Unless the context otherwise requires, all references to "Perry Ellis," the "Company," "we," "us" or "our" include Perry Ellis International, Inc. and its subsidiaries. This management's discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended January 28, 2012, filed with the Securities and Exchange Commission on April 12, 2012.

Forward-Looking Statements

We caution readers that this report includes "forward-looking statements" as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations rather than historical facts and they are indicated by words or phrases such as "anticipate," "believe," "budget," "contemplate," "continue," "could," "envision," "estimate," "expect," "guidance," "indicate," "intend," "may," "might," "plan," "possibly," "potential," "predict," "probably," "pro-forma," "project," "seek," "should," "target," or "will" or the negative thereof or other variations thereon and similar words or phrases or comparable terminology. We have based such forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, many of which are beyond our control. Some of the factors that could affect our financial performance, cause actual results to differ from our estimates, or underlie such forward-looking statements, are set forth in various places in this report. These factors include, but are not limited to:

• general economic conditions,

• a significant decrease in business from or loss of any of our major customers or programs,

• anticipated and unanticipated trends and conditions in our industry, including the impact of recent or future retail and wholesale consolidation,

• recent and future economic conditions, including turmoil in the financial and credit markets,

• the effectiveness of our planned advertising, marketing and promotional campaigns,

• our ability to contain costs,

• disruptions in the supply chain,

• our future capital needs and our ability to obtain financing,

• our ability to protect our trademarks,

• our ability to integrate acquired businesses, trademarks, tradenames and licenses,

• our ability to predict consumer preferences and changes in fashion trends and consumer acceptance of both new designs and newly introduced products,

• the termination or non-renewal of any material license agreements to which we are a party,

• changes in the costs of raw materials, labor and advertising,

• our ability to carry out growth strategies including expansion in international and direct to consumer retail markets,

• our ability to compete,

• exposure to foreign currency risk and interest rate risk,

• possible disruption in commercial activities due to terrorist activity and armed conflict, and

• other factors set forth in this report and in our other Securities and Exchange Commission ("SEC") filings.

You are cautioned that all forward-looking statements involve risks and uncertainties, detailed in our filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are valid only as of the date they were made. We undertake no obligation to update or revise any forward-looking statements to reflect new information or the occurrence of unanticipated events or otherwise.

Critical Accounting Policies

Included in the footnotes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended January 28, 2012 is a summary of all significant accounting policies used in the preparation of our consolidated financial statements. We follow the accounting methods and practices as required by accounting principles generally accepted in the United States of America ("GAAP"). In particular, our critical accounting policies and areas in which we use judgment are in the areas of revenue recognition, the estimated collectability of accounts receivable, the recoverability of obsolete or overstocked inventory, the impairment of long-lived assets that are our trademarks and goodwill, and the measurement of retirement related benefits. We believe that there have been no significant changes to our critical accounting policies during the three and nine months ended October 27, 2012 as compared to those we disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended January 28, 2012.

Results of Operations

The following table sets forth, for the periods indicated, selected financial
data expressed by segments and includes a reconciliation of EBITDA to operating
income, the most directly comparable GAAP financial measure:



                                             Three Months Ended                           Nine Months Ended
                                      October 27,           October 29,           October 27,           October 29,
                                         2012                  2011                  2012                  2011
                                                                     (in thousands)
Revenues by segment:
Men's Sportswear and Swim            $     165,517         $     174,864         $     514,981         $     554,818
Women's Sportswear                          45,105                50,506               118,033               130,539
Direct-to-Consumer                          18,708                16,746                58,422                48,130
Licensing                                    6,918                 6,304                19,772                17,657

Total revenues                       $     236,248         $     248,420         $     711,208         $     751,144


                                             Three Months Ended                           Nine Months Ended
                                      October 27,           October 29,           October 27,           October 29,
                                         2012                  2011                  2012                  2011
                                                                     (in thousands)
Reconcilation of operating
income to EBITDA
Operating income (loss) by
segment:
Men's Sportswear and Swim            $       3,910         $       7,338         $      14,607         $      34,095
Women's Sportswear                             327                 3,294                  (139 )               6,588
Direct-to-Consumer                          (2,267 )              (3,165 )              (4,886 )              (6,221 )
Licensing                                    6,417                 5,258                16,530                14,143

