Perry Ellis FY 3Q16 Earnings Call Notes

Perry Ellis International’s (PERY) CEO George Feldenkreis on Q3 2016 Results

Tough period for retail

“Last quarter was a very challenging period for the apparel and retail segments. Business are facing tremendous headwinds that resulted in lower sales for the early fall, September, October months for many of our retail partners.”

Cost benefits from stronger dollar should flow through in coming quarters

“because of the dollar strength which is not good for business in our international markets. We have been able to get a little bit of cost reductions in Asian countries and the decline of cotton prices and synthetics et cetera. That represent maybe a 2% reduction in general, not applicable to every country, not applicable to every commodity, but this is something that we are going to hopefully we will be showing in the quarters ahead. As you know, we do buy merchandize really five, six months ahead and that’s when commit to a price level.”

There is a lot of investment going into Vietnam to be able to use the benefits of Duty free there with TPPA

“The TPPA agreement which is the Pacific Trade Agreement with 11 nations, which is the only major really nation at this point that is important is Vietnam. We will pass some time next year or the year after. So that will bring large infrastructure sourcing into Vietnam. We feel that we have very good position because we have had relationship that go back almost 20 years. But there is a large influx of investments from Chinese and Taiwanese and Korean companies going actually, going – very large projects, even from Chinese factories going vertical into Vietnam to be able to use the benefits of duty-free from Vietnam.”

Also more sourcing opportunities in Africa

“Another development is, there is some sourcing now – more sourcing going on in Africa. We have been in the short run, Kenya for a couple of years now and there is more movements into Kenya and Ethiopia. Going forward, there are very large investments by the Chinese government in Ethiopia and they are building a lot of infrastructure highways which are very important.”

Oscar Feldenkreis – Vice Chairman, President and Chief Operating Officer

It’s incredible the new fabrics that are being developed today

“And people adjust on the sourcing side, our people just came back from the major fabric shows in Shanghai and all the new fabrics that are being developed today, it’s incredible, it’s very, very exciting what the new opportunities are out there today.”