US apparel business Perry Ellis International is to close 15 underperforming retail locations over the next 18 months as it revealed lower sales and a higher net loss in its second-quarter.

The closures, which are part of the company's focused strategy roadmap, are expected to reduce revenues in the current year by US$2.8m and next year by $8.3m with an improvement in annual operating income of approximately $1.3m.

The company says it will have a "heightened focus" on e-commerce and an improved retail performance.

For the period ended 30 July 2016, net losses amounted to $3.6m from $1.3m a year earlier, while total sales dropped 5% to $202m compared to $213 million in the same period last year.  

Meanwhile, gross margin expanded 100 basis points to 36.6%, reflecting stronger margin in men's sportswear, golf lifestyle and Nike businesses as well as expansion in direct to consumer margins, and cost savings realised through the ongoing infrastructure review.  

Increased sales across the company's core global brands were offset by 3% planned business exits as well as 2% reductions in special market revenues.

"We are pleased to report revenue and adjusted earnings per diluted share above guidance driven by the strength of our authentic brands, our commitment to innovation and product excellence combined with the continued success of our five point growth and profitability plan," says CEO Oscar Feldenkreis. "We believe our first half performance demonstrates that our focused strategy is providing us with the right formula to drive our business forward in a challenging retail environment. 

"We remain confident in our highly desirable portfolio of lifestyle brands — Perry Ellis, Original Penguin and Golf Lifestyle.  This combined with the continued traction of our strategy and our strong balance sheet positions us well to deliver on our objectives for fiscal 2017 to drive sustained long term growth and increased value for our shareholders."

The company has maintained its fiscal 2017 EPS guidance of $1.95 to $2.00. Revenues are expected in the range of $885-$890m, reflecting changes in currency translation and modified economic growth post Brexit.

Looking ahead, the apparel business will continue to focus on successfully implementing its growth and profitability plan.

The roadmap, articulated during the course of the year, includes:

  • Continuing to optimise competitive positioning as evidenced by growth achieved across the company's global growth brands led by Perry Ellis, Original Penguin, and Golf Lifestyle. Collectively, these businesses expanded 4.1% during the second quarter
  • Evolving materials and performance qualities of the company's products across its global brands to increase the consumer appreciation and support
  • Accelerating international expansion through direct investment in North America and Europe as well as strategic partnerships with licensees and other partners
  • Continued focus on controlling costs and expenses through process enhancements, inventory management and sourcing improvements

"While we feel confident with our business, we do believe that the strength of the US dollar and the changing consumer spending patterns for international tourists in the US, along with the volatility in the global environment,  remain headwinds," adds George Feldenkreis, executive chairman. "We believe that the sound execution of our business strategies and investment in our world-class brands, together with our strong balance sheet will position us to deliver strong results in fiscal 2017." 

The company recently expanded its executive team with the appointment of David Enright as COO, responsible for all aspects of the firm's global supply chain operations.

Perry Ellis hires COO to lead supply chain operations