Global apparel company Perry Ellis International (asi/77715), which operates in the promotional products market through its corporate sales division, reported a year-over-year decline in total sales in the first quarter of its fiscal year 2018, ended April 29. Headquartered in Florida, Perry Ellis said that quarterly revenue tallied $242 million, a 7.3% decline compared to the same quarter last year. While the performance beat Perry Ellis’ guidance range of $230 to $235 million, the dip in revenue “reflected a planned decrease in shipments given a reduction of customers’ doors and inventory discipline to drive higher margin sales.”
Indeed, Perry Ellis said that the strategic management of inventory, along with increased sales of higher margin core brands, contributed to a 120 basis point expansion in GAAP gross margin to 37.6% in the first quarter. That’s up from 36.4% in first quarter of fiscal 2017. Similarly, adjusted gross margin was 37.6%, compared with adjusted gross margin of 36.7% in the comparable period of the prior year.
Nonetheless, earnings before interest, taxes, depreciation and amortization for the first quarter of fiscal 2018 totaled $19.9 million – a decline of more than $5 million from Q1 fiscal 2017. Keeping with the downward trend, GAAP diluted earnings per share came in above guidance at $0.83, but were still less than the $0.95 recorded during the prior year’s first quarter. While Perry Ellis beat expectations on sales and EPS, a challenging retail environment has compelled the company to keep to a guidance range of $870 million to $880 million for fiscal 2018 annual revenue. Reaching that range would represent an annual sales increase for Perry Ellis, which reported revenue of $861 million in fiscal 2017.
In a statement, CEO Oscar Feldenkreis highlighted a number of positives. “We are pleased to report a solid start to Fiscal 2018 with both our top and bottom line results surpassing guidance, reflecting solid growth in our core brands driven by the earlier shipment of spring merchandise and strong gross margin expansion,” he said. “Our razor-sharp focus on maximizing the potential of our core global brands by delivering a continuous flow of new innovative products while maintaining tight inventory discipline continued to serve us well in a difficult U.S. retail environment, with particular strength in Golf Lifestyle Apparel and Nike Swim.”