Perry Ellis International Reports Third Quarter Fiscal 2014 Results *Total revenue of $222.1 million in line with Company updated guidance *GAAP loss per fully diluted share of $0.20 *Adjusted loss per fully diluted share of $0.15 *Company maintains updated full fiscal 2014 adjusted diluted EPS guidance in a range of $0.95 to $1.01 *Company sees full fiscal 2014 GAAP diluted EPS guidance in a range of $0.97 to $1.03 MIAMI, Nov. 21, 2013 (GLOBE NEWSWIRE) -- Perry Ellis International, Inc. (Nasdaq:PERY) today reported results for the third quarter ended November 2, 2013 ("third quarter of fiscal 2014"). Third Quarter Results from Operations In the third quarter of fiscal 2014, total revenues were $222.1 million compared to $236.2 million in the quarter ended October 27, 2012 ("third quarter of fiscal 2013") and in-line with the Company's updated guidance. The Company noted that continued growth within golf lifestyle apparel, the Nike Swim and the licensing business was offset by reductions in private and proprietary branded businesses in the mid-tier channel as well as negative comparable store sales in its own direct retail channel. Oscar Feldenkreis, president and chief operating officer, commented, "Our third quarter was disappointing as difficult performance in our direct to consumer and mid-tier channel businesses offset improvement in our focus areas of golf and collection sportswear. To this end, we continued with a positive momentum across all channels within our golf lifestyle apparel category, and our Rafaella collection sportswear business experienced a measured improvement in trend for the fall selling season. We did experience lighter traffic patterns and reduced consumer enthusiasm for spending during the quarter – most noticeably in the latter half of the fiscal quarter, which resulted in negative comparable store sales as compared to the three consecutive years of cumulative double digit comparable stores sales growth. We are focusing on a localization strategy for each of our stores in order to return to strong, positive comparable store selling performance as well as enhancing operational management where appropriate." Gross margin for the third quarter of fiscal 2014 was 32.1%, same as the comparable period last year. The lighter than plan direct to consumer mix impacted gross margin negatively. In addition, lower closeout margins in fashion swim also impacted gross margins. On the positive side, Rafaella collection business posted gross margin improvement over the prior year. Selling, general and administrative ("SG&A") expenses for the third quarter of fiscal 2014 increased $4.0 million to $68.4 million compared to $64.4 million in the third quarter of fiscal 2013.The increase reflects a larger investment in marketing and ecommerce along with the recently consolidated New York offices.The increase also reflects approximately $1.1 million of strategic costs associated principally with streamlining efforts within various business components, which we anticipate will lead to improved productivity in the future. As reported under generally accepted accounting principles ("GAAP"), net loss for the third quarter of fiscal 2014 was $3.0 million, or a loss per fully diluted share of $0.20, compared to net income of $3.2 million, or $0.21 per fully diluted share in the third quarter of fiscal 2013. After considering the costs associated with strategic initiatives, the sale of long-lived assets and tax impact, loss per fully diluted share, as adjusted, for the third quarter of fiscal 2014 was $0.15 compared to earnings per fully diluted share, as adjusted, of $0.25 in the third quarter of fiscal 2013. (See attached reconciliation "Table 1") Adjusted EBITDA for the third quarter of fiscal 2014 totaled $4.0 million, or 1.8% of revenue. (See attached reconciliation "Table 2") Nine Months Operations Review For the nine months ended November 2, 2013 total revenues were $696.1 million compared to $711.2 million for the nine months ended October 27, 2012. The revenue reduction during the first nine months of the fiscal year, as compared to last year, was primarily attributable to reduction in private branded business. Adjusted EBITDA for the first nine months of fiscal 2014 totaled $26.9 million, or 3.9% of revenue. (See attached reconciliation "Table 2") Net income for the first nine months of fiscal 2014 was $5.5 million, or $0.36 per fully diluted share, compared to $10.4 million, or $0.68 per fully diluted share, in the first nine months of fiscal 2013. (See attached reconciliation "Table 1") After considering certain costs as outlined in Table 1, earnings per fully diluted share, as adjusted, for the first nine months of fiscal 2014 was $0.32 as compared to $0.95 earnings per fully diluted share, as adjusted, in the first nine months of fiscal 2013. (See attached reconciliation "Table 1") Balance Sheet Update George Feldenkreis, chairman and chief executive officer of Perry Ellis International commented, "Despite our disappointing performance, we have an extremely solid balance sheet.We are committed to taking the necessary actions to drive our revenues and margins to enhance profitability.We believe that we have the balance sheet strength to fund growth in our core businesses, as well as to provide capital for our longer term strategic goals." Fiscal 2014 Guidance The Company continues to