Perry Ellis International reported results for the third quarter ended October 27,2012(third quarter of fiscal 2013).
Third Quarter Results from Operations
In the third quarter of fiscal 2013,total revenues were$236.2 million compared to$248.4 million in the quarter ended October 29,2011(third quarter of fiscal 2012)and in-line with Company guidance of an expected mid-single digit decrease.The Company noted that continued growth within golf,direct to consumer and women's contemporary was offset by planned decreases in its Perry Ellis and Rafaella collection businesses.
Oscar Feldenkreis,President and Chief Operating Officer,commented,"The third quarter was highlighted by continued positive momentum in our Golf and direct to consumer platforms,substantial progress on our initiatives to improve our Perry Ellis and Rafaella collection businesses and the disciplined management of expenses and continued strong cash flow.
"We are very pleased with the growth we are driving across our golf platforms through all channels of distribution.Across our direct to consumer business we are generating consistent sales and margin increases fueled by our unique products and focused merchandising planning by door.We are well on our way with our repositioning efforts in our Perry Ellis and Rafaella collection businesses,and expect an improved consumer response to our holiday collections in the fourth quarter and an even greater positive impact in spring 2013."
Gross margin for the third quarter of fiscal 2013 was 32.1%as compared to 33.2%for the comparable period last year.The decline was attributable to higher promotional levels in the collection businesses coupled with the lower margins on the Callaway transitioned businesses.On the positive side,gross margin expansion was realized in the golf business,as well as in the direct to consumer business.
Selling,general and administrative expenses for the third quarter of fiscal 2013 decreased$2.4 million to$64.0 million compared to$66.4 million in the third quarter of fiscal 2012.The Company remains disciplined in this area as it executes its streamlining and consolidating initiatives.
As reported under generally accepted accounting principles(GAAP),net income for the third quarter of fiscal 2013 was$3.2 million,or earnings per fully diluted share of$0.21,compared to net income of$6.5 million,or$0.40 per fully diluted share in the third quarter of fiscal 2012.
After considering the costs of the exit of underperforming brands,and the streamlining and consolidation of facilities and other strategic initiatives,earnings per fully diluted share,as adjusted,for the third quarter of fiscal 2013 was$0.25 compared to earnings per fully diluted share,as adjusted,of$0.40 in the third quarter of fiscal 2012.
Adjusted EBITDA for the third quarter totaled$12.5 million or 5.3%of revenue.
Nine Months Operations Review
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For the nine months ended October 27,2012 total revenues were$711.2 million compared to$751.1 million for the nine months ended October 29,2011.The revenue reduction during the first nine months of the fiscal year,as compared to last year,was primarily attributable to softness in the Company's collection businesses.
Adjusted EBITDA for the first nine months of fiscal 2013 totaled$42.9 million or 6.0%of revenue. Net income for the first nine months of fiscal 2013 was$10.4 million,or$0.68 per fully diluted share,compared to$23.7 million,or$1.47 per fully diluted share in the first nine months of fiscal 2012. After considering the costs associated with the exit of underperforming brands and businesses,the voluntary retirement program,the streamlining and consolidating of operations and strategic initiatives,earnings per fully diluted share,as adjusted,for the first nine months of fiscal 2013 was$0.95 compared to earnings per fully diluted share,as adjusted,of$1.55 in the first nine months of fiscal 2012.For the nine months of fiscal 2012,earnings per fully diluted share,as adjusted,excludes costs related to the impact of early extinguishment of debt and duplicate interest expense. Balance Sheet Update George Feldenkreis,Chairman and CEO of Perry Ellis International commented,"We are extremely pleased with the continued strengthening of our balance sheet.Inventory reduction continues to tighten ahead of sales.We believe that we have the balance sheet to fund our growth in our core businesses as well as provide ample capacity and liquidity under a wide range of economic conditions." The Company ended the third quarter of fiscal 2013 with$51.7 million in cash and cash equivalents and full availability under its senior credit facility.Inventories at quarter end totaled$157.5 million,a reduction of$40.8 million or 21%compared to$200.3 million as of October 29,2011.As a result of the disciplined management of inventory,the Company ended the period with a net debt to total capitalization of approximately 25%as compared to 32%for the comparable prior year period. Fiscal 2013 Guidance The Company remains comfortable with revenue guidance ranging from$990 million to$1 billion,as well as fully diluted earnings per share as adjusted in a range of$1.75 to$1.80. 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. |