HILFIGER NET JUMPS 55.7%; BEATS WALL STREET ESTIMATES
Byline: Alexandra Zissu
NEW YORK — Including kudos for the performance of its licensed line of women’s wear, Tommy Hilfiger Corp. reported Monday that its third-quarter earnings surged 55.7 percent, beating Wall Street estimates and prodding analysts to pump up their projections for the full year.
Earnings for the three months ended Dec. 31 rose to $27.4 million, or 72 cents a share, from $17.6 million, or 47 cents, a year ago.
Sales rose 44.2 percent to $188.2 million from $130.5 million.
Some Wall Street estimates for the quarter were as low as 56 cents a share, with the consensus coming in at 67 cents.
In a conference call with analysts Monday, Joel Horowitz, chief executive officer, said women’s sales during Christmas were “outstanding” and continued to perform well through January.
The line is licensed to Pepe Jeans London Corp.
Horowitz noted in a statement that overall sales were helped by “the continued success of our products across the board.”
He said, “As a result of a strong Christmas selling season, we saw a solid increase in our retail business and continued healthy gains in our men’s and boys’ wholesale businesses.”
Licensing programs also aided third-quarter results, Horowitz said, citing men’s fragrance and jeanswear along with the women’s casualwear line as performing well. He also noted that Hilfiger’s first women’s fragrance, “Tommy Girl,” under a license with Estee Lauder Cos., was launched during the quarter, while a new licensing agreement was signed with Lantis Eyewear Corp. for men’s sunglasses, to debut at retail this fall.
Reacting to the quarter’s figures, Jay Meltzer of JLR Redbook Research described the results as an “excellent performance” in an “excellent quarter.”
According to Meltzer, Hilfiger performed better than expected across the board, exceeding plan in each of its major categories.
The strength of the brand had been underestimated.
As a result, Meltzer will add 20 to 25 cents to his estimate of $2.10 a share for the year ending March 31.
Last year Hilfiger earned $1.65.
Allison Malkin, analyst at Dillon Read & Co., called the earnings “fabulous, with strength across the board.”
“I think concerns over Tommy’s ability to grow the wholesale business were quieted,” she said.
Malkin noted that overall margins were stronger than she expected, showing that men’s wholesale margins were up significantly as well.
She also commented that licensing revenue accounted for 5 percent of total sales.
“Earnings [per share] were up 53 percent, and that’s with a higher tax rate,” she said. Malkin is raising her full year estimate to $2.21 from $2.15.
Hilfiger stock closed Monday on the New York Stock Exchange at 53 1/2, up 2 1/4.
For the nine months, Hilfiger’s earnings rose 47 percent to $64.1 million, or $1.69, from $43.6 million, or $1.17. Sales increased 39.5 percent to $491.2 million from $352 million.
On the retail front during the third quarter, 49 men’s in-store shops were added and 23 existing men’s shops were expanded, bringing the total to 1,026.
Hilfiger also installed 58 fixtured areas for boys’ sizes 4-20, totaling 1,010. Two outlet stores were opened for a total of 54 outlet and specialty retail stores.
The company also has signed an agreement to lease its first international flagship on New Bond Street in London, planned to open in 1998.
Hilfiger will open a smaller London retail store on Sloane Street in fall 1997.
In addition, the firm has signed an agreement with Pepe Jeans London Corp. to distribute men’s sportswear throughout Europe, starting in the autumn.
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