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Perry Ellis Plans to Axe 15 Stores by 2018

Perry Ellis (PERY) said Thursday that it would close 15 underperforming retail stores over the next 18 months as it shifts more of its focus to e-commerce initiatives.

The Miami-based retailer, which owns Original Penguin and Laundry by Shelli Segal in addition to its namesake, broke the news after reporting a 5 percent decrease in second-quarter revenue. Despite a 4.1% sales increase across the company’s core global brands, it wasn’t enough to stop total revenue falling from $213 million to $202 million.

That result, combined with negative currency headwinds and costs associated with streamlining and consolidation of operations, caused the company’s net loss to widen from $1.28 million a year ago to $3.57 million in the three months ended July 30.

“As we look ahead to the remainder of the year, we are maintaining our guidance for adjusted earnings per share in a range of $1.95 to $2.00 for fiscal 2017,” said George Feldenkreis, executive chairman, noting, “While we feel confident with our business, we do believe that the strength of the U.S. dollar and the changing consumer spending patterns for international tourists in the U.S., along with the volatility in the global environment, remain headwinds.”

The aforementioned store closings are expected to reduce revenues by $2.8 million this year and by a further $8.3 million next year, though annual operating income is expected to improve by about $1.3 million.

In addition to the closures, Perry Ellis said it plans to accelerate international expansion through direct investment in North America and Europe as well as deals with licensees and other partners. Specifically, through the introductions of Ben Hogan in the U.K., Nike Swim across Europe and Latin America, and Perry Ellis America in Europe.

Earlier this year, the company inked a licensing agreement with Multimoda Import Inc. & Comercio Excelente Norte Sur De DV, a distributor and retail fashion leader in Mexico and Latin America, for the Perry Ellis brand. International revenue represented 13.6% of total sales in the most recent quarter.