4 - Perry Ellis International

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Transcript 4 - Perry Ellis International

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SAFE HARBOR
STATEMENT
We caution readers that the forward-looking statements (statements which are not historical facts) in this release are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations rather than historical facts and they are indicated by words or phrases such as
"anticipate," "believe," "budget," "contemplate," "continue," "could," "estimate," "expect," "guidance," "indicate," "intend, " "may," "might," "plan," "possibly," "potential," "predict,"
"probably," "proforma," "project," "seek," "should“ or "target" or the negative thereof or other variations thereon and similar words or phrases or comparable terminology. Such
forward-looking statements include, but are not limited to, statements regarding Perry Ellis’ strategic operating review, growth initiatives and internal operating improvements
intended to drive revenues and enhance profitability, the implementation of Perry Ellis’ profitability improvement plan and Perry Ellis’ plans to exit underperforming, low growth
brands and businesses. We have based such forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations,
assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, and other factors
that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forwardlooking statements, many of which are beyond our control. These factors include: general economic conditions, a significant decrease in business from or loss of any of our major
customers or programs, anticipated and unanticipated trends and conditions in our industry, including the impact of recent or future retail and wholesale consolidation, recent and
future economic conditions, including turmoil in the financial and credit markets, the effectiveness of our planned advertising, marketing and promotional campaigns, our ability to
contain costs, disruptions in the supply chain, our future capital needs and our ability to obtain financing, our ability to protect our trademarks, our ability to integrate acquired
businesses, trademarks, trade names and licenses, our ability to predict consumer preferences and changes in fashion trends and consumer acceptance of both new designs and newly
introduced products, the termination or non-renewal of any material license agreements to which we are a party, changes in the costs of raw materials, labor and advertising, our
ability to carry out growth strategies including expansion in international and direct-to-consumer retail markets, the effectiveness of our plans, strategies, objectives, expectations
and intentions which are subject to change at any time at our discretion, potential cyber risk and technology failures which could disrupt operations or result in a data breach, the
level of consumer spending for apparel and other merchandise, our ability to compete, exposure to foreign currency risk and interest rate risk, possible disruption in commercial
activities due to terrorist activity and armed conflict, actions of activist investors and the cost and disruption of responding to those actions, and other factors set forth in Perry Ellis'
filings with the Securities and Exchange Commission (SEC). Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those risks and
uncertainties detailed in Perry Ellis' filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are valid only as of the date they
were made. We undertake no obligation to update or revise any forward-looking statements to reflect new information or the occurrence of unanticipated events or otherwise, except
as otherwise required by the federal securities laws.


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BUSINESS OVERVIEW

Oscar
Feldenkreis
Vice Chairman of the Board,
President and Chief Operating Officer

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Slide 4

FISCAL 2015 FULL-YEAR PERFORMANCE

Total Revenues of $890 million

Gross Margin expansion of 80 bps to 34%
Cost savings generated were $12 million
Adjusted diluted EPS increased 47% to $0.56

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FISCAL 2015 STRONG SHAREHOLDER RETURN

Apparel, Accessories
& Luxury Goods

+4%

5

Composite

+14%

PEI delivered outstanding total shareholder
returns in FY15 (+53%)

PERY +53%


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STRONG Q1 FISCAL 2016 RESULTS

Q1 REVENUES
$266M
+4%

Q1 ADJUSTED EBITDA
+32%

$25M

$19M

$257M

FY15

6

FY16

7%
(margin)

9%
(margin)

FY15

FY16

Revenues increased 4% to $266M,
due to Company’s core brand strategy

Adjusted EBITDA Grew 32% to $25M and Adj.
EBITDA margin expanded 200 bps to 9.3%

Gross margin expanded 80bps to 34.9%

Earnings Per Share increased 80% to $0.99


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POWERFUL

ESTABLISHED

RESULTS

YEARLY

Lifestyle Brands
and Diversity

Operations with
Meaningful Scale

Steadily
Improving

Strategy Plans in Place

POSITIONING

ENHANCING

REDUCING

YIELDING

In Attractive Markets
and Supported by
Strong Financials

Direct-to-Consumer
and International
Businesses

Costs and Exposure to
Low-growth Brands

Clear Results and Strong
Shareholder Value


Slide 8

OUR GROWTH AND PROFITABILITY PLAN

8

1 2 3 4 5
Portfolio
Optimization

Retail
Brand
Enhancement

Expand
International
And Licensing
Distribution

Direct-toConsumer
Expansion

Operating
Efficiencies


Slide 9

PORTFOLIO OPTIMIZATION

1
% Direct Revenue
(87%)
Global Retail Sales
($2.6B)

