Perry Ellis Issues Concerning Prelim. Q4 Results, Guides FY14, FY15 Well Below the Street
Perry Ellis International, Inc. (Nasdaq: PERY) announced today, that based on its preliminary results for the fourth quarter and full year, the Company is providing fourth quarter guidance and updating its expectations for the 2014 fiscal year ended February 1, 2014. The Company expects to report actual fourth quarter and fiscal year 2014 results the week of April 7, 2014.
For the fourth quarter ended February 1, 2014:
* The Company currently expects total revenue to decline 16% to approximately $216 million versus $258 million in the comparable prior year period ended February 2, 2013 ("fourth quarter of fiscal 2013"). * Adjusted diluted earnings per share ("EPS") are currently expected in the range of $0.02 to $0.05.
For the 2014 fiscal year ended February 1, 2014:
* Fiscal 2014 revenue is expected to approximate $912 million, as compared to $970 million in fiscal 2013. * Adjusted diluted (EPS) are expected in the range of $.34 to $.37 for fiscal year 2014. * Adjusted earnings per fully diluted share for fourth quarter and fiscal year 2014 and fiscal 2013 exclude costs associated with; (i) the exit of underperforming brands and businesses; (ii) the voluntary retirement program; (iii) the streamlining and consolidating of operations; (iv) strategic initiatives and gains from assets sales; and (v) impairment on long lived assets and certain leasehold improvements. * The Company noted that its revenue and adjusted earnings per share expectations are preliminary and subject to quarter and year-end closing adjustments. As the Company has not completed its quarter and year-end fiscal close or the audit of its 2013 financial statements, the revenue and profit expectations presented in this press release may change.
The Company noted that its fourth quarter performance was impacted by inclement weather across major parts of the country coupled with a challenging consumer spending environment across its channels of distribution. In its direct-to-consumer channel, lower mall traffic contributed to a comparable store sales decline of 4.8%. On the wholesale side, the Company was negatively impacted by the customer flow of replenishment orders which was essentially turned off for many retailers in their effort to manage overall store inventories. In addition, many retailers delayed shipments of merchandise planned for January delivery to the first quarter of fiscal 2015.
"We are extremely disappointed with our fourth quarter and full year results. We experienced a very difficult environment, which required our customers to become more aggressive with promotions and limit new orders. This contributed to much lower sales versus our projections," said Oscar Feldenkreis, president and chief operating officer of Perry Ellis International. "We expect our customers to remain cautious and have adjusted our expectations for initial delivery and replenishment orders in fiscal 2015."
Other Fourth Quarter 2014 Highlights:
o Revenue growth was noted in Original Penguin and Nike performance swim as well as in the international and licensing businesses. o Gross margins expanded 170 bps for the quarter driven by a higher contribution from licensing revenues and higher margins in the Golf apparel and Rafaella sportswear business.
Fiscal 2015 Outlook
In light of the uncertainty of the retail environment, the Company has executed an infrastructure rationalization to achieve the following goals:
1) To enable it to be more streamlined in the channels it currently serves, 2) To redeploy resources to the businesses poised for more significant growth, 3) To dedicate investment into new businesses, such as international expansion under the Original Penguin and Perry Ellis brands, as well as the expansion of golf lifestyle apparel throughout Europe lead by Callaway golf.
The Company expects total revenues to be in a range of $910 to $920 million for fiscal 2015. Gross margins for fiscal 2015 should expand 50 to 60 basis points to a range of 33.7% to 33.8%. The Company expects that the infrastructure rationalization will deliver a net savings after the reinvestment of approximately 1% in operating margin on a full year annualized basis.
The Company also announced the election of Alexandra Wilkis Wilson, co-founder of online shopping website Gilt to the Board effective February 20, 2014.
The Company will provide a full update on the review at its year-end conference call. The Company also noted that it has approximately $17 million remaining under its share repurchase program.
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