PVH Corp. expects continuing headwinds in southern Europe and ongoing investments in the Calvin Klein businesses acquired from The Warnaco Group Inc. to limit its second-half profitability.
Reporting second-quarter results that beat analysts’ expectations on both the top and bottom lines, the New York-based firm held to its guidance for full-year adjusted earnings of $7 a diluted share and initiated guidance for adjusted earnings per share of $2.20 in the third quarter.
Both were below consensus estimates, which began the day at $7.14 and $2.30, respectively.
“Our integration efforts and investments in the newly acquired businesses will intensify in the second half of the year as we continue to invest in building a strong foundation for the future, which will have a negative impact on our year-over-year comparisons,” said Emanuel Chirico, chairman and chief executive officer of PVH, in a reference focused on the Calvin Klein jeans and underwear businesses acquired when PVH bought Warnaco for $2.9 billion earlier this year.
He added that guidance for the year was being maintained at the $7 level as the company faced strong comparisons in the Tommy Hilfiger and Calvin Klein businesses from a year ago and took a “cautious outlook that the apparel consumer environment will remain soft and sales volatility will continue, especially in southern Europe.”
Reacting to the cautious guidance, issued upon the close of the stock market on Monday, investors sent shares down $4.86, or 3.7 percent, to $127.25 in after-hours trading following a trading day in which they’d risen $2.14, or 1.7 percent, to $132.11.
In the three months ended Aug. 4, the owner of the Calvin Klein, Tommy Hilfiger and Izod brands reported a net loss of $16 million, or 20 cents a diluted share, versus net income of $89.9 million, or $1.22, in the comparable 2012 period. Subtracting costs related to the acquisition and integration of Warnaco Group assets, adjusted EPS was $1.39.
Revenues increased 47 percent to $1.96 billion from $1.34 billion. Reflecting the shift in Warnaco’s figures from royalty-generating licensees to sales-generating assets, sales rose 54.5 percent to $1.88 billion while royalties fell 24.2 percent to $62.6 billion and advertising and other income dropped 48.3 percent to $17.9 million. Revenues were expected to hit $1.89 billion.
At Calvin Klein, revenues rose 166.9 percent to $670.6 million with contributions from former Warnaco properties contributing $376 million, net of reductions in royalties. Calvin Klein’s North American retail business registered a 6 percent increase in comparable sales while wholesale operations experienced double-digit growth.
PVH said the Calvin Klein business in Europe “remained under pressure,” with the troubled jeans unit remaining in transition and “weak in Spain and Italy, where it is primarily concentrated.”
PVH will hold a conference call this morning to discuss the results and outlook.
“I think what’s so interesting about the #MeToo movement and this whole new wave of feminism in general, is that women are finally seeing, ’Oh I can start my own company, oh I can lear to code, oh I can leave my nine-to-five job and do the thing I want to do,” said @brooklyndecker ahead of her @sxsw talk for @createcultivate. The former model took the stage to share wisdom about networking and female-driven entrepreneurship. #wwdeye #sxsw (📷: @jgreenery)
“I was making the guacamole when my scout saw me,” says model @stuckinteenage on being discovered just six months ago while working at @chipotlemexicangrill. Since then Williams has signed with @dnamodels, walked in her first show at @calvinklein and landed on the cover of @vogueitalia – a high point of any model’s career. To read @lisajlockwood’s full interview with the model on her experiences thus far, head to WWD.com – link in bio. (📷: George Chinsee)
“I love the idea of dialogue, period. It’s where I’ve always gotten my inspiration from: hearing other women speak, their journeys and their paths,” said @hereisgina, who delivered the keynote speech at the @sxsw conference for @createcultivate, the online platform and conference series for women. For her two panels, Rodriguez chose female empowering, female-led and female entrepreneurs to focus on. Head to WWD.com to read more about her thoughts on Time’s Up, growing up in a family of women and why we “need a girls’ club.” #wwdeye #sxsw (📷: @jgreenery)
Leading luxury brand are shaking things up to keep up with streetwear. Case in point: the arrival of @mrkimjones as artistic director of @diorhomme. Jones, who succeeds @Kris_Van_Assche, is seen as one of the handful of designers who can actually straddle the luxury and streetwear worlds — which could lead to even more changes at established brands. What could this mean for the rest of the menswear landscape? Head to WWD.com to find out what experts predict #wwdfashion (📷: @franckmura)
“It’s like buying groceries. You’re going to buy the best mango, the best mozzarella, the best things. You have to, or others are going to take it all,” said @gabrielahearst on why she uses only the finest fabrics. Last week, Hearst received her first @cfda nomination for Womenswear Designer of the Year, and earlier this month she opened a permanent showroom in Paris. To read @jessiredale’s interview with the designer and find out why this is shaping up to be a big year for her, head to WWD.com. #wwdfashion (📷: @francoisgoize)
“It’s an interesting thing, playing a younger version of your mother. It’s an interesting concept. I adore my mom and love her in every capacity, but it was just something that had never crossed my mind,” says @anniemstarke on playing a young Joan Castleman in “The Wife.” The same role will be played by her mother Glenn Close. Read more about her growing up in the film industry as the daughter of producer John H. Starke and Close and what she has planned for the future #wwdeye (📷: @nataliamantini)
@asics is launching a new streetwear sneaker inspired by its latest ambassador, @steveaoki. The Hyper-Kenzen x Aoki, which will launch at @footlocker stores exclusively tomorrow, is a slip-on style that incorporates the brand’s proprietary Gel technology through beads integrated into the midsole for comfort and endurance. Read the full story on WWD.com.