Miami—Perry Ellis International Inc. today reported it swung into a fourth quarter loss due to major write-downs related to its non-core brands.
For the quarter ended Feb. 1, the owner of Perry Ellis, Jantzen, Rafaella and other licenses posted a loss of $28.2 million, or $1.91 a share, compared with a profit of $4.4 million, or 28 cents a share, a year ago. Included in the quarter’s results was $1.94 a share in write-downs of trade names, goodwill and certain store leaseholds. Excluding those write-downs and other items, adjusted earnings were 6 cents a share but ahead of analysts’ estimate for 3 cents a share.
National Brands Over Private Brands
Net revenue dropped 16% to $216.1 million which was in line with analysts’ consensus. In February, the company had forecast adjusted earnings of 2 to 5 cents a share and a 16% drop in revenue.
“Revenues were adversely impacted by both inclement weather country wide as well as a cautious consumer,” the company noted. “As a result, we saw a lack of replenishment orders across many of the business platforms.”
Gross margin widened to 34.3% from 32.6%, reflecting a lower level of promotional sales in the Rafaella and Perry Ellis businesses as well as higher contributions from the golf lifestyle, international and licensing businesses.
“We were disappointed with the results of fiscal 2014. The year saw significant challenges, with unseasonal weather, consumer indifference to apparel, and declines in mall and outlet center traffic all negatively impacting our business,” said President/CEO Oscar Feldenkreis. “We also experienced a fundamental shift in the business model favoring national brands over private and exclusive brands, thereby impacting revenues and near term profitability. On a positive note, there were many encouraging areas: our overall golf lifestyle apparel business, international, as well as Nike swim continued to be strong.”
Feldenkreis said licensing income “grew dramatically” during the quarter thanks to the strength of core brands and an increase in gross margins.
For the current fiscal year, Perry Ellis predicted adjusted earnings of 75 cents to 90 cents a share on revenue of $910 million to $920 million. Analysts expected 85 cents a share on $919 million in sales.