Perry Ellis' Feldenkreis: Succession and Low Income Buyers - Holiday Central

Hottest Zip Codes for Home Prices
US real estate prices have fallen dramatically over the past year, but some parts of the country have managed to buck the trend.
Berkshire Hathaway's 15 Biggest Stock Holdings
The company's most recent SEC filings reveal where the Oracle of Omaha is most heavily invested.
Where the Jobs Are
Click on to see where the jobs are and which industries are doing the hiring in each city.

CNBC ON DIGG

ABOUT THIS BLOG

It's a make-it or break it time for retailers. The holiday selling season is always a critical time for retailers, but this year this may be even more true. With several retailers already falling victim to a drop in consumer spending, and filing for bankruptcy, retailers will be navigating through some tricky waters. Consumers are strapped for cash due to high energy and food prices, and unemployment is rising. The recent credit crunch has made it more challenging for retailers and consumers to borrow.

This blog will look at the winners and losers in the retail space. Who has the right strategy to capture consumer dollars? It also will look for trends in consumer spending and how that will impact the economy.

Stay up to date with the Holiday Central

We’ll send the latest "Holiday Central" posts directly to you

Subscribe to this RSS feed

How to use RSS?

Text Size

Aug.09

2:14 PM ET

Thursday, 9 Aug 2007

Perry Ellis' Feldenkreis: Succession and Low Income Buyers

Posted By:Margaret Brennan

Topics:Advertising | Marketing | Stock Picks | Consumers | Retail Sales

Sectors:Personal and Household Goods | Food and Beverage | Retail

Companies:Perry Ellis Intl Inc | Wal-Mart Stores Inc

Perry Ellis
Talk about the American dream. I went to the Perry Ellis [PERY Loading... () ] showroom yesterday in midtown Manhattan for an exclusive conversation with company CEO George Feldenkreis. Normally, George and his son Oscar Feldenkreis (President & COO) work out of the Miami, FL corporate headquarters, but the two were in town to celebrate the company's 40th anniverary and to ring the closing bell at the Nasdaq.

George left Cuba after Castro came to power and he moved to the U.S. to make money in order to support his family back home. Now he's built an apparel company that sells products and private label brands to 15,000 stores and creates lines for the world's biggest retailer and some of the country's biggest department stores. Feldenkreis and his family own around 30% of outstanding shares of the company.

One of the big questions has been just when George will retire as CEO of the company and when/if he'll hand over the reins to son Oscar. I asked George just whether there is any substance to the rumors of his son being the heir apparent. While he stopped short of outright confirmation, he did say that his son was one of the hardest working executives that he knows of in retail and that he'll probably become the chief executive. As far as a timeline on those succession plans, George said simply that he's not looking to retire anytime soon BUT he'd like to slow down his schedule.

As far as what the view from the Perry Ellis C-Suite looks like, George says that he doesn't really see the consumer spending less in totality right now and he's not seeing a slowing of orders for menswear (95% of PERY's business is in menswear). Womenswear, however, is slower. For Perry Ellis, sales are stronger in the mid tier and department store side than they are on the mass market, lower income side. Translation: Wal-Mart [WMT Loading... () ]apparel orders are weakening. Of course, that shouldn't be much of a surprise since apparel has been a weak category for WMT and it is only 10-15% of the company's sales.

Besides the macroeconomic factors weighing on sales (gas, loan defaults, etc.), Feldenkreis speculated that there is another factor that may be eating up sales at discounter Wal-Mart. In fact, there could be 12 million of them. CEO Feldenkreis says that Wal-Mart is feeling a financial loss from no longer getting as much money from the 12 million or so undocumented workers that live and shop in the U.S. Why? The slowdown in construction and housing has left many of these low-income buyers without pay or with lowered pay.

Interesting theory. Perhaps it is the businessman in him or perhaps a bit of that early straight-out-of-Cuba George that is sympathetic toward the plight of undocumented workers here in the U.S.

Questions? Comments?

Tools:

Print Email