PVH Corp.’s optimism about the back half of 2012 isn’t relegated to its designer acquisitions.
During a series of afternoon Analyst Day presentations in New York Tuesday, the company reported progress in turning around the Heritage Brands business, which weighed on results throughout 2011 and in the first months of 2012 even as its two acquired designer brands, Calvin Klein and Tommy Hilfiger, continued to flourish.
“Our Heritage business, which has been a very stable cash-flow driver for us and allowed us to make these acquisitions, had a very tough 2011,” said Emanuel Chirico, chairman and chief executive officer, in his opening remarks. “We’re in a significant turnaround in this year’s second half. We see some really positive results there.”
The improvements at the Heritage unit are the result of external forces abating, such as the moderation in cotton prices, and the continuing recovery from problems Chirico described as “self-inflicted.”
He said the mounting price pressures being dealt with since late 2010 are “now totally behind us. We started to see some really positive results in the second quarter and I’ve been very clear that through the early portions of this third quarter...this business has really started to kick in.
“We see this business going back to historical levels of profitability of 10, 12 percent [operating margin] over the next two years,” Chirico said.
The operating margin at Heritage slumped to about 7.2 percent of sales during 2011.
With Klein and Hilfiger continuing to demonstrate strength in the U.S. and abroad, the ongoing recovery at Heritage provided additional cause for optimism at PVH, which raised its profit expectations for the third quarter and full year just prior to the meeting.
Guidance for adjusted earnings for the third quarter, which ends at the conclusion of October, was increased to a range of $2.28 to $2.30 a diluted share, versus prior guidance of between $2.20 and $2.25 and year-ago earnings per share of $1.89. Adjusted earnings are a non-GAAP measure that excludes extraordinary items such as integration and restructuring costs.
For the full year, EPS on an adjusted basis is expected to land at $6.32 to $6.37, up from the guidance of $6.25 to $6.32 provided when the firm reported second-quarter results on Aug. 27. Year-ago EPS was $5.38.
Discussing the ongoing recovery at Heritage Brands, Ken Duane, ceo of wholesale apparel, noted that brands in the PVH Heritage stable hold a 50 percent share of the U.S. neckwear market and, through brands including Van Heusen and Arrow, a 45.5 percent share of the U.S. dress shirt market. Falling cotton prices helped lift margins, as did the exit from the Izod women’s and Timberland business, which generated “close to $130 million” of volume but only $2 million in profit.
“We have now exited those businesses,” Duane said.
Shares of PVH fell 3 cents, less than 0.1 percent, to $92.92 Tuesday but rose more than $1 in the early moments of after-hours trading.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast