Perry Ellis International Inc said it is all set for a solid holiday season after posting a stronger-than-expected quarterly profit, helped by tighter cost controls.
The clothing maker also raised its fiscal 2010 earnings forecast and said it expects a strong first quarter. The company, which sells its brands in department stores such as Macy's Inc and Kohl's Corp, saw strong performance at Kohl's, with above plan sell-thru for its golf-inspired brand Grand Slam and an increased penetration of Hispanic brand Centro.
Our Perry Ellis Collection, mid-tier brands, golf and Hispanic businesses all reported a strong third quarter and are positioned for growth in the holiday and spring seasons, Chief Operating Officer Oscar Feldenkreis said in a statement.
In September, the Miami-based company said it was creating a new dress line with lower prices and is selling an array of lower-priced brands in its Perry Ellis outlets to draw more value-conscious shoppers.
Like most other retailers, the company has also cut jobs, exited unprofitable businesses and reduced its inventory as weak consumer spending weighed on sales. Cost cuts during the quarter resulted in a 10 basis-point rise in gross margins.
Operating expenses fell 18 percent to $52 million, while inventory was down 23 percent in the quarter.
For fiscal 2010, it sees earnings of 80 cents to 95 cents a share, up from its prior view of 70 cents to 85 cents.
However, Perry Ellis, whose brands include Laundry by Shelli Segal, Cubavera and Jantzen among others, said it still expects total revenue to fall in the low double-digit range in fiscal 2010.
The third quarter marks the final quarter of revenue declines ... Initial readings point to a solid holiday season and a strong first quarter for fiscal 2011, it said.
The company expects gross margins to expand in 2011.
For the third quarter ended Oct. 31, Perry Ellis, which distributes apparel, accessories and fragrances, earned $4.1 million, or 31 cents a share, compared with $5.0 million, or 33 cents a share, a year earlier.
Analysts on average had expected earnings of 21 cents a share, before special items, according to Thomson Reuters I/B/E/S.
Revenue fell 20 percent to $178.6 million, missing analysts' consensus view of $185.2 million.
Shares of the company pared some of their early gains and were up 2 percent at $15.24 in morning trade Wednesday. They touched a high of $16.44 in early trade.
(Reporting by Nivedita Bhattacharjee, Renju Jose in Bangalore; Editing by Deepak Kannan and Gopakumar Warrier)