Perry Ellis International sharpened its delivery in the first quarter, while Old Navy leads Gap Inc., Ralph Lauren beats estimates and omnichannel helps Bon-Ton.
Perry Ellis International Inc., in reporting first quarter results on Friday, said it had a solid start to the year but the retail environment remains tenuous.
Total revenue increased 7.3% to $242 million compared to $261 million in the first quarter of fiscal 2017. This reflected a planned decrease in shipments given a reduction of customers’ doors and inventory discipline to drive higher margin sales.
The disciplined management of inventory across channels along with increased sales of higher margin core brands led to an expansion of gross margin to 37.6% in the first quarter from 36.4% in the year-ago period.
Earnings before interest, taxes, depreciation and amortization for the first quarter dropped to $19.9 million from $25.2 million in the year-ago period.
First quarter net income also dipped to $12.8 million from $14.3 million.
Oscar Feldenkreis, chief executive officer and president, said, “We are pleased to report a solid start to Fiscal 2018 with both our top and bottom line results surpassing guidance, reflecting solid growth in our core brands driven by the earlier shipment of spring merchandise and strong gross margin expansion. Our razor-sharp focus on maximizing the potential of our core global brands by delivering a continuous flow of new innovative products while maintaining tight inventory discipline continued to serve us well in a difficult U.S. retail environment, with particular strength in Golf Lifestyle Apparel and Nike Swim.”
Feldenkries added that during the quarter, “we also continued to make progress on our speed-to-market initiatives, which position us to bring new innovation to store faster at increasing margins and replenish the most sought after products in season.”
The company reiterated guidance for fiscal year 2018 including revenues in a range of $870 million to $880 million.
Boosted by its Old Navy division, Gap Inc. reported a 2.6% increase in first quarter net income to $143 million, from $127 million in the year-ago period.
Diluted earnings per share of 36 cents compared with diluted earnings per share of 32 cents in the first quarter of fiscal year 2016.
Sales in the period ended April 29 were flat at $3.4 billion, though comparable-store sales were up 2 percent.
“We are pleased with our positive comp and earnings growth this quarter,” said Art Peck, president and chief executive officer. “We’ve made substantial improvements in product quality and fit, and our increasing responsive capabilities are enabling us to better react to trends and demand. While the retail environment continues to be challenging, we are focused on delivering the best possible product and customer experience, and our ability to leverage a portfolio of iconic brands and operating scale uniquely positions the company for long-term growth.”
Old Navy Global sales were up 8 percent, Gap Global sales fell 4 percent, as did Banana Republic Global.
Gap Inc. reaffirmed its full-year diluted earnings per share guidance to be in the range of $1.95 to $2.05. The company continues to expect comparable sales for fiscal year 2017 to be flat to up slightly.
Ralph Lauren ended the fourth quarter and fiscal year 2017 with double digit revenue declines, but came out ahead of Wall Street’s estimates.
Net revenue decreased 16% to $1.6 billion in the fourth quarter, and declined 10% to $6.7 billion for FY2017. International revenue for the fourth quarter declined 9% while North American revenue was down 21% compared to the same period one year ago.
Ralph Lauren’s wholesale business in the fourth quarter declined 17% to $777 million, and 15% to $2.8 billion for FY2017, mostly due to slow North American sales during both periods.
“The retail landscape today is more dynamic than ever, but within this environment, our brand continues to be one of the most recognized and beloved all over the world,” said Ralph Lauren, executive chairman and CCO. “Our performance for the year reflects our work to strengthen our brand and I am confident that the actions we are taking, combined with our strong heritage, position us well to succeed. I am very excited to partner with Patrice Louvet, who will join as our CEO in July, as we continue our evolution.”
The company reported a net loss of $204 million, or $2.48 per share for the fourth quarter. On an adjusted basis, net income was $74 million, or $0.89 per diluted share for the fourth quarter—exceeding Wall Street’s expectations of $0.79 cents.
The company saw a net income of $41 million, or $0.49 on a reported basis, compared to $74 million or $0.88 on an adjusted basis for the same period last year.
FY2017 saw a net loss of $99 million, or $1.20 per share. On an adjusted basis, net income was $477 million, or $5.71 per diluted share, compared to net income of $296 million, compared to $4.62 per diluted share on a reported basis and $6.36 per diluted share for FY2016.
“Fiscal 2017 was an important year as we strengthened the foundation of the company. We created operational efficiencies, increased the productivity of our assortment and improved quality of our sales,” said Jane Nielsen, Ralph Lauren chief financial officer.
For FY2018 Ralph Lauren anticipates an operating margin around 9-10.5%, with a net revenue down to the low double-digits.
Bon Ton Stores
Omnichannel was a bright spot in an otherwise difficult first quarter for Bon-Ton Stores Inc.
Kathryn Bufano, president and ceo, said, “Our first quarter results did not meet our expectations due primarily to weak mall traffic trends, unfavorable weather and marketing challenges associated with the Easter calendar shift. That said, our omnichannel business once again generated double digit growth and we continued to expand our merchandise offering with highly recognized brands as well as exclusive and private brands that resonate with our customer. Looking ahead, we will continue to make enhancements to our omnichannel strategy, expand our merchandise assortment with brands and categories that appeal to our customer, and elevate our marketing programs to drive traffic and conversion. In addition, we expect to achieve additional cost reductions in fiscal 2017 through the rollout of our internal profit improvement initiative.”
Comparable store sales in the first quarter decreased 8.8%, as total sales in the period fell 9.3% to $536.1 million, compared with $591.0 million in the first quarter of fiscal 2016.
The company once again achieved double-digit sales growth in omnichannel, which reflects sales via its web site, mobile site and customer service program. Other income in the first quarter fell $500,000 to $16.9 million.
Gross profit decreased $27.5 million to $172.6 million in the first quarter of fiscal 2017, primarily as a result of decreased sales volume.
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