Florida-based Perry Ellis International (asi/77715) experienced a decline in revenue in the fourth quarter and during the full year of its fiscal 2017, which ended January 28, according to an earnings statement released Wednesday. Fourth quarter revenue decreased 4.7% to $204 million, while annual revenue dropped $39 million to $861 million.
Despite the decrease, Perry Ellis said there were notable positive developments. For the year, adjusted gross margin expanded 140 basis points to a record 37.2%. Meanwhile, adjusted diluted earnings per share increased 13% from 2016 to $2.04. GAAP diluted earnings per share rose to $0.95, up from a loss of $0.49 in 2016. Perry Ellis also generated cost savings of $7 million during fiscal 2017 – a performance that followed $7.8 million in savings in fiscal ’16.
Significantly, for the full year, the international clothing company produced 1.6% revenue growth (3.2% on constant currency) among its core brands. “We believe this is a testament to the power of our lifestyle brands, the strength of our design and marketing, and the disciplined execution of our strategy by our team,” said CEO Oscar Feldenkreis.
Nonetheless, Perry Ellis noted that the sales growth in core brands was offset by planned reductions of $20 million in exited brands and an $11 million reduction in special market programs. The fiscal year also saw an $11 million negative impact from unfavorable foreign exchange rates, and a decline of $15 million in women’s shipments. Wholesale shipments also declined by $12 million. However, said Feldenkreis, the majority of the wholesale shipment loss was accounted for by a switch of the shipments from fiscal 2017 to the start of 2018.
For the fourth quarter of fiscal 2017, gross margin expansion coupled with expense discipline enabled Perry Ellis to expand adjusted EBITDA margins to 8.4%, compared to 6% in Q4 2016. As reported under GAAP, fourth quarter net income was $9 million, or $0.59 per diluted share, compared to a loss of $17.7 million, or $1.18 per diluted share, in the prior fiscal year’s final three months.
“While the global retail landscape continues to be rapidly changing with major foreign currencies largely weakening against the U.S. dollar and unpredictable and volatile global consumer spending, we believe that we have successfully navigated this environment having delivered a year of enhanced margins and profitability,” said George Feldenkreis, executive chairman of Perry Ellis International. “We continue to invest in our digital platform, which we believe will become more critical in the future, given evolving consumer shopping trends.”
For fiscal year 2018, Perry Ellis forecasts that revenues will rise into the range of $870 million to $880 million, while adjusted diluted earnings per share will tally between $2.07 and $2.17.