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Since FY14: Exited 30 brands (~ $80M in revenues)
Today: 87% of Revenues from Core Brands

24%

12%

20%

16%

15%

$930M

$385M

$510M

$375M

$435M


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DIVERSE RETAIL RELATIONSHIPS

2

10

25,000+ Door Penetration across Multiple Demographic
Segments, Price Points and Distribution Channels
Luxury

Dept / Mid-Tier

Specialty

Club / Mass

International


Slide 11

RETAIL BRAND ENHANCEMENT

2
Product
Innovation

Visual
Omnichannel
Merchandising
Marketing
Via Shop-in-Shops

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EXPANDING INTERNATIONAL AND LICENSING DISTRIBUTION

3

12

Licensing 4%
International 12%
Domestic 88%

FY15 International
revenues grew 15% to
represent 12% of revenues

Licensing income
grew 7% to represent
4% of revenues

Direct-to-Consumer 10%
Wholesale 86%

27 new licenses in FY15, extending
8 brands across geographic and
product categories


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LEADING

3

DIRECT

LICENSEE

UK
Mexico
Canada

Latin America
Philippines
Vietnam

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Slide 14

3

INVESTING AND
DEVELOPING

DIRECT

LICENSEE/JV

France
Spain
Italy
Germany

India
China
Middle East

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Slide 15

DIRECT-TO-CONSUMER PLATFORM

4

Perry Ellis
Original Penguin
Cubavera
Farah
Callaway
Rafaella

Total

15

Owned Retail
Stores

Licensee
Stores

E-commerce
Sites

46
28
2
2
-

30
62
4
2
-

1
1
1
1
1
1

78

98

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Slide 16

DIRECT-TO-CONSUMER EXPANSION

4

Open
New Stores

Enhanced
Profitability
Accelerate
E-commerce
Continuous
Comp Store Growth

16

Right-door strategies, with a focus on each brand’s geographic and
demographic attributes
Fulfill E-com orders from stores
Increase turns through lower markdowns, inventory management and
localized assortments
Expand high-margin assortments
Build new e-commerce sites and expand international shipping opportunities
Grow ownership of exclusive product
Deploy new e-mail growth strategies and intensify focus on SEO content
Focus on improved conversion
Climate-right assortment strategies

DTC Revenues rose 13% to represent 10% of Total Revenues


Slide 17

OPERATING EFFICIENCIES

5

Restructured Wholesale Business by lifestyle
Unified DTC Division under one leadership umbrella

Realized $12M in cost savings in FY15, $2.3M in Q1 FY16
FY16 capital refinancing to save $4.5M
Working-capital efficiencies

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Slide 18

FINANCIAL HIGHLIGHTS

Anita Britt
Chief Financial Officer

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Slide 19

STRONG STOCK RETURN COMPARED TO PEERS

19

PERY Peer Group
1 Year*

3 Year**

6 Year**

APP
COLM
CRI
CROX
DECK
DLA
GES
GIII
OXM
SHOO
ZQK

-55%
44%
56%
-1%
-15%
-3%
-30%
79%
32%
23%
-84%

20%
81%
92%
-46%
-21%
-40%
-41%
317%
9%
25%
-58%

-56%
196%
380%
783%
279%
146%
17%
1667%
740%
567%
-11%

Average
High
Low
S&P Apparel, Accessories and Luxury Goods

4%
79%
-84%
13%

31%
317%
-58%
33%

428%
1667%
-56%
274%

44%

51%

523%

PERY
* For the trailing 12 months (07/08/14 – 07/07/15)
** For the fiscal year ending 1/31/15


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20

LICENSING AND INTERNATIONAL DEVELOPMENT
$31M+
Royalty Income

YTD Fiscal
2016
Strategic
Initiatives

150+
Licensing
Agreements

98
LicenseeOperated
Retail Stores

Royalty revenue increased 10%

Eight new agreements, first agreement in India for Original Penguin
Add $10M to royalty revenues from Fiscal 2015
Expand international penetration from 25% to 40% of licensing income
Concentrate resources on globalizing core brands/product categories
Focus on underpenetrated markets, categories and channels
Continue to upgrade licensees
Pursue additional revenue models in addition to classic licensing
(JV, Equity Participation) for non-core brands


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FINANCIAL SUMMARY

21

Full Year FY
2015A

3M YTD FY
2015A

3M YTD FY
2016A

FY
2016E*

Total Revenue

$890.0

$257.3

$266.4
(+4%)

$925M –$935M
(+4% - +5%)

Adj. Gross Profit**1

$303.0
34.0%

$87.7
34.1%

$93.0
34.9%

34.6% –
34.7%

Adj. EBITDA**

$39.8
4.5%

$18.7
7.3%

$24.7
9.3%

$55M (6.0%) –
$58M (6.25%)

Adj. EPS**

$0.56

$0.55

0.99

$1.68 –
$1.75

(1) Adjusted for costs associated with exited brands and other strategic initiatives
*Guidance as of 05/14/2015
**Non-GAAP reconciliations are contained in PERY press release issued on 5/14/15, which was filed as Exhibit 99.1 to a Form 8-k filed with the SEC on 5/14/15.