Total operating income               $       8,387         $      12,725         $      26,112         $      48,605

Add:
Depreciation and amortization
Men's Sportswear and Swim            $       2,108         $       2,279         $       6,377         $       6,789
Women's Sportswear                             531                   351                 1,466                 1,054
Direct-to-Consumer                             712                   598                 2,169                 1,776
Licensing                                       73                   141                   302                   363

Total depreciation and
amortization                         $       3,424         $       3,369         $      10,314         $       9,982

EBITDA by segment:
Men's Sportswear and Swim            $       6,018         $       9,617         $      20,984         $      40,884
Women's Sportswear                             858                 3,645                 1,327                 7,642
Direct-to-Consumer                          (1,555 )              (2,567 )              (2,717 )              (4,445 )
Licensing                                    6,490                 5,399                16,832                14,506

Total EBITDA                         $      11,811         $      16,094         $      36,426         $      58,587

EBITDA margin by segment
Men's Sportswear and Swim                      3.6 %                 5.5 %                 4.1 %                 7.4 %
Women's Sportswear                             1.9 %                 7.2 %                 1.1 %                 5.9 %
Direct-to-Consumer                            (8.3 %)              (15.3 %)               (4.7 %)               (9.2 %)
Licensing                                     93.8 %                85.6 %                85.1 %                82.2 %
Total EBITDA margin                            5.0 %                 6.5 %                 5.1 %                 7.8 %

EBITDA consists of earnings before interest, taxes, depreciation and amortization. EBITDA is not a measurement of financial performance under accounting principles generally accepted in the United States of America, and does not represent cash flow from operations. The most directly comparable GAAP financial measure, presented above, is operating income. EBITDA and EBITDA margin are presented solely as a supplemental disclosure because management believes that they are a common measure of operating performance in the apparel industry.

The following is a discussion of the results of operations for the three and nine month periods of the fiscal year ending February 2, 2013 ("fiscal 2013") compared with the three and nine month periods of the fiscal year ended January 28, 2012 ("fiscal 2012").

Results of Operations - three and nine months ended October 27, 2012 compared to the three and nine months ended October 29, 2011.

Net sales. Men's Sportswear and Swim net sales for the three months ended October 27, 2012 were $165.5 million, a decrease of $9.4 million, or 5.4%, from $174.9 million for the three months ended October 29, 2011. Net sales decreased primarily from our expected decrease in Perry Ellis. As we advance into the fourth quarter we have repositioned Perry Ellis and expect to see an improvement in performance. This decrease was partially offset by increases in our core golf business across all brands.

Men's Sportswear and Swim net sales for the nine months ended October 27, 2012, were $515.0 million, a decrease of $39.8 million, or 7.2%, from $554.8 million for the nine months ended October 29, 2011. The net sales decrease was attributable to our expected decrease in Perry Ellis and private label bottoms programs, partially offset by increases in our golf and international businesses.

Women's Sportswear net sales for the three months ended October 27, 2012 were $45.1 million, a decrease of $5.4 million, or 10.7%, from $50.5 million for the three months ended October 29, 2011. Net sales decreased due to the factors described below.

Women's Sportswear net sales for the nine months ended October 27, 2012, were $118.0 million, a decrease of $12.5 million, or 9.6%, from $130.5 million for the nine months ended October 29, 2011. Net sales decreased, as anticipated, primarily due to our Rafaella sportswear business, partially offset by increases in our contemporary Laundry by Shelli Segal dresses and C&C California businesses. We expect improved performance in Rafaella sportswear collection business as we transition into the holiday and spring seasons.

Direct-to-Consumer net sales for the three months ended October 27, 2012 were $18.7 million, an increase of $2.0 million, or 12.0%, from $16.7 million for the three months ended October 29, 2011. Net sales increased due the factors described below.

Direct-to-Consumer net sales for the nine months ended October 27, 2012, were $58.4 million, an increase of $10.3 million, or 21.4%, from $48.1 million for the nine months ended October 29, 2011. The increase is attributable to comparable store increases in our store base. We also realized continued store expansion and growth in our e-commerce platform.

