“Believe it or not, we deal in perishables,” said Joseph Roisman, executive vice president with Perry Ellis International. Like other apparel companies, Perry Ellis has struggled with congestion at West Coast ports during the past year.
Roisman, who has been with the Miami-based company since 1970, said “I don’t think it has ever been as tough as this time.
“We had a hard time first of all getting containers off the ships and once they came off, getting them out of the port,” he explained. “We had to become creative, hiring additional drayage companies and just trying to get the product out as quickly as possible.”
Interviewed in early February, Roisman said Perry Ellis had containers that it was supposed to retrieve during the first week of January that were not available until the last week of the month.
“Our garments do not get better with age. It’s not wine,” he said.
“Port congestion created some delays in trying to execute our commitments to our customers,” he said, but added “the majority of our customers have been very understanding because they are in the same boat, no pun intended. They are going through the same issues with their own imports so most of them have been very cooperative.
“The problem is this is the time that—after Christmas and when customers do their physical inventory in January—they start receiving product for spring. So when you’re shipping a collection, like we do, for example, with Perry Ellis where the collection is a pair of pants, a shirt, a sweater, a vest—and you’re delivering the pants, but the sweater is sitting in a container. It creates a problem, because the tables are empty in the store and you cannot recover the lost business,” he said.
An apparel company that had revenue of $912 million in its 2013-14 fiscal year, Perry Ellis imports in the neighborhood of 75 million units or around 5,000 40-foot containers of garments annually.
These bear the name of a dozen brands—not just Perry Ellis, but names like Farah, Savane, Jantzen, Axist, Original Penguin, and many others. One specialty is golf togs: Ben Hogan, Jack Nicklaus, Callaway Golf, Grand Slam and PGA Tour clothing are all brands that Perry Ellis owns or licenses.
Perry Ellis has three main groups, Roisman explained. The first is a wholesale division where it sells product to wholesalers, specialty stores, department stores and national chains; the second sells directly to consumers either through Perry Ellis and Original Penguin stores or over the internet; and the third licenses brands to and from other companies.
Since the company has such a wide range of brands, one might find its products on the shelves or hanger racks of discount chains like Walmart and Kohl’s, or upscale department stores like Saks Fifth Avenue and Nordstrom.
According to its most recent annual report, Perry Ellis’s largest customers include Kohl’s, Macy’s, Sam’s Club, the Marmaxx Group (Marshall’s and TJ Maxx), and Dillard’s.
Most of the apparel that the company imports is manufactured in the Far East. The company’s most recent annual report stated 74 percent of its product was sourced from suppliers in Asia, 19 percent from the Middle East, and 7 percent in the Americas.
“Certain places are good for certain items,”Roisman said. “We try to find the best product in the best price in the best place.
“For example, Perry Ellis is the brand which is the jewel in our crown,” he said. “We strictly source it in the Far East, because it’s a more sophisticated product that needs more attention.”
When sourcing products destined to a mass merchant, the company needs to look not only for a company that can meet its quality standards, but also has the capacity to produce large quantities.
The company uses numerous contract manufacturers, explaining in its annual report that this “allows us to maximize production flexibility while avoiding significant capital expenditures, work-in-progress inventory build-ups and the costs of maintaining and operating production facilities.” It has had relationships with some suppliers for 30 years.
Roisman said the company has four offices in mainland China that deal with sourcing and quality control, as well as offices in South Korea, Hong Kong, Taiwan, Bangladesh, and Vietnam. It manages production in the Middle East and Africa.
The company has three distribution centers located in the Southeast at Miami; Tampa, Fla.; and Seneca, S.C. The Tampa and Seneca distribution centers were added as part of acquisitions.
“None of the three is strategically located, so to compensate for that we work with 3PLs in New Jersey and the greater Los Angeles area,” Roisman said.
The company has its own customs clearance team and after product clears U.S. Customs, it is delivered to its 3PL, Port Logistics, which receives, stores, and delivers to its customers.
With distribution centers in the Southeast, he said the company is looking forward to the Panama Canal expansion, noting Miami is deepening its harbor and making other improvements to accommodate larger containerships. He said Perry Ellis has been bringing product direct to Miami for 40 years.
The company has consolidated its business with container carriers to better leverage its market power.
“You’re better to be a big fish in a small pond,” Roisman said.
He said since most of the company’s product is made in the Far East and because of the importance of “speed to market” in the fashion industry, Perry Ellis moves most of its product through the ports of Los Angeles and Long Beach.
Roisman said because Christmas deliveries happen in October, the company was able reduce problems by delivering product far in advance.
Perry Ellis last month reported preliminary financial results and said West Coast port disruption had a negative $23 million impact on revenues in the fourth quarter and fiscal year ending Jan. 31.
Port disruption “caused shipments, originally intended for the fourth quarter to be received too late or post year end, thereby impacting sales,” the company said.
Oscar Feldenkreis, the company’s president, said “like companies across industries, we are taking action to overcome the challenges presented by the West Coast ports situation. We have expanded our East Coast logistics pipeline in an effort to improve receipts and the delivery of goods to our retail partners.”
This article was published in the March 2015 issue of American Shipper.
