Tag Archives: PERY

Perry Ellis 4Q16 Earnings Call Notes

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Oscar Feldenkreis – President & CEO

George Feldenkreis

Reduced retail space is a positive

“Generally speaking, we believe that the new reduced retail space in America is a positive development in the long run, especially in light of the way which retail is moving these days and the demographic implication of generation Z, generation Y versus generation X. This alphabets of generations are really creating a no-paradigm which manufactures [indiscernible] have to learn to navigate if they want to succeed.”

C&D malls are going to close

” But in the final analysis, depending on what is the traffic in the center as some of the centers also are closing the big anchored tenant, it will act like everybody in that center. We have to be very careful now in omitting in retail, especially with some of the — the trend is now that A&B super centers are going to be open and the CMDs are not. If you happen to be in a center that’s not A&B, you have a very large percentage of probability that you will not be making money and if you’re in A&B, the more developers are trying to balance their loss of income by increasing their rents on the A&B. That’s why so many specialty store business are going out of business”

Customers are getting more and more used to buying digitally

“you see what Amazon is doing by not showing a sample of anything they sell, the consumer is now getting more and more used but on a digital way.”

Perry Ellis 3Q16 Earnings Call Notes

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Perry Ellis International’s (PERY) CEO Oscar Feldenkreis on Q3 2017 Results

Stretch is becoming important to mens apparel

“I think that we have a lot of new product technology performance fabrics a lot of the bottoms business has changed dramatically. Stretch has become such a strong component to the men’s business where you find it on most of garments today and it’s creating the necessity to go out and replenish your wardrobe as well as we are seeing the evolution of so many different fits available to a man today, which has allowed us to again force us to replenish our inventory.”

Retailers carrying short sleeve much longer than they have in the past

“We sold short sleeve product all the way through, I would say, the end of October, to be honest with you. And we are seeing more and more retailers are looking at carrying short sleeve product much longer than they have in the past.”

George Feldenkreis

Feel good about UK and Europe

“We continue to be very bullish in U.K. and Europe. We feel that as microeconomic conditions stabilize and there is a better view of how Brexit will develop, business in the U.K. will increase considerably. We feel that the Pound is reaching a steady level, which will restore profitability and growth. We expect the United Kingdom to generate higher revenues than last year during the fourth quarter and improve its gross profit.”

Seeing reduction of retail space in US which is a positive development

“We are starting to see the reduction of new retail space in America, which is a positive development as e-com continues to capture sales every year, more or less equivalent to what used to be the standard growth in the apparel industry. It is better to have fewer stores concentrate on your product and get the department store and retail buyers to focus on product and product delivery, which will be a better customer experience through less promotions and better service.”

Perry Ellis FY 2Q17 Earnings Call Notes

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Perry Ellis International’s (PERY) CEO Oscar Feldenkreis on Q2 2017 Results

George Feldenkreis

Things have changed

“On another issue, the fact that some of our great banners like Macy’s and Kohl’s have announced substantial decreases in brick-and-mortar stores validate the fact that things have changed. We’ve to understand that retail manager are finally adopted a new policy of reducing the total number of stores.”

Overstoring of America is a problem

“In my last conference call I mentioned that overstoring of America is a problem that is affecting retailer in a very negative way. At a time when income continues to capture sales every year, more or less equivalent to what used to be the standard growth in the apparel industry, it is better to have less stores concentrate on new products, produce a better customer experience through less promotion and better service to customers. We feel that these are the key to the future.”‘

Very confident that the world is not coming to an end

“we feel very strongly that the world is not coming to an end and there is a strong appetite for American brands overseas, which we continue to see and you see all the e-com businesses that are developing overseas around American brands growing very fast. So we’re very confident that internationally as you know the United States has 5x as much store space as Europe. So there is still a lot of opportunity.”

No slowdown in the UK from Brexit

“On the U.K question, frankly on a field currency our sales did not go down. We’ve the loss because of the conversion. Our sales in pound have been the same or what we projected. So there have not been a slowdown. In fact our Penguin retail stores, we have six stores in the U.K. turned positive this year, we were losing money. The U.K has also very high rental charges and we were losing money in a couple of stores. We got off them finally. This year it turn positive. So in that sense we’re very encouraged by the trends in local.”

Tech is needed to be successful

“y. I think the price, quality, innovation and great design are given for success for the apparel company. But I feel very strongly that going forward management capabilities, technology is what to be successful. We are pushing full steam ahead for the future. ”

Anita Britt

Inventories in excellent shape

Turning to the balance sheet, inventories are extremely tight and in amazing shape. “

B Riley 2016 Conference Notes

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This week we attended the B Riley conference in Los Angeles. These notes are from one on one meetings with management teams.