see updated full year fiscal 2014 revenues in a range of $960 to $970 million and fully diluted earnings per share, as adjusted, in a range of $0.95 to $1.01. GAAP fully diluted earnings per share are forecasted in a range of $0.97 to $1.03. About Perry Ellis International Perry Ellis International, Inc. is a leading designer, distributor and licensor of a broad line of high quality men's and women's apparel, accessories and fragrances, as well as select children's apparel. The Company's collection of dress and casual shirts, golf sportswear, sweaters, dress pants, casual pants and shorts, jeans wear, active wear, dresses and men's and women's swimwear is available through all major levels of retail distribution. The Company, through its wholly owned subsidiaries, owns a portfolio of nationally and internationally recognized brands, including: Perry Ellis®, Jantzen®, Laundry by Shelli Segal®, C&C California®, Rafaella®, Cubavera®, Ben Hogan®, Centro®, Solero®, Munsingwear®, Savane®, Original Penguin® by Munsingwear®, Grand Slam®, Natural Issue®, Pro Player®, the Havanera Co.®, Axis®, Gotcha®, Girl Star®, MCD®, John Henry®, Mondo di Marco®, Redsand®, Manhattan®, Axist®, Farah®, Anchor Blue® and Miller's Outpost®. The Company enhances its roster of brands by licensing trademarks from third parties, including: Nike® and Jag® for swimwear, and Callaway®, PGA TOUR®, Champions Tour® and Jack Nicklaus® for golf apparel. Additional information on the Company is available at http://www.pery.com. Safe Harbor Statement We caution readers that the forward-looking statements (statements which are not historical facts) in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations rather than historical facts and they are indicated by words or phrases such as "anticipate," "believe," "budget," "contemplate," "continue," "could," "estimate," "expect," "guidance," "indicate," "intend," "may," "might," "plan," "possibly," "potential," "predict," "probably," "proforma," "project," "seek," "should," "target," or "will" and similar words or phrases or comparable terminology. We have based such forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, many of which are beyond our control. These factors include: general economic conditions, a significant decrease in business from or loss of any of our major customers or programs, anticipated and unanticipated trends and conditions in our industry, including the impact of recent or future retail and wholesale consolidation, recent and future economic conditions, including turmoil in the financial and credit markets, the effectiveness of our planned advertising, marketing and promotional campaigns, our ability to contain costs, disruptions in the supply chain, our future capital needs and our ability to obtain financing, our ability to protect our trademarks, our ability to integrate acquired businesses, trademarks, trade names and licenses, our ability to predict consumer preferences and changes in fashion trends and consumer acceptance of both new designs and newly introduced products, the termination or non-renewal of any material license agreements to which we are a party, changes in the costs of raw materials, labor and advertising, our ability to carry out growth strategies including expansion in international and direct to consumer retail markets, the level of consumer spending for apparel and other merchandise, our ability to compete, exposure to foreign currency risk and interest rate risk, possible disruption in commercial activities due to terrorist activity and armed conflict, and other factors set forth in Perry Ellis International's filings with the Securities and Exchange Commission. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those risks and uncertainties detailed in Perry Ellis' filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are valid only as of the date they were made. We undertake no obligation to update or revise any forward-looking statements to reflect new information or the occurrence of unanticipated events or otherwise. PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED) (amounts in 000's, except per share information) INCOME STATEMENT DATA: Three Months Ended Nine Months Ended November 2, October 27, November 2, October 27, 2013 2012 2013 2012 Revenues Net sales $214,700 $229,330 $674,676 $691,436 Royalty income 7,421 6,918 21,469 19,772 Total revenues 222,121 236,248 696,145 711,208 Cost of sales 150,757 160,453 467,554 478,348 Gross profit 71,364 75,795 228,591 232,860 Operating expenses Selling, general and 68,434 64,394 205,624 196,844 administrative expenses Depreciation and amortization 3,573 3,424 9,375 10,314 Total operating expenses 72,007 67,818 214,999 207,158 (Loss) gain on sale of (108) 410 6,162 410 long-lived assets Operating (loss) income (751) 8,387 19,754 26,112 Interest expense 3,782 3,689 11,307 11,011 Net (loss) income before (4,533) 4,698 8,447 15,101 income taxes Income tax (benefit) provision (1,511) 1,518 2,979 4,687 Net (loss) income $(3,022) $3,180 $5,468 $10,414 Net (loss) income, per share Basic $(0.20) $0.22 $0.36 $0.71 Diluted $(0.20) $0.21 $0.36 $0.68 Weighted average number of shares outstanding Basic 14,991 14,662 15,042 14,669 Diluted 14,991 15,295 15,363 15,275 PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED) (amounts in 000's) BALANCE SHEET DATA: As of November 2, 2013 February 