Apparel maker Perry Ellis is reviewing its brand portfolio and streamlining its operations to "eliminate less productive overhead," after warning that increased discounting is likely to hurt its fourth quarter and full year profits.

The company, whose brands include Perry Ellis, Jantzen, Laundry by Shelli Segal, C&C California and Savane today (14 February) said it expects to report an increase in fourth-quarter revenue. But it also admitted that revenue and gross margins were pressured due to retailers requesting later deliveries of goods, and an increase in promotional markdowns.

Total revenue for the three months to 28 January is set to rise 11% to US$229m. While for the full-year sales are seen increasing 24% to $980m with earnings per share in a range of $1.91-1.94.

But president and COO Oscar Feldenkreis also noted: "While we experienced increased traffic in our direct to consumer business, we also increased promotions to be in line with the environment to remain competitive.

"As a result, the positive momentum in revenue came at the expense of profitability and we acknowledge the environment remains challenging.

"With that backdrop, we are streamlining our operations and eliminating less productive overhead. We have begun a strategic brand review that will maximise profitability in our core businesses: men's and ladies sportswear, golf and Hispanic lifestyle, and swim."

The company expects to complete the review during the first-half of fiscal 2013, planning to rationalise brands to "position the company for long-term growth". It expects to implement initiatives during the second-half of fiscal 2013.

The company will also increase efficiency by consolidating distribution facilities and foreign sourcing offices, as well as streamlining operational support functions.

"Our goal is to further reduce expenses from non-core infrastructure areas and redeploy part of that capital to marketing and direct-to-consumer infrastructure," said Feldenkreis.

The company expects to begin seeing the benefits of the programme in the second half of fiscal 2013.