Steve Madden (SHOO) Director of Finance Derek Browe at B Riley Investment Conference 5.25.2016

Steve Madden (SHOO) Director of Finance Derek Browe said consumer shopping habits are changing   

“We feel like consumers are focusing on comfort and that trend will likely continue.  Also, millenials are less brand conscious, they don’t want to wear branded goods with logos on them, they want to think for themselves.”

Steve Madden (SHOO) Director of Finance Derek Browe talked about increased efficiency in the supply chain

“It now can take us about 6-8 weeks to bring a product to market whereas it used to take us about 3 months.  Also, about 65% of our products are shipped via boat.  However, when time is of the essence and we need to be on trend with our product, we can ship via airplane and get it here faster.”

Steve Madden (SHOO) Director of Finance Derek Browe talked about the profitability economics of different channels

“Amazon is currently the most profitable place to sell our goods because they’re taking care of all the logistics and sometimes we’re able to give them exclusive products.  Macy’s is our next most profitable channel but it is less profitable because they often push us on volume rebates and bulk pricing discounts.  Selling on our own website isn’t as profitable as the previous 2 channels because of the high shipping costs.”

Amazon is making a hard push into apparel

“Amazon definitely wants to be seen as a place where a customer can get fashion

Perry Ellis (PERY) CEO Oscar Feldenkreis at B Riley Investment Conference 5.25.2016

Perry Ellis (PERY) CEO Oscar Feldenkreis says no analysts are asking Amazon CEO Jeff Bezos the right questions

“E-commerce is not profitable, I don’t care what Bezos says.  Some of the biggest costs in the online channel are freight and credit card fraud protections.  No analysts are asking Jeff the right questions.  They need to be asking him what the liquidation value of his inventory is if he doesn’t sell it.”

Perry Ellis (PERY) CEO Oscar Feldenkreis says brand is important in retail

“Amazon doesn’t want to carry fashion product, in order for us to succeed I have to focus on brand differentiation and treating my product with respect.”

One must adapt to change

“The world is changing and you have to understand what’s around you, what you can and can’t control. If not you’re not long for this business or any business really”

Destination XL Group (DXLG) CEO David Levin at B Riley Investment Conference 5.25.2016

Destination XL Group (DXLG) CEO David Levin said the economics of e-commerce returns are atrocious

“In the online channel, it’s the return and refund costs that kill you because of the high cost of shipping versus the ultimate price of the order.  About 20% of overall apparel orders on e-commerce are returned whereas, because our customer segment is so unique, ours is around 8%.”

Digimarc (DMRC) CFO Charles Beck at B Riley Investment Conference

Digimarc (DMRC) CFO Charles Beck said a key ingredient is necessary in the innovation process

“Innovation only happens if trust is inherent in the organization.”

Digimarc CTO Tony Rodriguez noted that there has been interest in AI before that didn’t pan out

I was around for the first AI wave…AI became such a dirty word that grad students avoided the subject because you’d have your funding pulled right away

Camtek CFO Moshe Eisenberg

Camtek’s CFO said that the semiconductor industry has become less cyclical as it has matured

I think that as the industry has become more mature you see less cycles. The trend in the semi cycle is up.

Jetpay CFO Peter Davidson

Government regulations to protect low income borrows may have restricted their access to credit

“Government regulators have declared war on anything that serves underbanked consumers”

Earthlink Treasurer Trey Huffman

Legacy Earthlink still has 700,000 subscribers

“There are still 700,000 subscribers to legacy Earthlink. There are a lot of people who are tied to their email and don’t want to give it up.”

Perry Ellis 1Q17 Earnings Call Notes

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Perry Ellis International’s (PERY) CEO Oscar Feldenkreis on Q1 2017

It’s all about product and inventory management

“It’s all about product, Eric. And I think that in today’s day and age, we’re seeing that when retailers deliver newness and product that is comfort that is as well as has some performance attributes and features it does extremely well. Also managing inventory and churn is very, very important as everybody is managing inventory cash flow has become topic — is number one topic. ”

Department stores will readjust their business model

“Department stores today represent about 25% of our revenues and we believe the department stores will continue doing well. I think that department stores are readjusting their business model and making a big focus on eCommerce digital, which is important as well as I think tourism has hurt department — some department stores more than other. And I think you’ll see a lot of changes in how they market themselves more for the local consumers versus talking so much to tourism”

E-commerce is more expensive vs brick and mortar

“we’re looking at ways to improve how we consolidate the distribution side. But, it is a challenge, eCommerce definitely is a lot more expensive versus brick and mortar. But, we have to adapt to the new way of — as mobility apparel online sales today account for about 18% and we’ll continue to grow even further. So it’s something that we’re looking out. We’re making a lot of improvements to ensure profitability.”

