Perry Ellis International Inc. eked out a profit gain on softer sales as retail consolidation and the elimination of some private label sportswear lines affected financial results during the third quarter.
For the current fourth quarter, management expects to deliver a better performance.
Net income for the quarter ended Oct. 31 rose 1.2 percent, to $8.2 million, or 80 cents a diluted share, from $8.1 million, or 80 cents, in the prior year on sales that declined 3.3 percent, to $207.8 million from $214.9 million. Earnings were ahead of previously announced company expectations.
For the nine-month period, the firm reported earnings that fell 19.9 percent, to $11.7 million, or $1.14 per diluted share, from $14.6 million, or $1.45 per diluted share, on sales that dropped 6.1 percent, to $581.7 million from $619.4 million during the comparable period a year ago.
“Third-quarter results reflect the end of the impact of retail consolidation and other factors that have impacted top-line growth. We are well positioned for record sales and gross margins in our upcoming fourth quarter with our diversified growth platforms, including swim, outerwear, Perry Ellis sportswear, international and direct retail. We expect these and other growth platforms to continue to show strong growth as we enter fiscal 2008,” Oscar Feldenkreis, vice chairman, president and chief operating officer, said in a statement.
In an earnings call Tuesday morning, George Feldenkreis, chairman of the board and chief executive officer, said the company’s licensing business was also doing well, showing an increase in royalties during the third quarter. The company expects to enter multiple licensing agreements in the next six months, following negotiations over the last few months, he said.
The company said it expects revenue for the balance of the year, fiscal 2007, to range between $840 million and $850 million. The company reconfirmed its previously announced earnings expectation of $2.30 to $2.40 per diluted share for the year.
“Generally speaking, we feel that we are one of the companies that will benefit from the consolidation of the retail sectors,” George Feldenkreis said on the company call. Perry Ellis’ position as a provider of well-known brands and strong private label brands that connect with consumers will help the company continue to grow, he said.
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In other news, the company announced a 3-for-2 common stock split, a result of the company’s confidence in its long-term outlook, according to a statement from Perry Ellis’ management. The split will be payable on Dec. 29 to stockholders of record since Dec. 12.