After announcing a drop in its Q4 earnings, Perry Ellis described a restructuring plan. The plan aims to close or spin off smaller brands and units, among other changes, though which brands and units will be closed has not been specified. Overall profits were down 77%, from $7.7 million in Q4 2010 to $1.8 million in Q4 2011. Net revenue increased 11%, to $229.4 million. The acquisition of the Rafaella unit contributed to the year over year increase in revenue, along with the opening of 15 new bricks-and-mortar locations.
The company intends to continue its expansion overseas by developing its bases in Asia and Europe. They intend to realign around their core businesses of sportswear, golf clothing, and swimwear. The company also intends to increase its focus on direct-to-consumer marketing, which is a rapidly growing share of its business. In a press release announcing the moves, CEO Oscar Feldenkreis expressed optimism, stating, “Fiscal 2012 included strong sales and profit growth despite second half challenges driven by the difficult holiday season and product setbacks within our Perry Ellis & Rafaella collection businesses.”
To boost profitability and streamline processes, the company aims to cut $5.5 million in jobs, distribution costs, and other changes including design and tradeshow attendance. The news was greeted positively by investors, as shares of the company rose 2.6% to $18.35. The company beat analysts’ earnings expectations and met expectations on revenues, which likely led to the share price increase. Despite continued uncertainty in the European apparel market, in which Perry Ellis has recently expanded, analysts predict the company will outperform expectations for Q1. The company continues to see opportunities for expansion and growth, and is expected to announce further details of its restructuring later in the year.