Perry Ellis (PERY) Misses Q3 EPS by 6c; Updates on Strategic Initiatives

Perry Ellis (NASDAQ: PERY) reported Q3 EPS of $0.00, $0.06 worse than the analyst estimate of $0.06. Revenue for the quarter came in at $211.4 million versus the consensus estimate of $215.1 million.

Update on Strategic Priorities for Fiscal 2015 to Enhance Profitability

As previously announced, the Company continues to focus on strategic priorities to deliver sustainable growth in revenue and profits. These actions include concentrating the Company's resources on its highest return businesses and brands, and driving efficiencies across its operating platform.

George Feldenkreis, chairman and chief executive officer of Perry Ellis International said, "We've seen steady progress over the last three quarters as we have focused our portfolio, cut costs and expanded our profitable licensing and international operations. We enter the last quarter of our fiscal year as a more focused company with a clear plan for achieving our goals and building upon our strong heritage. We look forward to accelerating our momentum."

The Company's strategies to enhance profitability include:

• Continue the strategic review of the Company's portfolio of brands as it continues to exit underperforming, low growth brands and businesses. Since implementing the initiative a year ago, the Company has substantially completed the exit of $65 million of private and retailer exclusive brands. The Company will continue to evaluate its core businesses and transition non-core business to its licensing platform.
• Drive international and licensing growth through both direct investment in North America and Europe as well as strategic partnerships with licensees and other partners. The Company entered into 8 new licensing agreements during the 3rd quarter, for a total of 20 new agreements for the year. The pipeline for future licenses is robust. During the quarter, the Company recorded significant growth in its key United Kingdom market and expanded its reach in Europe, France, Spain and the Benelux countries. As a result, International expanded to 11.3% of total revenues for the quarter, as compared to 10% for the comparable period last year.
• Expand the Direct to Consumer channel. The Company has successfully integrated all domestic businesses under one team creating single strategic oversight for the higher margin Direct to Consumer business. During the quarter, the team began to benefit from numerous operational enhancements. Despite negative traffic patterns, the Company increased its conversion and drove increased retail prices as well as stronger gross margin. The team remains focused on delivering enhanced profitability in the near term before expanding its global footprint. Over time, the Company expects Direct to Consumer to represent a greater percentage of total company revenues.
• Continue to optimize its positioning and competency in the menswear arena through wholesale, retail and licensing of its core brands. The global footprint for the Perry Ellis and Original Penguin brands continued to gain traction throughout all of these venues. In addition, the Company's golf lifestyle brands retain significant market share across the western hemisphere.
• Drive efficiencies and generate cost savings through process enhancements, inventory management and sourcing. During the third quarter, the Company realized $4.0 in cost savings resulting from its infrastructure review. In addition, the Company is working to implement recommendations emanating from its supply chain review. The Company expects to continue realizing significant operating margin improvement over time as these initiatives take hold.

For earnings history and earnings-related data on Perry Ellis (PERY) click here.

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