2, 2013 Assets Current assets: Cash and cash equivalents $49,493 $54,957 Accounts receivable, net 148,982 174,484 Inventories 166,491 183,127 Other current assets 28,707 30,536 Total current assets 393,673 443,104 Property and equipment, net 61,206 50,749 Intangible assets, net 245,978 246,681 Goodwill 13,794 13,794 Other assets 8,429 8,801 Total assets $723,080 $763,129 Liabilities and stockholders' equity Current liabilities: Accounts payable $76,425 $132,028 Accrued expenses and other liabilities 25,871 28,595 Accrued interest payable 1,104 4,061 Unearned revenues 4,630 4,647 Total current liabilities 108,030 169,331 Long term liabilities: Senior subordinated notes payable, net 150,000 150,000 Senior credit facility 18,826 -- Real estate mortgages 23,539 24,202 Deferred pension obligation 12,457 14,686 Unearned revenues and other long-term 34,227 33,670 liabilities Total long-term liabilities 239,049 222,558 Total liabilities 347,079 391,889 Equity Total equity 376,001 371,240 Total liabilities and equity $723,080 $763,129 PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES Table 1 Reconciliation of the three and nine months ended November 2, 2013 and October 27, 2012 net (loss) income and diluted (loss) earnings per share to adjusted net (loss) income and adjusted diluted (loss) earnings per share. (UNAUDITED) (amounts in 000's, except per share information) Three Months Ended Nine Months Ended November 2, October 27, November 2, October 27, 2013 2012 2013 2012 Net (loss) income $(3,022) $3,180 $5,468 $10,414 Plus: Costs on exited brands -- 400 -- 2,245 Costs of streamlining and consolidation of 1,057 936 3,922 2,397 operations, and other strategic initiatives Costs of voluntary -- -- -- 2,420 retirement Less: (Loss) gain on sale of 108 (410) (6,162) (410) long-lived assets Tax (benefit ) (445) (358) 1,682 (2,545) provision Net (loss)income, as $(2,302) $3,748 $4,910 $14,521 adjusted Years Ended Nine Months Ended November 2, October 27, November 2, October 27, 2013 2012 2013 2012 Net (loss) income per $(0.20) $0.21 $0.36 $0.68 share, diluted Net per share costs on -- 0.02 -- 0.09 exited brands Net per share costs of streamlining and consolidation of 0.05 0.04 0.18 0.10 operations, and other strategic initiatives Net per share costs of -- -- -- 0.10 voluntary retirement Net per share gain on sale of long-lived -- (0.02) (0.22) (0.02) assets Adjusted net (loss) income per share, $(0.15) $0.25 $0.32 $0.95 diluted "Adjusted net (loss) income per share, diluted" consists of "net (loss) income per share, diluted" adjusted for the impact of the costs on exited brands, costs of streamlining and consolidation of operations, and other strategic initiatives, costs of voluntary retirement and gain on sale of long-lived assets. These costs and gain are notindicative of our core operations and thus to get a more comparable result with the operating performance of the apparel industry, they have been removed, net of taxes, from the calculation. PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES Table 2 RECONCILIATION OF NET (LOSS) INCOME TO EBITDA AND ADJUSTED EBITDA(1) (UNAUDITED) (amounts in 000's) Three Months Ended Nine Months Ended November 2, October 27, November 2, October 27, 2013 2012 2013 2012 Net (loss) income $(3,022) $3,180 $5,468 $10,414 Plus: Depreciation and 3,573 3,424 9,375 10,314 amortization Interest expense 3,782 3,689 11,307 11,011 Income tax (benefit) (1,511) 1,518 2,979 4,687 provision EBITDA 2,822 11,811 29,129 36,426 Costs on exited brands -- 400 -- 2,245 Costs of streamlining and consolidation of 1,057 715 3,922 2,176 operations, and other strategic initiatives Costs of voluntary -- -- -- 2,420 retirement Loss (gain) on sale of 108 (410) (6,162) (410) long-lived assets EBITDA, as adjusted $3,987 $12,516 $26,889 $42,857 Gross profit $71,364 $75,795 $228,591 $232,860 Less: Selling, general and administrative (68,434) (64,394) (205,624) (196,844) expenses Plus: Costs on exited brands -- 400 -- 2,245 Costs of streamlining and consolidation of 1,057 715 3,922 2,176 operations, and other strategic initiatives Costs of voluntary -- -- -- 2,420 retirement EBITDA, as adjusted 3,987 12,516 26,889 42,857 Total revenues $222,121 $236,248 $696,145 $711,208 EBITDA margin 1.8% 5.3% 3.9% 6.0% percentage of revenues (1) Adjusted EBITDA consists of (loss) earnings before interest, taxes, depreciation, amortization, costs on exited brands, costs of streamlining and consolidation of operations, and other strategic initiatives, costs of voluntary retirement, as well as the gain on sale of long-lived assets. Adjusted EBITDA is not a measurement of financial performance under accounting principles generally accepted in the United States of America, and does not represent cash flow from operations. Adjusted EBITDA is presented solely as a supplemental disclosure because management believes that it is a common measure of operating performance in the apparel industry. In addition, we present adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across periods on a consistent basis by excluding items that we do not believe are indicators of our core operating performance. CONTACT: Perry Ellis International, Inc. Anita Britt, 305-873-1210 Perry Ellis International, Inc. logo
Perry Ellis International Reports Third Quarter Fiscal 2014 Results
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