Apparel maker Perry Ellis International Inc today (13 November) cut its full-year profit and sales outlook after third quarter revenues were hit by markdowns, rising costs and customer bankruptcies.

It also said it was launching a strategic review of underperforming businesses with a view to saving $5-6m a year from fiscal 2010. 

The warning came after the Miami, Florida based company said it expects third quarter revenues to be down 2% to $222.8m, compared with last year's $227.5m.

It also indicated that earnings per share will be in the range of $0.30 to $0.33, down from $0.55 per share during the same period last year.

Oscar Feldenkreis, president and COO, said: "We are experiencing the most significant economic slowdown that we have ever witnessed or have been a part of."

He added that despite the loss of customers to Chapter 11, the company still managed to ship more product than during the same period last year - but returns and allowances meant total revenues were down.

Third quarter results have been hit by $4m in markdowns, $4.5m in lost sales to customers who filed for Chapter 11 reorganisation and/or liquidation, and costs of $5.2m for the Contemporary Lady's businesses which were acquired in February.

In an attempt to cut costs, the company is reviewing underperforming brands and businesses, including its men's specialty store business for all brands, real estate realignment, Perry Ellis retail, distribution costs, and shared services.

Moves are likely to include consolidating Tampa's bottoms production department into Miami's headquarters, a reduction in headcount in the specialty store businesses and shared services, and consolidation of its offices in New York.

As for fiscal 2009, earnings guidance has been lowered to $0.90 to $1.10 per share from $1.67 to $1.72 per share.

Revenues for the year are also likely to be lower at $910m - $925m, down from earlier forecasts of $875m - $900m.

"We are positioning Perry Ellis International to be a stronger and more nimble company when the economy turns around," Mr Feldenkreis concluded.

The company's brands include its namesake Perry Ellis line, as well as Jantzen, Laundry by Shelli Segal, C&C California, and Farah. It also licenses Dockers for outerwear, and Nike and Jag for swimwear.