Perry Ellis International Inc. (NASDAQ:PERY)

Second Quarter 2011 Results

“Expansion of our core businesses and the addition of Rafaella women’s sportswear resulted in a strong profit for the second quarter. We believe this exemplifies the success of our diversification strategies and the ongoing strength of our growth initiatives. We are very pleased to achieve this performance in what traditionally has been an unprofitable quarter for our Company and during what continues to be an uncertain domestic and global economy,” commented Oscar Feldenkreis, President and COO.

Mr. Feldenkreis continued, “Our efforts in expanding our international footprint are beginning to gain strong traction. Our focus on direct to consumer was also productive as we achieved solid gains in these businesses. We also successfully acquired six top retail leases in an auction, which will be converted into full price doors. These locations are scheduled to open at the start of the holiday season.”

First Quarter Results:

• Total revenue increased 31% to $288.3 million as compared to $220.3 million for the comparable prior year period.
• Operating income increased 52% to $30.4 million
• Net income increased 37% to $15.4 million
• EBITDA of $33.6 million increased 45% over $23.1 million in the comparable prior year period
• Diluted EPS of $0.99 increased 22%
• Diluted EPS, as adjusted, of $1.08 increased 33%
• Increased fiscal 2012 EPS guidance to a range of $2.40 to $2.50 from previous guidance of $2.30 to $2.40.

"We are extremely pleased with our results for the first quarter. Our ability to successfully capitalize on the positive momentum for our brands and business from prior year coupled with the addition of the new Rafaella women’s sportswear business drove record revenue and net income for Perry Ellis International," commented Oscar Feldenkreis, President and COO. "Throughout fiscal 2012 we will continue to invest in and focus on our niche businesses such as golf and Hispanic as well as in Perry Ellis Collection, women’s sportswear, direct -to-consumer, and international where we believe we can further maximize our operating model and drive significant growth and earnings for our shareholders," continued Mr. Feldenkreis.

The Company reaffirmed its revenue guidance of reaching $1.0 billion for full fiscal year 2012. In addition, core organic growth is expected to add 8% to 10% from prior fiscal year total revenues, and the newly acquired Rafaella women’s sportswear business is expected to add approximately $125.0 million in revenue for full fiscal year 2012.

Fiscal 2011 Highlights:

• Total revenue increased to $790 million from $754 million last year, an increase of 5%
• Fiscal 2011 EPS increased 68% to $1.70 vs. $1.01 last year
• Fiscal 2011 adjusted EPS of $1.85, an increase of 81% from prior year adjusted EPS of $1.02
• Fiscal 2011 gross margins increased to 35.7% from 33.0% last year
• Further strengthened capital structure with completion of common stock and senior note offering
• Expects fiscal 2012 EPS in range of $2.30 - $2.40, which represents growth of 27% at the mid-point of the range from adjusted diluted EPS of $1.85 in fiscal 2011

Revenue expected to reach $1 billion for fiscal 2012

"Fiscal 2011 was an outstanding year for Perry Ellis International. The results we delivered and our current positioning in the market place remains a testament to the strength of our brand portfolio and business model," commented Oscar Feldenkreis, President and COO. "Our key growth platforms led by women’s and contemporary with the recent acquisition of Rafaella, as well as Perry Ellis Collection, Golf, Hispanic, and direct to consumer, are all very well positioned to show strong organic growth and capture additional market share in fiscal 2012," continued Mr. Feldenkreis.

We are coding PERY as a GeoSpecial @ $30.81

Company will have a GPR of 4 starting in its first quarter ending April 2011 ( fiscal year ends in January).

• Fiscal 2012 EPS is expected to grow at least 35% to $2.50
• Company expects fiscal 2012 sales to grow 20% to $1 billion. This is the first significant revenue increase in at least three years.
• Commitment to increasing share holder value, as evidenced by a recent accretive acquisition that will add $0.40 to 2012 EPS
• Its brands are recognized by consumers

PERY would have been coded as a GeoBargain if not for its high debt to equity ratio. The stock has had a sharp run. so investors should be ready for pull backs.  We plan to nibble at current prices and scale in on pull backs.

Potential short-term valuation scenario: $37.00 to $46.00 (15X 2012 EPS estimate; 25 times soon to be trailing EPS of $1.83)