Royalty income. Royalty income for the three months ended October 27, 2012 was $6.9 million, an increase of $0.6 million, or 9.5%, from $6.3 million for the three months ended October 29, 2011. Royalty income increases were primarily attributable to increases in royalty income from Perry Ellis and Original Penguin footwear licenses and fragrance licenses.

Royalty income for the nine months ended October 27, 2012 was $19.8 million, an increase of $2.1 million, or 11.9%, from $17.7 million for the nine months ended October 29, 2011. Royalty income increases were attributable to Perry Ellis and Original Penguin footwear licenses, as well as, fragrance licenses.

Gross profit. Gross profit was $75.8 million for the three months ended October 27, 2012, a decrease of $6.7 million, or 8.1%, from $82.5 million for the three months ended October 29, 2011. Gross profit was $232.9 million for the nine months ended October 27, 2012, a decrease of $18.8 million, or 7.5%, as compared to $251.7 million for the nine months ended October 29, 2011. These decreases are attributed to the reduction in net sales as described above and the factors described within the gross profit margin section below.

Gross profit margin. As a percentage of total revenue, gross profit margins were 32.1% for the three months ended October 27, 2012, as compared to 33.2% for the three months ended October 29, 2011, a decrease of 110 basis points. The decrease in the quarter was largely driven by continued promotional levels in our collection business coupled with the lower gross margins on the transitioned Callaway businesses. Somewhat offsetting this reduction, were stronger gross margins in our core golf and direct to consumer businesses. For the nine months ended October 27, 2012, gross profit margins were 32.7% as a percentage of total revenue as compared to 33.5% for the nine months ended October 29, 2011, a decrease of 80 basis points. This decrease is primarily associated with the impact from the write-down and liquidation of planned exits of brands, the closing of a sourcing office as well as increased promotional activity within our collection businesses, which will be experienced during fiscal 2013. This decrease was partially offset by higher margins in our direct-to-consumer business, golf lifestyle and licensing.

Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended October 27, 2012 were $64.0 million, a decrease of $2.4 million, or 3.6%, from $66.4 million for the three months ended October 29, 2011. The decrease was primarily attributable to savings realized in our strategic review, lower incentive compensation expense, partially offset by an increase of approximately $1.1 million related to our reorganization, which includes the cost of the new Callaway business, duplicate rent at our New York offices during our relocation and severance expense related to exited businesses. Increases also resulted from our retail store expansion in our direct-to-consumer business for new stores opened during fiscal 2012.

Selling, general and administrative expenses for the nine months ended October 27, 2012 were $196.4 million, an increase of $3.3 million, or 1.7%, from $193.1 million for the nine months ended October 29, 2011. The increase was in line with our expectations and was primarily attributed to the direct-to-consumer business for new stores opened during fiscal 2012. Also, we experienced costs in the amount of approximately $5.4 million related to our reorganization, which primarily encompassed voluntary early retirement costs, the exit and consolidation of our west and east coast third party logistics warehouses, relocation of our New York offices and severance expense related to exited businesses. These increases were partially offset by savings realized in our strategic review as well as lower compensation expense.

EBITDA. Men's Sportswear and Swim EBITDA margin for the three months ended October 27, 2012 decreased 190 basis points to 3.6%, from 5.5% for the three months ended October 29, 2011. Men's Sportswear and Swim EBITDA margin for the nine months ended October 27, 2012, decreased 330 basis points to 4.1%, from 7.4% for the nine months ended October 29, 2011. The EBITDA margin was negatively impacted by the reduction in gross profit margin, which was attributable to higher levels of promotional activity in our Perry Ellis sportswear collection business, partially offset by higher gross profit margins in our golf lifestyle business. We also realized reduced leverage from selling, general and administrative expenses attributable to the expected revenue reductions in this segment.

