Perry Ellis International Inc.
) posted adjusted earnings per share of 71 cents in the first
quarter of fiscal 2013, beating the Zacks Consensus Estimate of 65
cents but deteriorating from the year-ago earnings of $1.08 per
share. On a reported basis, earnings per share were 64 cents versus
99 cents earned in the year-ago quarter. Perry Ellis' total revenue
decreased 7.9% year over year in the quarter to $265.5
During the quarter, Perry Ellis' gross profit declined 9.6% year
over year to $87.7 million. Moreover, gross margin fell 60 basis
points (bps) to 33.0%. Selling, general and administrative expense
increased 4.6% year over year to $66.3 million owing to the
expansion of the company's direct to consumer business in the
second half of fiscal 2012 and costs related to exited brands as
well as restructuring in the first quarter of fiscal 2013.
At quarter end, Perry Ellis had cash and cash equivalents of
$28.5 million. Total long-term liability was $248.7 million.
For full fiscal 2013, Perry Ellis expects revenue from its
existing business in the range of $990 million to $1.0 billion.
Adjusted earnings per share are expected in the range of $1.95 to
$2.00. On a GAAP basis, management expects earnings per share
between $1.85 and $1.90.
For the full year, management anticipates gross margin
improvement in the range of 70 to 80 bps.
Perry Ellis, the designer, distributor and licensor of a broad
line of men's and women's apparel, accessories, and fragrances,
remains optimistic about the new product assortment for the fall
and holiday seasons especially in Rafaella sportswear collections.
Management remains committed to growing direct-to-consumer and
e-commerce businesses. We believe this is a positive step toward
the strength of Perry Ellis' market share gain. In a faltering
economy, the company is streamlining operations and cutting less
productive overhead in order to realize cost savings. Moderating
prices of cotton and other raw materials is another positive for
Concerns for the near term include wage inflation, promotional
markdowns and high amount of debt in the company's balance sheet.
Additionally, most of the company's initiatives are unlikely to
reap benefit before the second half of the year.
Perry Ellis currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. We are also maintaining our
long-term Neutral recommendation on the stock. Perry Ellis' peers
Polo Ralph Lauren Corp.
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