Perry Ellis CEO: the worst might be over
Perry Ellis International, Inc. (Nasdaq:PERY) CEO George Feldenkreis said the worst might be over for the apparel company, whose brands include Original Penguin, Jantzen, Laundry by Shelli Segal and Gotcha. Feldenkreis made the comments during a morning conference call.
“The stimulus package is starting to hit consumers and other measures being passed by Congress like the mortgage bill and at some point, the farm bill, should help the economy by the end of this year and into 2009,” Feldenkreis said.
In an announcement released after Wednesday’s closing bell, Perry Ellis reaffirmed its 2008 earnings guidance of a range of $1.95 to $2.00 per share on revenue of between $910 million and $925 million. Wall Street expects a 2008 profit of $1.99 per share on revenue of $922.3 million.
“We continue to be very focused on achieving the revenue goals that we have set for ourselves and because of this, I am happy to confirm that we are maintaining our guidance,” Feldenkreis said.
However, textile price increases and an increase in the value of the Chinese currency could threaten Perry Ellis’ profits, the chief executive said. In response, the Miami-based company began reducing its Chinese purchases in late 2006 and early 2007. The company has also opened new offices in Bangladesh and Jordan.
Feldenkreis said the firm’s financial position is “extremely strong” and the company is “very excited” about growth opportunities in the near future. An analyst asked Feldenkreis if the strong financial position will translate to near-term acquisitions.
“We are always looking for acquisitions. We were out of the game during 2006 and 2007 because of prices that were being paid, but we continue to look at opportunities to grow our company,” Feldenkreis said. “The last two acquisitions seem to be big growth opportunities. If we can finance it and it is valued at the right price, we will continue to acquire whatever opportunities we have at the right price. The acquisition would have to be accretive in the relatively short term.”
Perry Ellis reported late Wednesday that its first-quarter profit edged down to $9.1 million, or $0.60 per share, versus $9.5 million, or $0.60 per share, a year earlier. Wall Street analysts, on average, anticipated earnings of $0.55 per share.
“A few months ago when we saw the meltdown of the stock prices of apparel and retail companies, we were of the opinion that things were not as bad as some analysts expected it to be. We are still of the same opinion,” Feldenkreis said. “While gasoline prices continue to increase and consequently reduce the buying power of the average consumer, it is evident that the American economy continues to be extraordinarily resilient. At this point, we feel that the worst might be over.”
Revenue for the three months ended April 30 rose 6% to $243.5 million from $228.8 million a year earlier. Wall Street was looking for $233.7 million. Ninety-two percent of the firm’s sales come from men’s apparel, Feldenkreis said.
Quarterly gross profit increased 9% to $84.6 million from $77.8 million during the same period of 2007. Operating expenses also rose 15% to $65.9 million from $57.5 million a year earlier.
COO Oscar Feldenkreis said the company started fiscal 2009 strongly, despite economic uncertainty.
“We are confident that Perry Ellis will deliver another record year, starting with a solid second quarter and leading to a great second half of the year,” the chief operating officer said. “Although no one is immune to the macroeconomic environment, we remain focused on executing on our diverse strategy, enhancing our powerful national and international brands, and leveraging our ability to identify and develop niche businesses.”
In Thursday afternoon trading, PERY shares are up 14.38% to $27.86.
