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Perry Ellis International Reports Third Quarter Fiscal 2016 Results

The following excerpt is from the company's SEC filing.

Perry Ellis International, Inc. (NASDAQ:PERY) today reported results for the third quarter ended October 31, 2015 (third quarter of fiscal 2016).

Key Fiscal Third Quarter 2016 Financial and Operational Highlights:

Third quarter revenue totaled $205.4 million.

Adjusted diluted earnings per share increased to $0.16 as compared to adjusted diluted earnings per share of $0.03 in comparable period of prior year.

Diluted GAAP Earnings per share of $0.15, as compared to a loss of $0.03 comparable period of prior year.

Gross margin expansion of 240 bps to 35.7% as compared to 33.3% in comparable period of prior year.

Adjusted EBITDA margin expansion of 90 bps to 4.3% as compared to 3.4% in comparable period of prior year.

Inventory decreased 7% to $145 million as compared to end of the third quarter of prior year, the lowest level since fiscal 2011.

Full-year Adjusted EPS guidance increased to a range of $1.81 to $1.88.

Oscar Feldenkreis, President and Chief Operating Officer of Perry Ellis International commented: We had a strong third quarter highlighted by growth across our key lifestyle brands of Perry Ellis, Rafaella and Golf Lifestyle, expansion in gross margin and expense discipline which drove a more than fivefold increase in adjusted diluted earnings per share. We delivered excellent operating results by staying focused on what we do best bringing relevant, innovative product to the marketplace, amplifying our relationships with consumers and driving operational excellence into every area of our business. Revenues declined in total driven by the strategic sale of C&C California and the transition of certain exclusive labels to our national, lifestyle brands. We ended the period in a strong position with inventory down 7% from the prior year and our brands and businesses positioned to capitalize on the holiday season. Overall, I believe todays results speak to the power of our global lifestyle brands and platforms which performed well in what is proving to be a mixed retail environment.

Mr. Feldenkreis concluded: We will continue to execute on our successful business strategy. We are excited to move into the holiday and spring seasons with a strong order book, solid product selling and improved profitability. We believe that our combination of market leading brands, great product and world class execution provide an on-going opportunity to enhance our leadership position and drive superior value to our shareholders, customers and partners.

Fiscal 2016 Third Quarter Results

Total revenue for the third quarter of fiscal 2016 was $205.4 million, down slightly from $211.4 million reported in the third quarter of fiscal 2015. The Company realized increases in its core global brands, Perry Ellis, Rafaella and Golf Lifestyle, across international, licensing and direct-to-consumer (DTC) businesses. This was offset by the loss of revenues associated with the divestiture of C&C California as well as private and exclusive brand reductions over the prior year. The reduction is in line with the Companys continued focus to narrow its portfolio to our national brands and to steer smaller brands to a licensed model.

was 35.7%, representing a 240 basis point improvement over the same period last year. The expansion reflects benefits from stronger sell-through performance at retail in the Perry Ellis, Original Penguin and Golf Lifestyle collection businesses, and favorable mix from higher margin licensing and DTC businesses.

Selling, general and administrative expenses

totaled $64.9 million as compared to $64.5 million in the comparable period of the prior year. Excluding costs associated with streamlining and consolidation of operations, expenses totaled $64.5 million, or 31.4% of revenues, as compared to $63.4 million, or 30.0%, in the comparable period of the prior year.

As reported under GAAP, the fiscal 2016 third quarter net income was $2.3 million, or $0.15 per diluted share, as compared to a loss of $437k, or $0.03 per diluted share, in the third quarter of fiscal 2015. On an adjusted basis, fiscal 2016 third quarter earnings per diluted share were $0.16 as compared to adjusted earnings per share of $0.03 in the third quarter of fiscal 2015. These results benefited from improved operating results as well as a lower interest cost for fiscal 2016. (Adjusted earnings per diluted share exclude certain items as outlined in Table 1, Reconciliation of GAAP net income (loss) and diluted earnings (loss) per share to adjusted net income and adjusted diluted earnings per share.)

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) for the third quarter of fiscal 2016 totaled $8.8 million as compared to $7.2 million in the comparable period of the prior year. Adjusted EBITDA margin expanded to 4.3% from 3.4% in the prior year. (Adjusted EBITDA excludes certain items as outlined in Table 2, Reconciliation of Net (Loss) Income to EBITDA and adjusted EBITDA.)

Balance Sheet

At the close of the third quarter, the Companys balance sheet was solid. Inventories were extremely tight down 7% to $145 million as compared to $156 million at the end of the comparable period in the prior year and $184 million at year end. Capitalization reflects a net debt position of $97 million or 23% as compared to prior year $120 million or 25%.

Update on Strategic Priorities for Fiscal 2016 to Enhance Profitability

The Company continues to concentrate on the successful execution of its growth and profitability plan to continue to strengthen its industry leadership, reach new consumers and drive continued growth.

Fiscal 2016 is on track to be a very strong year for Perry Ellis International, driven by strong performances in...


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