August 19, 2009 / 11:11 AM / 10 years ago

UPDATE 3-Perry Ellis posts narrower-than-expected Q2 loss

* Q2 loss/shr $0.42 vs est loss/shr $0.54

* Revenue $159.2 mln vs est $172.9 mln

* Sees FY EPS $0.70-$0.85 vs est $0.68

* Inventory down 22 pct

* Shares rise 20 pct (Recasts; adds details, conference call comments, updates share movement)

Aug 19 (Reuters) - Perry Ellis International Inc PERY.O reported a narrower-than-expected second-quarter loss, helped by tighter cost controls, and forecast full-year earnings ahead of Wall Street expectations, sending the clothing maker’s shares up 20 percent.

Perry Ellis, which has rigorously managed expenses and slashed inventory to strengthen its liquidity, said the strong earnings forecast was based on increased visibility for holiday season orders.

The company reduced total operating expenses by 20 percent to $51.1 million and slashed inventories by 22 percent in the second quarter, even as sales fell 18 percent on weakness at its swimwear segment, which was hit by unseasonably cold weather.

“We believe that fourth quarter provides us with an inflection point where we will report increased net sales in the low single digits and expansion of gross margins year-over-year,” Chief Financial Officer Anita Britt said on a conference call with analysts.

Chief Executive George Feldenkreis said he was optimistic about holiday and spring orders for the fourth quarter and second-half bookings point to strong results.

Perry Ellis expects to earn 70 cents to 85 cents a share in fiscal 2010. It reaffirmed its revenue outlook of a decline in the low double-digits.

Analysts on average were looking for a profit of 68 cents a share, before items, on revenue of $783.7 million, according to Reuters Estimates.

For the second quarter, Perry Ellis posted a loss attributable to the company of $5.3 million, 42 cents a share, while analysts a loss of 54 cents a share.

Revenue fell to $159.2 million. [ID:nWNBB7201]

Shares of the Miami-based company touched a high of $10.73 before paring some gains to trade up 17 percent at $10.43 Wednesday afternoon on Nasdaq. (Reporting by Viraj Nair in Bangalore; Editing by Anne Pallivathuckal)

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