Double-digit revenue and profit growth at its two designer divisions allowed PVH Corp. to overcome weakness in the Heritage Brands unit and post second-quarter profits comfortably ahead of Wall Street’s and its own expectations.
For the three months ended July 31, the company reported net income of $66.7 million, or 92 cents a share, versus a loss of $70.6 million, or $1.07 a share, in the second quarter of 2010, when it concluded its purchase of Tommy Hilfiger. Stripping out extraordinary items, including those related to the acquisition, earnings per share for the quarter were $1.07, 12 cents better than the guidance provided in June and subsequently adopted by analysts.
Revenues totaled $1.33 billion, up 21 percent from the $1.1 billion reported in the year-ago period, as net sales rose 21.4 percent to $1.23 billion from $1 billion.
Emanuel Chirico, chairman and chief executive officer, said, “Trends in both the Calvin Klein and Tommy Hilfiger businesses globally demonstrate how powerful brand appeal translates into strong performance across product categories, distribution channels and geographies. As such, we continue to invest in marketing to broaden the reach of the Calvin Klein and Tommy Hilfiger brands worldwide.”
Hilfiger revenues rose 30.2 percent to $692.9 million while adjusted earnings before interest and taxes were up 33.5 percent to $75.6 million. Calvin Klein revenues were up 18.9 percent to $239.9 million with EBIT up 21.4 percent to $65.6 million. Same-store sales were ahead 21 percent at Calvin Klein, 13 percent at Tommy Hilfiger North America and 12 percent for the Hilfiger business in other parts of the world.
The Heritage Brands unit saw operating earnings, excluding costs incurred in connection with PVH’s early termination of its Timberland license, contract 2.7 percent to $30.2 million on an 8.8 percent increase in revenues to $401.7 million. Same-store sales rose 2 percent. Although wholesale volume of dress furnishings was up 20 percent and profitability for that business rose substantially, improvements were “more than offset by a gross margin decline due to higher product costs and increased promotional selling in the Izod wholesale sportswear division.”
Long-term debt was reduced to $2.09 billion from $2.49 billion a year ago as the company made debt payments of $247.5 million on outstanding term loans during the first half, the majority ahead of schedule. Debt payments since the Hilfiger acquisition are about $500 million.
Full-year EPS guidance was raised to $5 to $5.12 on a non-GAAP basis from the range of $4.80 to $5 provided in June.
For the first half of 2011, net income was $124.4 million, or $1.71 a share, against a net loss during the first six months of 2010 of $98.2 million, or $1.67. Revenues, which include Tommy Hilfiger for all of the current year but for less than three months of 2010, were up 57 percent to $2.7 billion from $1.72 billion.
The company, known as Phillips-Van Heusen Corp. prior to changing its name in June, will discuss the results during a conference call today.
Alberta Ferretti's "Rainbow Week" sweaters are back. The designer closed her #MFW show with a few day-of-the-week sweaters, which first debuted on the catwalk last January as part of the pre-fall 2017 collection. #wwdfashion (📷: @delphineachard)