Perry Ellis International, Inc. (NASDAQ:PERY) today provided an update on expected fourth quarter (“fourth quarter fiscal 2012”) and full fiscal year ended January 28, 2012 (“fiscal 2012”).
For fourth quarter fiscal 2012, the Company expects to report an 11% increase in total revenue to $229 million as compared to $207 million last year. Adjusted earnings per share (“EPS”) are expected in the range of $0.35 - $0.38. Fiscal 2012 revenue is expected to approximate $980 million, an increase of 24% from the prior year. Reflecting the factors below, the Company currently expects full fiscal year 2012 adjusted EPS in a range of $1.91 - $1.94. Adjusted earnings per fully diluted share exclude costs related to the early extinguishment of debt. The Company noted that any potential impairment charges or write downs that may arise from its strategic brand review discussed below would reduce the Company’s EPS to be determined and reported under generally accepted accounting principles (“GAAP”).
The Company noted that revenues and gross margin in the fourth quarter were pressured due to retail partners requesting later deliveries of goods, as well as a significant increase in promotional markdowns and sales allowances for the holiday season. On a positive note, the Company saw strength in its golf lifestyle, women’s dresses and swim businesses. In addition, the Company maintained expense discipline and saw a favorable impact from reversing long-term incentive compensation expense. The Company also anticipates a higher effective tax rate for the year due to an increased mix of domestic versus international income.
The Company noted that it expects to end fiscal 2012 with $24 million in cash. Total inventory at January 28 th, 2012 is expected to be approximately $198 million, an 11% increase, compared to $178 million in the comparable prior year period and in line with the Company’s expectation of $200 million.“This holiday season, the entire retail industry was faced with a highly promotional environment meant to drive customer purchases, and we were not immune to this activity,” said Oscar Feldenkreis, president and chief operating officer of Perry Ellis International. “While we experienced increased traffic in our direct to consumer business, we also increased promotions to be in line with the environment to remain competitive. As a result, the positive momentum in revenue came at the expense of profitability and we acknowledge the environment remains challenging. With that backdrop, we are streamlining our operations and eliminating less productive overhead. We have begun a strategic brand review that will maximize profitability in our core businesses: men’s and ladies sportswear, golf and Hispanic lifestyle, and swim.”
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