Perry Ellis Stock is Best Left On the Rack – PERY

by Zacks Investment Research | March 14, 2014 2:09 pm

Estimates have come down after disappointing fourth quarter preliminary results for Perry Ellis (PERY[1]), sending this apparel maker to a Zacks Rank # 5 (Strong Sell) last month.

About the Company

Perry Ellis (PERY[2]) is a designer and distributor of a broad line of men’s and women’s apparel, accessories and fragrances, as well as select children’s apparel.

The Company, through its wholly owned subsidiaries, owns a portfolio of brands, including some well knows ones like Perry Ellis, Cubavera, and Rafaella.

Disappointing Fourth Quarter Preliminary Results and 2015 Guidance

On February 24, Perry Ellis reported its preliminary results for Q4 2014 ended February 1, 2014. The Company now expects total revenue to decline 16% to approximately $216 million from $258 million in the prior year quarter and adjusted diluted earnings to be in the range of 2 cents per share to 5 cents per share.

According to the company, the performance was impacted by inclement weather coupled with a challenging consumer spending environment. In its direct-to-consumer channel, lower mall traffic resulted in a 4.8% decline in comparable store sales.

Its wholesale business was hurt as many retailers delayed shipments of merchandise planned for January delivery to the next quarter.

The company expects total revenues for fiscal 2015 to be in a range of $910 to $920 million.

Downward Revisions

After disappointing preliminary results, estimates for the company have moved downwards. Zacks Consensus Estimates for the current year and next year are now down to 34 cents per share and 89 cents  per share respectively, from 66 cents per share and $1.30 per share, 60 days back.

Declining estimates sent Perry Ellis stock to a Zacks Rank #5 (Strong Sell) on February 28.

The Bottom Line

The outlook for Perry Ellis stock remains cloudy due to a challenging consumer spending environment combined with its poor business execution.

Perry Ellis stock  is currently Zacks Rank # 5 (Strong Sell) stock and as such investors would like to avoid this stock until there are clear signs of improvement in its performance.

Better Play?

Investors seeking exposure to the ‘Apparel’ industry could look at HanesBrand (HBI[3]), a Zacks Rank #1 (Strong Buy) stock.

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