PVH Corp. sales kept growing last year and earnings surpassed expectations despite a slight dip in profits.
The Calvin Klein and Tommy Hilfiger operator saw consolidated revenue for the year grow 9 percent to $8.9 billion, led by sales gains at both brands, while net income fell 2 percent to $537.8 million. Nevertheless, earnings per share for the year came in at $6.84, compared to $6.79 in fiscal 2016.
During the year, Calvin Klein tallied a 10 percent increase in sales and Tommy Hilfiger an 11 percent increase, both due largely to business in Europe and China. Tommy, too, counted its first full quarter of revenue from PVH’s acquisition of the brand’s China business, costs from which accounted for some of the decrease in overall profits. Changes to the tax code calling for repatriation of foreign earnings at a reduced penalty also led to a onetime increase in the company’s effective tax rate to 329 percent. Going forward, PVH expects its tax rate to be reduced to around 15 percent from 20 percent.
International comparable-store sales increased 6 and 8 percent for Klein and Hilfiger, respectively, while North America continued to lag behind. Calvin’s comps fell 1 percent while Tommy’s increased 3 percent. Meanwhile, PVH’s heritage business remained flat while comp sales increased 2 percent.
“Our 2017 results demonstrate our strong execution and commitment to our long-term vision,” Chirico said. “We continued to make investments that centered around areas most impacted by the changing dynamics in the industry — the growing prominence of digital, the importance of having a nimble and responsive supply chain and our ever-present commitment to driving consumer engagement.”
He added that the “incredible brand power” of Klein and Hilfiger have PVH in a competitive position that will “drive continued momentum.”
“While we, like many other global consumer companies, will continue to face geopolitical headwinds, the power of our brands, our business and, most importantly, our people, should drive the company forward,” Chirico said.
That confidence infused a rosy outlook for 2018. PVH expects EPS to come in around $8.80 based on a projected 7 percent consolidated revenue increase. Revenues at Klein and Hilfiger are expected to increase 9 and 8 percent, respectively.
For the upcoming first quarter, EPS are projected to top out at $2.18, compared to 89 cents in the first quarter of 2017. Revenue is expected to grow 15 percent due to double-digit sales increases in both the Klein and Hilfiger businesses.
Chirico and other PVH executives are scheduled to host a call with financial analysts Thursday morning.
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