Perry Ellis swings to FY profit

US: Perry Ellis swings to FY profit

By Joe Ayling | 22 March 2010

FY net income of $13.2m
Gross margins improve 30 bps
Expenses down 15%

Apparel company Perry Ellis International has swung into profit for the full fiscal year, buoyed by improved margins that offset lower FY sales.

Fiscal 2010 revenues were US$754.2m versus $851.3m in the prior year. The company reported net income of $13.2m fot the fiscal year ended 31 January, compared to a net loss of $12.9m for the comparable period last year.

"Fiscal 2010 was a turnaround year for Perry Ellis International," said Oscar Feldenkreis, president and chief operating officer. "We delivered earnings ahead of expectations during a very challenging economic downturn. We also took the initiative to seek out new business opportunities such as the Callaway & Pierre Cardin license agreements. We expect to see 2011 as a breakout year to capitalise on these opportunities as well as our core growth platforms."

Overall gross margins for fiscal 2010 improved 30 bps to 33.0% compared to 32.7% in fiscal 2009, driven by a mix of higher margin branded product, the exiting of several low profit private label programmes, the exit of some underperforming businesses, the introduction of Callaway Golf direct sales and reduced sales and operational allowances resulting from strong product performance and improved operational efficiencies.

Selling, general and administrative expenses at $200.4m represented a 15% reduction compared to fiscal 2009.

Overall, fourth quarter revenue for was $196.4m, a 3% increase attributable to a turnaround of Perry Ellis Collection at department stores, initial shipments of Callaway and Top-Flite spring product, and improved performance in direct to consumer businesses, primarily the Perry Ellis and Original Penguin retail stores, the company said.

The company said it anticipates revenues to be in the range of $770 - $790m durng the next year, representing a low- to mid-single-digit increase.