Slide 22

CAPITALIZATION SUMMARY

22

Actual

Actual

Capitalization

May 2, 2015

May 3, 2014

Cash & Investments
Senior Credit Facility
Senior Subordinated Notes Payable, Net
Real Estate Mortgages

$32.7
$9.7
$150.0
$21.9

$47.8
$64.6
$150.0
$22.7

Total Net Debt

$139

$189

Inventory
Accounts Receivable
Total Current Assets
Total Shareholders’ Equity

$153.5
$181.0
$379.8
$313.4

$177.2
$183.1
$434.2
$357.1

31%
3.0x
3.2x

35%
5.7x
2.2x

Summary Credit Statistics
Total Net Debt to Capital
Net Debt / LTM EBITDA as Adjusted
LTM EBITDA as Adjusted / PF Interest Expense

Effective 5/6/15, $100 million senior subordinated notes redeemed and financed through expansion of senior credit facility


Slide 23

23

BOARD AND
MANAGEMENT TEAM


Slide 24

BOARD AND MANAGEMENT TEAM

George
Feldenkreis
Chairman of the Board and
Chief Executive Officer

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ALIGNMENT OF BOARD, MANAGEMENT AND SHAREHOLDER PRIORITIES

Leadership includes highly-qualified, experienced and
engaged apparel and retail veterans
Perry Ellis International’s Board and management own approximately 25%
of the outstanding shares of the Company’s common stock
Stock ownership requirements for directors/executives
Operational and Profitability Goals

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Slide 26

PERRY ELLIS INTERNATIONAL BOARD OF DIRECTORS

George Feldenkreis
Chairman

Founded and built Perry Ellis International into a global lifestyle-apparel company
Visionary in creating and developing international apparel sourcing networks
Grew PEI sales from $33M at initial IPO, to $890M in Fiscal 2015

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PERRY ELLIS INTERNATIONAL BOARD OF DIRECTORS

Oscar Feldenkreis
Vice-Chairman

35 years of leadership experience at Perry Ellis International
Implemented a successful brand-acquisition strategy, transforming PEI into a global lifestyle apparel company
Will assume role of Perry Ellis' Chief Executive Officer at the beginning of next fiscal year

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PERRY ELLIS INTERNATIONAL BOARD OF DIRECTORS

Jane DeFlorio
Lead Independent Director
Added as an Independent Director in 2014

16 years of experience advising retail-industry sector at Deutsche Bank, UBS and Morgan Stanley
Focus on retail, E-commerce, finance for retail groups
Vice Chairman of Board of Trustees, and Chairman of the Audit and Risk Committee, at The New School University

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Slide 29

PERRY ELLIS INTERNATIONAL BOARD OF DIRECTORS

J. David Scheiner
Added as an Independent Director in 2014

35 years of experience in senior leadership at major retailers
Former President and COO of Macy’s Florida and Puerto Rico
Retail, wholesale and private-equity management consultant

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PERRY ELLIS INTERNATIONAL BOARD OF DIRECTORS

Alexandra Wilson
Added as an Independent Director in 2014

15 years of international experience in luxury goods, e-commerce, retail and finance
Founder of online retailers Gilt Groupe and GLAMSQUAD
Entrepreneurial advisor to fashion, retail and tech companies

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PERRY ELLIS INTERNATIONAL BOARD OF DIRECTORS

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Michael Rayden
Added as an Independent Director in 2015

Former Chairman and CEO of Tween Brands, currently a subsidiary of Ascena Retail Group.
Led Tween Brands as CEO beginning in 1996, and took the Company public in 1999
Former Chairman and CEO of Pacific Sunwear of California. Held chief executive positions at
The Stride Rite Corporation and Eddie Bauer
Served as a director at David's Bridal, Dress Barn and Strottman International


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PERRY ELLIS INTERNATIONAL BOARD OF DIRECTORS

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Bruce J. Klatsky
Added as an Independent Director in 2015

Former Chairman and CEO of PVH Corporation, transforming the apparel company into
one of the largest in the world
Co-founded private equity company, LKN Partners and is on the Board of Gazal Corporation,
a leading Australian clothing company
Previously served on President Clinton's White House Apparel Task Force


Slide 33

@peicorp

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