in its Miami headquarters, and Feldenkreis emphasized that as the company develops new systems to improve its own e-commerce sales, it will improve sales to e-commerce business partners in the brick-and-mortar realm as well.
On the international front, which grew 9 percent during the year and represents 13 percent of the company’s total business, the chairman said, “This is in spite of the devaluation of the British pound, the euro, and the Mexican peso. We have stabilized our pricing to reflect the necessary increases to compensate for the valuation of the current sales, and we are happy to report that our current sales are continuing to show an upward trend despite the price increases to consumers.”
He said being able to market five brands — Original Penguin, Farah, Callaway Golf, Ben Hogan and Nike Swim — in Europe affords an opportunity “to substantially increase our presence and our strength with many retailers in Europe.”
Oscar Feldenkreis, vice chairman, president and chief operating officer, added that the company in the current year will launch Perry Ellis America in Europe, Ben Hogan in the United Kingdom and Nike Swim in Latin America and Europe. “Our brands are resonating well outside the U.S., giving us a larger footprint to drive revenues and profitability going forward,” he said.
The president said early reads on the Perry Ellis America brand “have been encouraging as we launched with House of Fraser in London, Galeries Lafayette in France, and Coin in Milan, which will have full shops. We will continue to refine the assortment based on the performance as we move through the next season.”
The president added that the company expects the “global retail environment to remain challenging in fiscal 2017 especially in the first half, but…we believe and are optimistic that the strength of our brand and the disciplined execution of our strategy will enable us to further drive sales, margin and profit for this year.”
The company said its focused strategy for its 2017 plan includes continuing to optimize its competitive positioning, with a key focus on global growth brands Perry Ellis, Original Penguin, Golf Lifestyle and Women’s Sportswear; making strategic investments to grow its presence with the Millennial consumer via e-commerce and social media networks; accelerating its international presence, and continuing to home in on controlling costs and expenses.
Guidance for fiscal 2017 has adjusted earnings per share at $1.90 to $1.95, on total revenues between $910 million to $915 million. Guidance reflects foreign exchange pressure of 1 percent, as well as a 2 percent revenue impact from the exit of certain businesses. Gross margins in fiscal 2016 were 35.8 percent, and the company expects that to expand by 30 to 40 basis points to around 36.1 percent.
Shares were around $18.52 at noontime trading.