“Overstored” is a term increasingly used by retail executives, as such chains as Macy’s Inc. and Kohl’s Inc. announce plans to close bricks-and-mortar locations in the face of growing online sales. Apparel brand Perry Ellis International Inc. is following suit.
As the company announced a strong 35.6% increase in online sales in the second quarter, it disclosed plans this week to close 15 stores—20% of its physical outlets—over the next 18 months.
“In my last conference call I mentioned that overstoring of America is a problem that is affecting retailers in a very negative way,” Perry Ellis executive chairman George Feldenkreis told analysts on a call Thursday, according to a transcript from Seeking Alpha. “It is better to have less stores, concentrate on new products and produce a better customer experience through less promotion and better service to customers.”
While Perry Ellis does not report online sales separately from total sales in its quarterly earnings report, company officials say company-owned e-commerce sites account for about 2.6% of worldwide revenue. With second quarter net sales coming in at $193.3 million, that suggests online sales totaled about $5 million in the quarter.
Perry Ellis operates five U.S. e-commerce sites: Perry Ellis.com, OriginalPenguin.com, CallawayApparel.com, Cubavera.com and PeonyandMe.com. It also sells its Rafaella sportswear on Amazon and operates the Farah.co.uk e-commerce site in the United Kingdom. Feldenkreis said results were particularly strong in Q2 on OriginalPenguin.com, which features apparel for younger men. He said Google queries for Original Penguin increased 82% in the quarter and that social marketing campaigns boosted direct traffic by nearly 61%. The site’s conversion rate improved by 49%, which Feldenkreis said “can be attributed to our merchandising effort that create a strong inventory and product assortment position that clearly resonated with site visitors.”
For the fiscal second quarter ended July 30, Perry Ellis also reported:
- Net sales of $193.341 million, down 5.5% from $204.638 million in the same period a year ago. Company officials attribute the decline in part to the sale of the C&C California women’s clothing line and a 1.4% impact on revenue from currency fluctuations, including the fall of the British pound and the strong U.S. dollar.
- Comparable-store sales declined 4.7%.
- A net loss of $3.565 million, versus a loss of $1.281 million in the year-ago quarter.
For the first six months of the fiscal year, the company reported:
- Net sales of $444.216 million, a decline of 4.0% from $462.895 million a year ago.
- Net income of $10.685 million, an increase of 31.4% from $8.130 million.
The company also announced that it has hired David Enright as chief operating officer. Enright most recently was senior vice president of global distribution, planning and logistics at Coach Inc.