Women's Sportswear EBITDA margin for the three months ended October 27, 2012 decreased 530 basis points to 1.9%, from 7.2% for the three months ended October 29, 2011. Women's Sportswear EBITDA margin for the nine months ended October 27, 2012 decreased 480 basis points to 1.1%, from 5.9% for the nine months ended October 29, 2011. In addition to the reduction of net sales, as discussed above, the margin was negatively impacted by the costs associated with the exit and consolidation of our east coast warehouse logistics providers. Margin was also negatively impacted by the loss of leverage in selling, general and administrative expenses attributable to the expected revenue reductions in this segment.

Direct-to-Consumer EBITDA margin for the three months ended October 27, 2012 increased 700 basis points to (8.3%), from (15.3%) for the three months ended October 29, 2011. Direct-to-Consumer EBITDA margin for the nine months ended October 27, 2012 improved 450 basis points to (4.7%), from (9.2%) for the nine months ended October 29, 2011. The increase was primarily attributable to the expansion of net sales and gross profit margin as described above. In addition, the segment realized favorable leverage in selling, general and administrative expenses attributable to the revenue increases realized in the segment.

Licensing EBITDA margin for the three months ended October 27, 2012 increased 820 basis points to 93.8%, from 85.6% for the three months ended October 29, 2011. Licensing EBITDA margin for the nine months ended October 27, 2012 increased 290 basis points to 85.1%, from 82.2% for the nine months ended October 29, 2011. These increases were primarily attributed to the increase in license business as discussed above.

Depreciation and amortization. Depreciation and amortization for the three months ended October 27, 2012 and October 29, 2011 remained flat at $3.4 million, respectively. Depreciation and amortization for the nine months ended October 27, 2012, was $10.3 million, an increase of $0.3 million, or 3.0%, from $10.0 million for the nine months ended October 29, 2011. This increase is attributed to our capital expenditures, primarily in the direct-to-consumer segment.

Costs on early extinguishment of debt. During the first quarter of fiscal 2012, we retired our 8 7/8% senior subordinated notes due 2013 payable in the amount of $104.3 million with the proceeds of our new 7 7/8% senior subordinated notes due 2019. In connection with this retirement, we paid an additional $1.5 million in fees and premiums, wrote-off approximately $853,000 in unamortized discount and bond fees, and wrote-off the $1.1 million remaining premium that was associated with the termination of the swap that occurred during fiscal 2011. There were no comparable transactions during fiscal 2013.

Interest expense. Interest expense for the three months ended October 27, 2012 was $3.7 million, a decrease of $0.2 million, or 5.1%, from $3.9 million for the three months ended October 29, 2011. Interest expense for the nine months ended October 27, 2012 was $11.0 million, a decrease of $1.3 million, or 10.6%, from $12.3 million for the nine months ended October 29, 2011. For the three months ended October 27, 2012, the primary reason for the decrease in interest expense is due to the lower average borrowings on our credit facility as compared to our borrowings in the prior year. Additionally, for the nine months ended October 27, 2012 the decrease is further attributable to the 8 7/8% senior subordinated notes and the 7 7/8% senior subordinated notes that were outstanding simultaneously for about one month during fiscal 2012 causing us to have approximately $0.7 million in redundant interest expense. There were no comparable transactions during fiscal 2013.

Income taxes. The income tax provision for the three months ended October 27, 2012, was $1.5 million, a decrease of $0.8 million as compared to the income tax provision of $2.3 million for the three months ended October 29, 2011. For the three months ended October 27, 2012, our effective tax rate was 32.3% as compared to 26.5% for the three months ended October 29, 2011. The overall increase in the effective tax rate is attributed to a change in ratio of income between domestic and foreign operations, of which the domestic operations are taxed at higher statutory tax rates.

Our income tax provision for the nine months ended October 27, 2012, was $4.7 million, a $6.6 million decrease as compared to $11.3 million for the nine months ended October 29, 2011. For the nine months ended October 27, 2012, our effective tax rate was 31.0% as compared to 32.2% for the nine months ended October 29, 2011. The decrease in the effective tax rate is attributed to prior year withholding taxes that are not applicable in the current year, as well as a change in the ratio of income earned between domestic and foreign operations, of which the foreign operations are taxed at lower statutory rates.

