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.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty