Wednesday, September 23, 2009

Pery Ellis signs new licensing agreement (PERY)

AlphaNinja - Apparel outfit (funny!) Pery Ellis International (PERY) just announced new licensing agreements for its Jantzen girls swimwear label and ProPlayer men's athletic brand:

Shipments look to start in late 2009 or early 2010.

-->> MAG Brands, a leader in the children’s swimwear market, will design, manufacture and distribute girls’ swimwear and cover-ups under the Jantzen® brand in the U.S. The Jantzen® product line for girls will be designed exclusively for sizes 4 to 16 and include swimsuits, board shorts, rash guards and swim cover-ups and will be distributed at the department store and specialty sports channels. Initial shipments are expected in early January 2010.

-->> Innovative Fashion Group will design, manufacture and distribute men’s athletic apparel and performance underwear under the ProPlayer® brand. The line will be distributed in the U.S. at sports specialty stores and mid-tier retailers starting in November of 2009. This license excludes product in the collegiate team logo market, which is covered by another PEI Licensing licensee.

The thing I love about licensing agreements is that the money falls almost directly to the bottom line. If these new agreements bring in $1million in royalty income in 2010, the after-tax increase to earnings-per-share would be about 5cents. Sounds tiny, but add it to the 2010 consensus street estimate of $1.06 in earnings and you get to $1.11 -->> applying the same 15 PE(price-to-earnings) the stock has now and you get a 5% bump in the stock price. Or assume that this extremely higher-margin revenue should warrant an increase in the PE to 16, and the stock should get an 11% boost. Good stuff.

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