That was the forecast for 2014 provided by Emanuel Chirico, chairman and chief executive officer of PVH Corp., as the company reported fourth-quarter and full-year results that generally exceeded the group’s and analysts’ expectations. However, PVH provided guidance for the year that fell below Wall Street’s estimates.
In 2014, Chirico expects a year “of two stories,” with its investments in Warnaco Group, acquired last year, “and the continuing difficult macroeconomic environment” limiting upside potential in the first six months.
The second half of the year will be the first to fully reflect its investments in the Calvin Klein jeans and underwear businesses acquired as part of Warnaco and will mark “the first season of product from our newly established design and sourcing teams and presented in an enhanced retail presentation,” the ceo said.
He noted that, while the Calvin Klein jeans business “struggled in 2013” in North America and Europe, results for the newly acquired businesses, including underwear, were good in Asia and Brazil and he was optimistic about the profit potential in the tougher markets. PVH expects adjusted earnings of between $1.45 and $1.50 a diluted share in the first quarter and between $7.40 and $7.50 for the year, below the respective analysts’ consensus estimates of $1.70 and $7.81 established before the guidance was issued.
Shares were up 0.7 percent to $118.01 in after-hours trading following the earnings report. They closed down 1.7 percent at $117.25 during the New York Stock Exchange’s regular trading session.
In the fourth quarter ended Feb. 2, PVH registered a net loss of $37.5 million, or 46 cents a diluted share, versus net profit of $80.7 million, or $1.09, in the year-ago quarter. Stripping out a series of charges related to its acquisition and integration of Warnaco, the sale of G.H. Bass & Co. and other items, the adjusted profit was $1.43 a diluted share, 1 cent better than the consensus estimate of analysts and 3 cents above its own guidance.
Revenues in the quarter rose 25.4 percent to $2.05 billion from $1.64 billion, with $479 million of the increase coming from the acquired Warnaco businesses. Revenues in the Tommy Hilfiger business and the Calvin Klein businesses predating the Warnaco acquisition were up 2 percent, or $18 million, the company said, while the sale of G.H. Bass & Co. to G-III Apparel Group Ltd. on the first day of the quarter translated into $75 million in lost revenues, pushing sales in the Heritage Brands businesses, excluding those like Speedo acquired with Warnaco, down 19 percent.
Overall revenues at Tommy Hilfiger — the one business unit not significantly affected by a major acquisition or divestiture during the quarter — were up 1.2 percent to $902 million as North American sales were flat based on “relatively flat” comparable-store sales results. Those results were balanced against a strong performance in Europe, where sales were up 10 percent for both retail and wholesale and comps tracked up 7 percent.
For the full year, net income fell two-thirds to $143.5 million, or $1.74 a diluted share, from $433.8 million, or $5.87, while revenues rose 35.5 percent to $8.19 billion.
The company will hold a conference call this morning to discuss the results and guidance.
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