Perry Ellis revenues down 3.5% as lost womenswear sales take their toll
As Perry Ellis International moves forward with its acquisition by founder George Feldenkreis, the apparel company has reported slipping revenues in the second quarter, dragged down by lost womenswear sales.
The company’s revenues in the second quarter ended August 4, 2018 totaled $199 million, a 3.5% decrease (or 3.8% in constant currencies), compared to the $207 million reported in the prior-year period.
This poor performance was impacted by a decline in Perry Ellis International’s womenswear business, which suffered a loss of around $5 million in sales associated with the closure of the now defunct department store chain Bon-Ton, one of the group’s distributors.
These negative effects were partially offset by improvements at the company’s Original Penguin label and in its international business, as pointed out in a release by Perry Ellis CEO and President Oscar Feldenkreis, who further highlighted progress at the Golf Sportswear and Nike brands.
Selling, general and administrative expenses in the quarter rose to $75.1 million, compared to $68.4 million in the same period in the previous year. $6.8 million of this increase was linked to the company’s Board’s activities as it researched and evaluated the group’s options in the light of acquisition bids from George Feldenkreis and Randa Accessories.
While gross margin did expand to 38.1%, up 110 basis points from 37.0% in the same period in the previous year, this progress was not enough to prevent the company reporting a net loss of $3.3 million for the second quarter of 2019, compared to net income of $1.0 million in Q2 2018.
Nonetheless, Oscar Feldenkreis is optimistic, asserting that, “The second quarter completed a strong first half for Perry Ellis highlighted by core revenue growth, positive comparable store sales and expansion in gross margin, which drove an increase in adjusted pre-tax income versus the prior year first half.”
The company’s revenues for the first six months of fiscal 2019 came to $455 million, a 1.3% increase (0.7% in constant currencies) when compared to the $449 million reported in the first half the previous fiscal year. Net income for the first half totaled $7.0 million, down from $13.8 million in the prior-year period.
Earlier this month, Perry Ellis announced that it had called an end to talks concerning a possible acquisition by Randa Accessories and would be pursuing the deal previously proposed by George Feldenkreis which values the company at around $437 million or $27.50 a share.
Due to the pending transaction, the company did not provide guidance this quarter.
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