• Q3 profit fell 9.7% to $6.5m
• Total revenues increased 23% to $248.4m
• Gross margin fell 240 bps to 33.2% of revenues

Perry Ellis International Inc has described its third quarter as "challenging," after higher levels of markdowns offset rising sales to push the apparel maker's profit down by 9.7%.

Net income in the three months to 29 October fell to $6.5m or $0.40 per share, down from $7.2m or $0.51 per share the year before.

Total revenues jumped 23% to $248.4m, the company said, with a $38.4m contribution from the Rafaella women's sportswear line it bought earlier this year.

But a poor response to some Rafaella and Perry Ellis Collection products, and the impact of unseasonably warm weather in Europe, offset rising revenues in the company's golf, Hispanic, accessories, women's contemporary dress, and direct-to-consumer businesses.

"While our Perry Ellis business had a challenging third quarter, overall the product has been superior and executed well over the last four seasons and we believe this longer trend is more indicative of the type of performance that can be expected of the brand," noted chairman and CEO George Feldenkreis.

"Supported by its basics and core bottoms business Rafaella has traditionally seen lower levels of markdowns and sales allowances compared to larger competitors that dominate the zone. However, our recent product assortment challenges were created by a lack of execution from the showroom to the retail floor and we expect to see elevated levels of markdowns driven by this in the fourth quarter.

"We have addressed the brand direction and expect to be back on track for the spring/summer seasons. We remain confident in our ability to present strong selling deliveries in both our Perry Ellis Collection and Rafaella product lines."

The company, whose brands include Jantzen, C&C California, Savane and Farah, has recently appointed Carmine Petruzello as president and Doug Jakubowski as chief merchandising officer of the Perry Ellis division.

Based on its performance, it has now lowered its full-year earnings forecast to at or above $2.00 per share, down from earlier guidance of $2.45 to $2.52. Revenues are expected to be $1.0bn.