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Business Description


Perry Ellis International, organized in 1967, is a global leader in the design, manufacturing, marketing and distribution of branded lifestyle apparel and accessories. We are one of the largest apparel companies in the world with a portfolio consisting of nationally and internationally recognized lifestyle brand names, some of which have a heritage dating back over 100 years.


We sell our products under our owned global brands, licensed brands and private retailer labels. Our owned brands include the global designer lifestyle brands, Perry Ellis® and Original Penguin ® by Munsingwear ® (“Original Penguin”) as well as Ben Hogan ®, Cubavera ®, Farah ®, Grand Slam ®, Jantzen ®, Laundry by Shelli Segal ®, Rafaella ® and Savane ®. We license the Callaway Golf® brand, PGA TOUR® brand, and the Jack Nicklaus® brand for golf apparel, the Jag® brand for swimwear and cover-ups and the Nike® brand for swimwear and accessories.

We have four reportable segments – Men’s Sportswear and Swim, Women’s Sportswear, Direct-to-Consumer, and Licensing – and we have a strategically diversified global distribution network focused on leading department stores, company-operated retail stores, specialty stores and select licensing partners. We distribute our products primarily to wholesale customers that represent all major levels of retail distribution including department stores, national and regional chain stores, mass merchants, specialty stores, sporting goods stores, the corporate wear market, e-commerce, as well as clubs and independent retailers, in North America and Europe. Our largest customers include Walmart Stores Inc., which includes Sam’s Wholesale Club (“Sam’s”) together (“Walmart”), The Marmaxx Group, and Macy’s, Inc. (“Macy’s”).


We also distribute through our own retail stores. As of April 1, 2016, we operated 41 Perry Ellis, 12 Original Penguin and two multi-brand retail outlet stores located primarily in upscale retail outlet malls across the United States, United Kingdom and Puerto Rico. As of April 1, 2016 we also operated three Perry Ellis, two Cubavera, 16 Original Penguin and one multi-brand full price retail stores located in upscale demographic markets in the United States and United Kingdom. In addition, we leverage our design, sourcing and logistics expertise by offering a limited number of private label programs to retailers.


The revenue generated through our licensing business, which we license to third parties for certain production, sales and/or distribution rights through geographic licensing arrangements is a significant contributor to our operating income and our arrangements heighten the overall awareness of our brands without requiring us to make capital investments or incur additional operating expenses.

Leadership position in the Men’s Wholesale business. We believe that our established relationships with retailers allow us to maximize the selling space dedicated to our products, monitor our brand presentation and merchandising selection, and proactively introduce new brands and products. Because of our quality brands and products, dedication to customer service, design expertise and sourcing capabilities, we have developed and maintained long-standing relationships with our largest customers. In addition, we are engaged in wholesale growth initiatives that are designed to transform our respective brands’ displays at select department stores into branded “shop-in-shops.” By installing customized freestanding fixtures, wall casings and components, decorative items and flooring, as well as deploying specially trained staff, we believe that our shop-in-shops provide department store consumers with a more personalized shopping experience than traditional retail department store configurations.
Growing Licensing business. The strengths of our brands have been instrumental in helping us build our global licensing business. We collaborate with over 120 high-quality product licensees who produce and sell what we believe are products requiring specialized expertise that are enhanced by our brands’ respective strengths. We provide support to these business partners and ensure the integrity of our brand names by taking an active role in the design, quality control, advertising, marketing and distribution of licensed products.

Continue to strengthen the competitive position and recognition of our lifestyle brands. We intend to continue growing brand awareness and customer loyalty in North America and internationally, in a number of ways including by:

Managing our brands individually, and developing a distinctive merchandising and marketing strategy for every product category and distribution channel.

Opening new retail stores in key geographical locations.

We maintain our advertising position in global fashion publications, participation in trade shows, event and celebrity sponsorships, cooperative advertising in print and broadcast media, as well as growing our online advertising exposure and internet presence directly to consumers.

Increasingly using e-commerce, digital, social media, and mobile applications to both support the initiatives of our wholesale partners as well as interact with our customers in order to enhance the shopping experience. We are investing in initiatives to provide attractive, effective, reliable, user-friendly e-commerce platforms that offer a wide assortment of merchandise with rapid delivery options that continually meet the changing expectations of online shoppers. In addition, we have built a state of the art photography studio to provide greater creative functionality.


We partner with leading wholesale customers in national and regional department, chain, mass market, specialty and independent stores in North America and Europe. These longstanding relationships enable us to access large numbers of our key consumers in a targeted manner. In addition, we are engaged in wholesale growth initiatives such as advertising support in the form of point-of-sale fixtures and signage to enhance the presentation and brand image of our products. We also participate in shop-in-shops which are the primary component of our retail marketing strategy to increase and brand floor space dedicated to our products within our major retail accounts. The design and funding of our concept shops within our major retail accounts has been a key initiative for securing prime floor space, educating the consumer and creating an exciting environment for the consumer to experience our branded products. Our shops enhance our brand’s presentation within our major retail accounts with a shop-in-shop approach, using dedicated floor space exclusively for our products, including flooring, lighting, walls, displays and images. We participate in incentive programs with our retailer customers, including customer loyalty, discounts, allowances and cooperative advertising funds. We also offer sales incentive programs directly to consumers through our “Supreme Perks” Loyalty Program which targets consumers in our direct-to-consumer channel.


The strength and agility of our global brands has been instrumental in helping us expand our licensing business. We collaborate with a select number of product licensees who produce and sell products requiring specialized expertise that are enhanced by our brands’ strengths. In addition, we have entered into agreements with non-manufacturing licensees who have particular expertise in the distribution of our products in countries and geographic territories such as South Korea, the Philippines, the Middle East, China, South Africa, Latin America and the Caribbean.


Expand our product offerings. We have been a leader in men’s apparel for over 40 years and believe we can continue to grow this business by leveraging our expertise and experience in design and manufacturing in our relationships with leading retailers, and in our sourcing capabilities to expand to new product categories by capitalizing on our brands’ strong awareness and loyalty among consumers. We can both optimize our strong business opportunities and attract new customers to our brands. For example, this year our product offerings within Perry Ellis expanded to include “athleisure” components under Perry Ellis 360°. The line incorporates performance fabrics, reflective tape and materials that provide function and versatility.


Grow our Direct-to-Consumer channel. We seek to expand and leverage the high gross margin direct-to-consumer channel, which includes e-commerce, outlet stores and full-price stores, and where we control all aspects of the operation, thereby complementing our wholesale business. This business segment operates under a single operating group to ensure our omni-channel operations are interdependent. This has enabled our company to increase comparable store sales with a number of initiatives already under way to increase the size and frequency of purchases by our existing customers and to attract new customers. Such initiatives include, among others, maximizing productivity with existing stores, creating compelling store environments and offering new products, including menswear, small leather goods, and active footwear.

E-commerce is our fastest growing direct-to-consumer channel. As a complement to our wholesale business, we currently market Perry Ellis, Original Penguin, Farah, Rafaella, Cubavera and Callaway Golf Apparel products online in the United States and internationally. We are continuing to enhance the online capabilities and functionality of our e-commerce sites to improve the shopping experience and increase sales. At the same time, these enhancements enable us to expand the number of countries to which we are able to ship. In addition, we plan to continue servicing our indirect e-commerce channel platforms for our retail partners by further investing in product presentation and selling capabilities to strengthen the competitive position and image of our current brands on their respective websites.

 




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