Amazon is a top 15 customer not quite top 5 yet

“They are probably up 15 they’re not top five at this present stage. Our business is good with them. We continue to meet with them to try to understand their new business model which is — they’ve taken an approach to understand better. And our relationship with them is very strong and looking to continue growing with them. And we have strong brands that are performing extremely well for them. ”

George Feldenkreis

H&M, Zara etc have taken share in women’s business

“Certainly the women business has been more of a challenge especially with the advent of the international competitor like Zara, H&M, et cetera, which unquestionably have taken market share away in the women’s and junior business from change on department. ”

The over-storing of America is coming to an end

“Time to recognize the over storing of America is coming to an end and that the sooner we reduce the store count the better, it will make retailer stronger, more focused and more profitable. In our case, we are reducing our full price store count and being very selective in opening new stores especially as retail developers continue to increase rents as all leases expire.”

Perry Ellis FY 3Q16 Earnings Call Notes

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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.”

Perry Ellis FY 1Q16 Earnings Call Notes

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Men’s business very strong

“when we have to look at the business wide segment, the men’s business as you heard from J.C. Penney was very strong and I haven’t been able to read the transcript from the other retailers. But men’s continues to do extremely well, active wears is doing well, ath-leisure still continues to be strong and our golf business which has basically kicked in and as I mentioned Nike Swim are all doing extremely well, as a whole within the stores.”

WalMart has intensified health and wellness business

“we’re seeing Wal-Mart has intensified the whole health and wellness business and especially on making a strong commitment to the whole ath-leisure active wear business. So I think that halo effect than the in-store developments of what they’re doing has helped Ben Hogan as well as our product. We worked very closely with Wal-Mart in developing all of our business.’

Pery Ellis 4Q14 Earnings Call Notes

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TPPA will provide duty free imports to major countries except China

“We continue to reduce cost across the portfolio. We have decided to consolidate our Beijing offices into our two other offices in China; in Guangzhou and Shanghai. As we continue to prepare for an eventual approval by the U.S. Senate of the Trans-Pacific partnership agreement or TPPA. When approved this agreement will provide for duty free imports and exports to major countries, except China and this will have a major implication for the apparel industry in the next three to five year period.”

Moving more and more production away from China

“Today our company imports as mainly units from Vietnam as we do from China. Going forward there will be an increase in imports of certain apparel products from countries other than China.”

Tough environment for retail companies

“s you are all aware apparel companies are operating in a very challenging environment with a consumer that has so many choices and so many avenues and channels to choose from.”

Receiving half as many goods through the west coast as they did before the port closure

“As you all know we faced external headwinds that were unique for the quarter, namely port closures in the United States and historic currency fluctuations. While we are pleased that an agreement has been reached in the port dispute we believe that it will take another month or so until the port is back to full normal operations.

In order to mitigate delays caused by the port closures we have redirected a significant portion of our inbound shipments to the East Coast and anticipate that our deliveries will be back on schedule by the second quarter of our fiscal ‘16. We are now receiving approximately 15% of our goods through the West Coast port as compared to 35% to 40% before the slowdown began.”

The port situation has definitely improved

“First of all the port situation has definitely improved. We are, I would say that by the end of May on time for Father’s Day, we will be caught up. As Anita mentioned, we have diverted and started diverting a lot of our concentration from the West Coast to the East Coast, back last year when we saw what was transpiring.”

Got e-commerce to standalone profitability

“this is the first year we were able to get e-com basically to a small profit on a standalone basis, unlike I would say most other platforms that are out there in the industry. We were able to do that by really focusing on specific merchandising assortment within each of the brands, within our e-commerce platform today and we focus on also reducing where there were some duplicative analytics, where we felt that we weren’t getting a payback and where we were able to invest in marketing and analytics that we sell to give us a higher e-commerce lift and better profitability.”

Price of oil lower has been helpful

“Product cost, has been favorably affected by the lower prices of synthetic, the lowering of oil prices, have lowered prices of polyester nylon et cetera. And cotton has been on a kind of decline for a couple of years. So basically that is an effective, in fact it will result in improved earnings. We haven’t been able to quantify that. It’s a small number but it’s a helpful number whatever it is.”

We’re moving to Africa

“Generally speaking, men’s companies are always in the forefront of the changes because we are more conservative “than ladies business” and the men business can take a longer delivery than ladies. So all the big companies today are moving to Africa, for example PVH has established office in Africa, so is Avis [ph] and we are in that process too. We have been buying in Africa for a number of years. So all this is going to be good for the apparel business and we also doing office consolidation whenever necessary like in China. We’re reducing our exposure in China, which will result in improved cost of goods to a degree.”