Net income. The net income for the three months ended October 27, 2012 was $3.2 million, a decrease of $3.3 million, or 50.8%, as compared to $6.5 million for the three months ended October 29, 2011. Net income for the nine months ended October 27, 2012 was $10.4 million, a decrease of $13.3 million, or 56.1%, as compared to $23.7 million for the nine months ended October 29, 2011. The changes in operating results were due to the items described above.

Liquidity and Capital Resources

We rely principally on cash flow from operations and borrowings under our senior credit facility to finance our operations, acquisitions and capital expenditures; and to a lesser extent, on letter of credit facilities for the acquisition of a small portion of our inventory purchases. We believe that our working capital requirements will decrease for fiscal 2013 driven primarily by lower levels of inventory. As of October 27, 2012, our working capital was $277.0 million as compared to $289.9 million as of January 28, 2012 and $303.1 million as of October 29, 2011. We believe that our cash flows from operations and availability under our senior credit facility and letter of credit facilities are sufficient to meet our working capital needs. We also believe that our real estate assets, which had a net book value of $23.8 million at October 27, 2012, have a higher market value and may provide us with additional capital resources, if needed. Additional borrowings against these real estate assets, however, would be subject to certain loan to value criteria established by lending institutions. As of October 27, 2012, we had mortgage loans on these properties totaling $25.2 million.

Net cash provided by operating activities was $60.2 million for the nine months ended October 27, 2012, as compared to cash used in operating activities of $19.0 million for the nine months ended October 29, 2011.

The cash provided by operating activities for nine months ended October 27, 2012 is primarily attributable to a decrease in inventory of $41.1 million associated with our inventory management, an increase of our accounts payable and accrued expenses of $6.7 million and an decrease in other current assets and prepaid income taxes of $1.1 million; partially offset by an increase in accounts receivable of $9.3 million, and a decrease in accrued interest in the amount of $3.2 million. As a result of the decrease in inventory for the nine months ended October 27, 2012, our inventory turnover ratio increased to 3.7 as compared to 3.3 for the comparable period in fiscal 2012. The cash used in operating activities for the nine months ended October 29, 2011 is primarily attributable to an increase in inventory of $22.1 million, an increase in account receivable of $20.4 million and an increase in other current assets and prepaid income taxes of $3.4 million, a decrease in accounts payable and accrued expenses of

$8.3 million; partially offset by net income of $23.7 million. As a result of this increase in inventory and the inventory acquired through the Rafaella acquisition in January 2011, our inventory turnover ratio decreased to 3.3 as of October 29, 2011, as compared to 4.4 as of October 30, 2010.

Net cash used in investing activities was $8.5 million for the nine months ended October 27, 2012, as compared to cash provided by investing activities of $1.3 million for the nine months ended October 29, 2011. The net cash used during the nine months ended October 27, 2012, primarily reflects the purchase of Ben Hogan in the amount of $7.0 million and the purchase of property and equipment in the amount of $6.4 million; offset by the proceeds related to the Rafaella purchase price adjustment of $4.5 million. The net cash provided in the first nine months of fiscal 2012 primarily reflects the redemption of restricted cash collateralizing letters of credit in the amount of $9.4 million acquired in the Rafaella acquisition and the proceeds from the sale of certain foreign intangible assets in the amount of $2.9 million; partially offset by the purchase of property and equipment in the amount of $9.5 million. We anticipate capital expenditures during fiscal 2013 of $8.0 million to $10.0 million in technology, systems, retail stores, and other expenditures.

Net cash used in financing activities for the nine months ended October 27, 2012 was $24.2 million, as compared to cash provided by financing activities of $20.5 million for the nine months ended October 29, 2011. The net cash used during the first nine months of fiscal 2013 primarily reflects net payments on our senior credit facility of $21.7 million and the purchase of treasury stock of $2.6 million; partially offset by proceeds from exercises of stock options of $0.6 million and a tax benefit from the exercise of stock options of $0.4 million. The net cash provided during the first nine months of fiscal 2012 primarily reflects net proceeds from the issuance of our new 7 7/8% senior subordinated notes in the amount of $146.5 million and the net proceeds from our stock offering in the amount of $52.9 million; partially offset by net payments on our senior credit facility of $73.3 million and the retirement of our 87/8% senior . . .