Strength at Tommy Hilfiger and Calvin Klein helped offset weakness at PVH Corp.’s heritage brands unit and send the company’s first-quarter revenues and profits well above its own guidance and Wall Street’s estimates.
In the three months ended April 29, the New York-based apparel giant saw net income expand 61.5 percent to $93.1 million, or $1.27 a diluted share, from $57.7 million, or 79 cents, in the year-ago quarter. Excluding special items, adjusted earnings per share was $1.30 against the analyst consensus estimate of $1.26 and PVH’s most recent guidance update, issued last month, that it would be “at least at the high end” of earlier projections for non-GAAP EPS of $1.23 to $1.25.
Revenues increased 4.3 percent to $1.43 billion from $1.37 billion in the 2011 period as consolidated gross margin receded to 53 percent of revenues from 53.2 percent a year ago.
Emanuel Chirico, chairman and chief executive officer, noted that the Hilfiger and Klein brands “continued to demonstrate their worldwide consumer appeal during the first quarter, allowing us to perform above our expectations for both revenue and EPS despite the cost pressures and economic headwinds in Europe that have impacted our industry.”
Despite the economic uncertainties currently at work, PVH increased its full-year guidance for non-GAAP EPS to a range of $6.15 to $6.25 from its earlier guidance of $6.10 to $6.20. It continues to expect an increase in revenues of 1 to 2 percent, putting projected volume for the year at $5.95 billion to $6.01 billion.
Chirico noted that cost pressures are expected to abate in the second half of the year.
In the quarter, Tommy Hilfiger and Calvin Klein accounted for 72.3 percent of overall revenues, or $1.03 billion, versus 70.2 percent, or $961.1 million, in the first quarter of 2011. Revenues at Hilfiger grew 7.7 percent to $770.4 million despite a $20 million negative impact from currency translation. Same-store sales were up 16 percent in North America and 5 percent in Europe. Operating income was up 53.4 percent, to $102.4 million, although ahead a more modest 13.3 percent on a non-GAAP basis, eliminating the impact of integration and restructuring charges, principally on the 2011 period.
Calvin Klein revenues rose 6.7 percent to $262.1 million from $245.6 million, while operating income was up 4.9 percent to $58.3 million. Same-store sales rose 9 percent. The company noted a 1 percent increase in royalty revenue despite “challenging business for the jeanswear and underwear product categories in Europe and a planned reduction in U.S. jeanswear sold to secondary channels.” The Warnaco Group Inc. holds the rights to jeanswear and underwear under the Calvin Klein brand. Calvin Klein Inc. took its European CK Calvin Klein business in Europe in-house in March, terminating that component of the PVH-Warnaco alliance.
The heritage brands unit — which houses owned and licensed labels including Van Heusen, Izod, Bass and Arrow — saw operating profits contract 55 percent to $17.7 million as overall revenues were off 3.2 percent to $394.9 million. PVH said that a same-store sales gain of 3 percent “was more than offset by a planned combined 6 percent decrease in the wholesale business.” Wholesale dress furnishings sales were down 10.6 percent to $122.1 million in the quarter while sportswear declined 0.8 percent to $137.2 million and retail rose 1.8 percent to $135.7 million. In the final quarter of 2011, problems at Izod sent sportswear sales down 17 percent.
The company plans to hold a conference call this morning to discuss the results and is on the schedule to address the Citi 2012 Global Consumer Conference today.
“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