Perry Ellis International Chairman George Feldenkreis is glad these days that his customers include Wal-Mart and Costco as well as Neiman-Marcus and Macy's.

While declining sales and merchandise markdowns took their toll on Perry Ellis' third-quarter performance, the Miami apparel company's diverse distribution channels are expected to help avoid disaster during this year's critical holiday season.

Even if sales are down at department stores, Perry Ellis continues to see increases from its off-price retailers and warehouse clubs.

''When you look at how bad things are, we still expect to ship more units for the fourth quarter than we did last year,'' Feldenkreis said in an interview.

Perry Ellis' net income plummeted for the third quarter. Net income was $5 million or 33 cents per diluted share, compared to $8.5 million or 55 cents per share during the same period last year. Revenue fell 2 percent to $222.8 million.

Even in a bad year there were still bright spots. The company reported strong results from the Perry Ellis brand (up 30 percent), Hispanic brands (up 20 percent) and golf (up 20 percent). It also helps that the vast majority of its business is in menswear, where retail performance is holding up better.

CUTTING COSTS

Still, Perry Ellis continues to cut costs in light of expected revenue declines in fiscal 2010. The company said its review of underperforming businesses has now identified $14 million to $15 million in cost reductions, up from last week's projections of $5 million to $6 million.

''There is a noticeable reduction in shoppers and we all have to adjust,'' Feldenkreis told analysts on Thursday's conference call. ``As long as we remain vigilant and flexible we will continue to do better than the average company.''

The new cost-cutting initiatives include restructuring the Perry Ellis outlet operations, reducing the advertising budget for the men's specialty stores, closing a distribution center, freezing all hiring and reducing travel and discretionary expenses.

E-COMMERCE

The company also is investing for future growth, particularly in its new women's contemporary brands, European expansion and e-commerce.

These investments hiked operating costs by $19.8 million in the first nine months of this year.

Analysts said they are confident Perry Ellis' managers are taking the right steps.

''This is a very well-managed company and there's no question they can weather the storm,'' said Robin Murchison, managing director of equity research for SunTrust Robinson Humphrey, who rates the stock a buy. ``What we're going through right now is not about the company, it is about the environment.''

RESTRUCTURING

Perry Ellis confirmed last week's updated earnings guidance for 2009 of between 90 cents and $1.20 per fully diluted share. These projections include one-time costs of between 10 cents and 15 cents related to restructuring.

The company's stock closed at $4.07 per share, up 49 cents. Perry Ellis' stock has plummeted in recent months from a 52-week high of $29.27 to a low last week of $3.40.

Eric Beder, a retail analyst with Brean Murray Carret & Co., believes the stock is worth buying at these prices, which are less then four times his 99 cents earnings estimate for the year.

`WORTH BUYING'

''The risk/reward, even in this uncertain environment, remains impressive,'' Beder wrote in a note Thursday to investors. ``We believe the Perry Ellis management team is well worth buying into.''

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