Blog: Leonie BarrieFuture looks bright for Perry Ellis

Leonie Barrie | 20 August 2009

It seems like a long time since an apparel firm has posted such an optimistic outlook as Perry Ellis did yesterday.

The company, whose brands include Laundry, Shelli Segal and C&C California, said cost-cutting and better inventory management helped second-quarter profits beat expectations – while a strong second-half order book prompted it to post an optimistic earnings forecast for the year.

The steps taken to position its business for the future include working closely with retailers and careful control over where it sells its clothes to reduce markdowns and sales allowances.

It has pulled the Perry Ellis Collection out of 127 unprofitable department stores and exited, among others, the mass merchant private label business and the Dockers outerwear license.

New lines like the Merona swim program and Hispanic lifestyle brand Café Luna are helping to lift sales. Moreover, branded swim brands, denim platform, golf brands, Hispanic lifestyle brands and brands distributed to mid-tier stores, are all “beginning to return to more normal levels."

And headcount has been reduced in the last 12 months by 181 people, or over 9% of its US workforce, in an attempt to streamline its operation.

Speaking on a conference call, CEO George Feldenkreis said: “We exited some businesses that we did not want to continue and thus we have been able to focus on the potential growth of business units that are being brought back toward profitability.”

He added: “Some of the divisions that were not profitable last year are doing better than projected a few months ago and we expect most of them to be profitable next year.”

As well as seeing “positive signs in the consumer environment,” Perry Ellis has been buoyed by orders now coming in from retailers for the 2009 holiday and 2010 spring seasons.

In particular it hopes that having spent the best part of the last year slashing their inventories, retailers are going to be chasing new product when sales start to rise again. And when this happens, it’s determined to be the first in line to make up this shortfall.



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