A better-than-expected performance from the newly acquired Tommy Hilfiger business helped Phillips-Van Heusen Corp. beat analysts’ estimates for the second quarter and prompted the firm to boost its guidance for the year.
For the three months ended Aug. 1, the New York-based apparel giant on Tuesday reported a net loss of $54.6 million, or 83 cents a diluted share, compared with net income of $26.6 million, or 51 cents, in the year-ago period. Excluding expenses related to the Hilfiger acquisition, completed in May for about $3 billion, and other extraordinary items, net income was 72 cents a share, 18 cents above analysts’ expectations.
Net sales reached $1.01 billion, more than double the $457.4 million in last year’s quarter. Total revenues grew to $1.1 billion from $529.3 million.
PVH said the Hilfiger business generated $532.2 million in revenues, $12.2 million better than anticipated by the firm. Earnings before interest and taxes for the unit, on a non-Generally Accepted Accounting Principles basis, tallied $56.6 million, $16.6 million above PVH’s previous guidance.
The company noted it had made a $100 million debt repayment on the $1.9 billion term loan taken as part of its financing package for the Hilfiger acquisition. It plans to pay down about $300 million more during the current third quarter.
Along with Hilfiger’s performance, Emanuel Chirico, chairman and chief executive officer of PVH, said, “We continued in the second quarter to see improvements in our gross margins over the prior year’s results for our Heritage Brands and Calvin Klein Apparel businesses, with the Calvin Klein licensing segment also delivering a royalty revenue increase of 11 percent over the prior year.”
EBIT at Calvin Klein rose 21 percent to $54 million as same-store sales grew 14 percent and total revenues increased 14.5 percent to $201.8 million. In the firm’s new Heritage Brands segment, which amalgamates retail and wholesale operations for its longer-standing dress furnishings and sportswear businesses, EBIT was $31 million, 14.4 percent above the 2009 quarter. Revenues rose 4.6 percent to $369.3 million.
On a GAAP basis for the first half of the year, PVH’s net loss totaled $82.2 million, or $1.39 a diluted share, versus net income of $51.3 million, or 99 cents, during the comparable 2009 period. Revenues rose 58.5 percent to $1.72 billion from $1.09 billion.
PVH raised its full-year guidance to a non-GAAP profit of between $3.70 and $3.80 a diluted share, up from the $3.55 to $3.65 range projected when the firm reported first-quarter earnings on May 24.
Shares of PVH fell 1.2 percent to $50.50 before the company’s afternoon report on quarterly results. The firm will hold a conference call to discuss the results today.
In the overall markets, the S&P Retail Index declined 1.6 percent, or 6.99 points, to 418.90 as the Dow Jones Industrial Average slid 1 percent, or 107.24 points, to 10,340.69.
Concerns about the health of European banks weighed on markets and the CAC 40 fell 1.1 percent to 3,643.81 in Paris, as the DAX fell 0.6 percent to 6,117.89 in Frankfurt and the FTSE 100 dropped 0.6 percent to 5,407.82 in London.
Asian investors pushed the Nikkei 225 down 0.8 percent to 9,226 in Tokyo, though the Hang Seng Index inched up 0.2 percent to 21,401.79 in Hong Kong.
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