You'll find Perry Ellis International (PEI) apparel worn about town during the workweek and on the links most weekends. It designs, distributes, and licenses men's and women's sportswear under 30-plus company-owned or licensed brands, including Jantzen, Laundry, Manhattan, Munsingwear, Original Penguin, and namesake Perry Ellis, among others. PEI also distributes PGA and Champions Tour golf apparel and NIKE swimwear under licenses. PEI's customers include some of the nation's largest retailers (Wal-Mart, Dillard's, and Macy's) and it distributes its products to some 15,000 stores. The apparel maker also operates more than 35 Perry Ellis stores in the US and Puerto Rico and several Original Penguin US shops.
Perry Ellis International rings up nearly 8% of its sales outside the US. PEI's apparel is made by Asian and Central American contractors and is sold in the US, Canada, Mexico, the UK, and elsewhere in Europe.
PEI is a diversified company with a vast portfolio of brands and products, which it peddles through multiple distribution channels (from mass merchants to luxury stores and specialty shops). The company generates most of its revenue from wholesale sales, which represented 97% of its business in fiscal 2012 (ends January). Of this segment, some 87% came from the sale of men's sportswear; men's and women's swimwear sales accounted for the balance. PEI is looking to boost business in its direct-to-consumer channel, which includes retail stores and e-commerce revenue, for all of its brands worldwide.
Licensing agreements accounted for a mere 3% of PEI's revenue. Looking to make itself a mainstay in the apparel arena, PEI licenses its name to third parties -- a strategy many fashion houses have moved away from. Despite this, the company continues to license its name, citing that the effort elevates the overall awareness of its brands without much investment.
The apparel maker's net sales increased 24% in fiscal 2012 (ends January) vs. the prior year, while net income grew by 4% over the same period. It was the second consecutive year of sales and profit gains at Perry Ellis, following a decline in both measures during the deep recession. With the exception of licensing, all of the firm's business segments posted gains, with women's sportswear improving the most, primarily as a result of the acquisition of the Rafaella business in January 2011. Indeed, PEI's sales topped $980 million in fiscal 2012, a record for the company.
PEI employs a three-dimensional approach to growth and profitability by developing and enhancing its portfolio of brands, increasing its product offering, and broadening distribution for its brands. Already a major player in menswear, PEI has been actively building its women's contemporary brands business with a spate of acquisitions in recent years. Women's brands acquired in the last few years include Rafaella (2011), and Laundry by Shelli Segal and C&C California acquired from Liz Claiborne in 2008. Laundry is a key dress brand for major retailers such as Saks, Bloomingdale's, Nordstrom, and Neiman Marcus, while C&C is a contemporary brand for missies and juniors.
The apparel company has sought to further diversify by seeking out new markets overseas. Adding the huge Chinese market to the list, in 2012 PEI formed a joint venture with China Outfitters Holdings (CHO), to develop its Manhattan brand in China, Hong Kong, and Macau. CHO will make and distribute Manhattan-brand apparel through in-store shops in more than 160 better department stores throughout China by 2017. Also, PEI hopes to learn about opportunities for its other brands in the Chinese market through the joint venture. Previously, PEI inked a licensing deal with South Pacific Apparel, which makes and markets Savane- and Farah-branded pants and shorts for men and boys in Australia, New Zealand, and elsewhere in the South Pacific region. Also, it has added several licensing deals to sell clothes in South Korea, Japan, and Vietnam.
PEI's largest customers is Kohl's, which accounted for about 16% of its fiscal 2012 (ends January) sales, followed by TJX Cos. and Macy's, each accounting for 10%.
Mergers and Acquisitions
In early 2012 PEI acquired the worldwide intellectual property rights to the Ben Hogan family of brands from Callaway Golf. The purchase bolstered the company's golf apparel business and expanded its operations in South Korea and Japan, where it assumed licensing agreements for the Ben Hogan brand. To build its women's business, PEI acquired the privately-held Rafaella Apparel Group from affiliates of Cerberus Capital Management for $80 million in early 2011.
The founding Feldenkreis family owns about 26% of the company, which it also runs.