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Perry Ellis Reports Q3 Loss, Shareholders Request Evaluation

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Perry Ellis Interntional, Inc. shareholders are reacting to the sportswear brand’s disappointing third quarter 2015 results. On Thursday, the company reported a loss of $437,000, or $0.03 a diluted share, in its fiscal third quarter, which fell short of analysts expectations. Zacks Investment Research showed that on average analysts’ expected earnings of $0.06 per share.

Net revenues decreased 4.8% to $211.4 million from $222.1 million the period one-year ago in the three months ended Nov. 1. However, the company said the decrease was in line with guidance even as $6 million in revenues moved from the third quarter to the fourth quarter due to delays related to shopping from West Coast ports and the high demand for ground transportation.

A letter to the board of directors of Perry Ellis International, Inc. sent from two shareholders, Legion Partners and CalSTRS, which own about 6.3% of the apparel brand’s shares, expressed concern of what they described as “a lack of commitment” from the brand to take the necessary steps to ensure long-term value for all shareholders. The letter is requesting that the board of directors form a special committee to explore strategic alternatives.

Legion Partners managing director Chris Kiper said, “We believe there is serious interest in Perry Ellis from strategic buyers, and that the Board has a fiduciary responsibility to objectively evaluate all viable alternatives to maximize value for all shareholders.” He added, “This evaluation process must consider the risk profile of alternative courses of action from Perry Ellis’ current strategy. We are concerned that the status quo, under the leadership and control of the Feldenkreis family, entails a very high risk that Perry Ellis will continue to under perform, causing irreparable value destruction for shareholders.”

Perry Ellis has not commented on the letter. However, as previously announced, the company said it will continue to expand its direct to consumer channel, drive international and licensing growth in North America and Europe and focus on disciplined inventory management.

George Feldenkreis, Perry Ellis chairman and chief executive officer, said, “We’ve seen steady progress over the last three quarters as we have focused our portfolio, cut costs and expanded our profitable licensing and international operations. We enter the last quarter of our fiscal year as a more focused company with a clear plan for achieving our goals and building upon our strong heritage. We look forward to accelerating our momentum.”

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