Perry Ellis founder discusses next chapter
There are few Miami companies left from the era when George Feldenkreis, who fled Communist Cuba in the 1960s, founded the firm that today is known as Perry Ellis International.
What began as an automotive parts import-export business in downtown Miami in 1967 ultimately became a company with nearly $1 billion in revenue and a brand name known the world over. In 1994, the company, then known as Supreme International, went public. In 2000, Supreme In-
ternational bought Perry Ellis, the namesake brand of the Manhattan women’s wear star designer who died in 1986. Supreme was renamed Perry Ellis International and traded on the NASDAQ Exchange as PERY.
Over the next decade, the Perry Ellis brand became a staple in men’s clothing and sportswear. Perry Ellis International continued to sign licensing deals with and sometimes purchase marquee brands including Levi’ s, Dockers, Nike Swimwear, Jantzen and PGA Tour.
Following the Great Recession, the company struggled to maintain financial performance. In 2014, activist investors launched a bid to shake up the company’s management. In 2015, Feldenkreis stepped down as CEO; the next year, his son Oscar was named CEO. Two years later, in 2017, the company’s board forced George Feldenkreis from his position as executive chairman, as some unhappy shareholders pushed to reduce the Feldenkreis family’s influence.
Almost immediately, the elder Feldenkreis began mounting a come back. In February of this year, he submitted a bid to buy out all outstanding shares of the company at $27.50 per share. That offer valued the company at just under $430 million. Some activist shareholders continued to resist Feldenkreis control, and at least one other buyer was considered. In October, the company’s board voted unanimously to accept the Feldenkreis bid and take the company private. The company, based in Doral, has about 550 employees in Miami and about 2,400 worldwide.
Analyst Andrew Burns, with investment banking firm Davidson, issued a note to clients in February saying privatization would likely benefit the company. Burns cited an improving overall retail climate, the company’s plans to invest in international expansion, and its continued push to acquire brands in his note.
Shareholder advisory firms ISS and Glass Lewis also endorsed the bid. Wrote Glass Lewis, “The executed agreement appears to be reasonably consistent with industry trends and the premiums generally realized by investors across recent all-cash buyouts.”
George and his son Oscar, Perry Ellis’ president and CEO, talked with the Miami Herald to discuss the company’s next chapter. Their answers have been edited for length.
Q: Why was it so important to keep Perry Ellis in the family?
George: “Businesses that have more of a family feeling are more successful in the long run. We are able to teach employees and give them an opportunity to grow on the job. That’s why there was such an overwhelming explosion of support.
“We won the shareholder vote by 90 percent. When I saw the faces, saw the body language of shareholders at October’s live vote in Doral, I felt proud in accomplishing that. The danger we had was, in almost every company, when a Miami company gets acquired, the Miami location is the one that disappears. That affects the employees, the building, the vendors, the support of local organizations.
“For the Feldenkreis family, it was important to keep the business in Miami. Naysayers said it was impossible, but we made the dream possible, and we acquired the company.
Q: George, what has the past year felt like? How did your ouster affect you?
George: “It was a great shock to me when the special committee had me leave. They decided for reasons unknown to me-I never interviewed anyone to ask what I did that prompted their action. They said I have a few days to sign document, that I have to leave in four days, sign a release letter. At my age, and what I’ve done in life, it was something humiliating and very frustrating — to lose everything I worked for in my life
“So I thought the only way out for me was to buy the company.
“I was motivated by the way they behaved to methat there was no reason to do that. And No. 2, financial interest: We have 25 percent of the company-that’s Oscar, all my grandchildren, 27 grandchildren; it was really a big financial danger I was facing.”
When he offered to buy the company on Feb. 6, Feldenkreis was surprised that a group of shareholders continued to oppose him, he said.
”But when I went to the employees, the warehouses, our employees in Miami, it was really overwhelming, great emotion, very rewarding, very emotional for me and family.“
Oscar: “I was ready to leave as well. My father asked me to stay, and as he proceeded in developinga strategy, we continued to work under very challenging circumstances.
“At the end of the day, my father gave me, every day, the motivation. He told me that this difficulty eventually would be overcome, that he’s lived through many challenging times, and the Man Above has always been good to us. I had a great confidence in our people and when the deal was approved, on Oct. 18, it was a great feeling-there’s no greater feeling than that. I’m excited about the future and what we can bring to Miami. We employ 500 people in the state of Florida, between Tampa and Miami. We’re proud to be in Miami, proud that we will continue to be here in South Florida. We came here in 1961-my father from nothing. We’ve always contributed back to the community.”
Q: What will taking the company private accomplish?
Oscar: It’s better for the company in the long termfor the growth in the digital space, as well as opening up more stores, between retail and digital. The company should have 25 stores; today it’s only 15.”
The move will also benefit the company’s various brands, he said.
“We’re launching Guy Harvey — named for the marine artist and ecologist — next year, which has a lot of heritage in South Florida. We’re launching Perry Ellis America with a more streetwear logo.
“We have lot of opportunities in the company, and we feel it’s in the best interest to invest in the future.” The pressures of quarterly returns can stand in the way of good long-term investments, he said.
“Our future is to continue growing digital, growing international, which is a small piece of the business; right now it’s 18 percent, and it should be close to 35 percent. I think we have a tremendous portfolio with Nike swimwear which has seen an explosion in the U.S. and Europe. And with our golf brands, our licensing will continue to grow as our brands become stronger and more powerful. We’re also launching Jack Nicklaus brand, PGA Tour brand, Ben Hogan brand golf accessories. We’ve made some strong acquisitions and are bringing more licensing opportunities to the company.
Q: Business-watchers keep talking about the death of brick-and-mortar stores. Do you see continued signs of doom for physical retail stores?
Oscar: “Our customers continue to shop brick-andmortar stores. Only 25 percent of sales are generated from the digital side, and that is more basic items like underwear or socks. I think fashion customers will still be 75-80 percent brick-andmortar.
“Retailers need to create an experience. In today’s day and age, it’s not just about what products you have, it’s the experience you can bring to table. Are you giving the customer something unique to them. Personalization is becoming more important today-today you’re able to personalize the Original Penguin logo with your favorite color, or get embroideries done on Cubavera shirt.
Q: What do you see as the future growth pro- spects for Miami as a city?
Oscar: “I think what’s happened in Miami is fantastic. The Miami Design District, Wynwood Aventura is being refurbished. Miami is a great city. People love to come here. We’re very fortunate to live here in South Florida, and we have an understanding that it’s more than about the warmth.”
George: “We’ve seen the growth of incredible museums, the Arsht Center for the Performing Arts. Our universities are getting better. And now so many people in the north are coming here because of the lower taxes.”
Q: George, do you believe it is possible for someone to build a billion-dollar, publicly traded company today from Miami in the way you did?
George: “It would be difficult to replicate it today, in this business. I was fortunate that my father was representing foreign factories in Cuba. And the 1960s were transformational years, when markets went from the U.S. to overseas for apparel and footwear. If you look back at the trajectory, our company was already in Japan in 1963, Korea and Taiwan in ’68. I was in China in the ’70s-before Kissinger. Right place at the right time.
“Also today, the cost of starting new businesses is different. But having said that, you have Uber, Lyft; they did not exist just a few years ago so there are other ways you can come in and make a big business. But it shows you have to be in the right place at right time, and identify the right place at right time. But there are always opportunities.“