PVH Corp. managed to post sales gains last year, but is taking a “prudent approach” to 2017.
The company logged comparable-sales declines for Calvin Klein and Tommy Hilfiger in North America last year. That restrained top-line growth wasn’t enough to keep profits from declining, but investors were feeling bullish enough to send the stock up 7 percent to $97.23 in afterhours trading Wednesday.
Total revenue for all PVH brands rose by 2.3 percent to $8.2 billion last year, in large part to increased sales of Calvin Klein and Tommy Hilfiger in Europe and China. The company’s net income fell 4.1 percent to $548.7 million from $572.4 million in 2015.
Calvin Klein’s total annual revenues rose 7.3 percent to $3.1 billion, but the brand struggled in its own North American stores, with comparable sales falling 4 percent.
Similarly, Tommy Hilfiger’s sales grew by 4.2 percent to $3.5 billion, but saw comp-store sales in North America drop by 9 percent.
PVH attributed the weaker performance in North America to “declines in traffic and consumer spending,” especially in stores located in tourist locations.
Tommy Hilfiger was also impacted by the decision to give up control of its women’s wear business to G-III Apparel Group with a recent licensing deal, PVH said.
The Heritage Brands division logged a 9.9 percent drop in revenues to $1.6 billion as the company rationalized the business.
Emanuel Chirico, PVH’s chairman and chief executive officer, said the company was pleased with its performance, and noted that 2016 results exceeded its guidance “despite the volatile macroeconomic environment.”
“Succeeding in the current business environment has required us to embrace change and implement new initiatives to ensure that our business model is positioned for future success,” Chirico said. “We empowered our teams to think creatively, capitalize on new product and business opportunities and find innovative ways to engage consumers, while exercising sustainable business practices. We believe that our brands, led by Calvin Klein and Tommy Hilfiger, continue to resonate with consumers and position us well in the marketplace against our competition.”
Chirico also pointed to PVH’s recent acquisition of True & Co. as evidence of its commitment to innovation across the business.
The firm also added Amy McPherson, the president and managing director of Europe for Marriott International, to its board, bringing in a fresh voice.
Looking ahead to 2017, Chirico said PVH is taking a “prudent approach” to its business planning given the “geopolitical volatility around the world, the uncertain global retail landscape, as well as the strengthening U.S. dollar.”
The company expects earnings per share to drop to between $6.20 and $6.30, compared with $6.79 in 2016 given the currency impact of a stronger U.S. dollar.
Revenue is expected to rise another 2 percent for the first quarter and 2017 as a whole, however, with Calvin and Tommy Hilfiger sales expected to increase.
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