PVH annual outlook reflects negative impact of strong US dollar

For the third quarter ended PVH said revenue increased 3 percent on a constant currency basis and decreased 3 percent on a GAAP basis to 2.16 billion dollars compared to the prior year’s third quarter revenue of 2.23 billion dollars. The company's outlook for the fourth quarter and full year indicates negative impact of foreign currency exchange rates on earnings and revenue.

Commenting on these results, Emanuel Chirico, Chairman and Chief Executive Officer, noted, “We are very pleased with our third quarter results, which exceeded our expectations despite the difficult and volatile market environment, including the slowdown in traffic experienced in the US during the quarter. Our results continued to highlight the strength of our Calvin Klein and Tommy Hilfiger International businesses and improving trends in our Heritage Brands business.”

Third quarter business review

As compared to the prior year’s third quarter, revenue increased 7 percent in the Calvin Klein business on a constant currency basis and was flat on a GAAP basis; increased 4 percent in the Tommy Hilfiger business on a constant currency basis and decreased 5 percent on a GAAP basis; and decreased 5 percent in the Heritage Brands business on a GAAP basis.

Calvin Klein North America revenue increased 7 percent on a constant currency basis and 4 percent on a GAAP basis compared to the third quarter of 2014. The North America wholesale business experienced healthy growth on a constant currency basis. Revenue growth on a constant currency basis in the North America retail business was due principally to square footage expansion in company-operated stores, including the conversion of IZOD stores to Calvin Klein Accessory and Calvin Klein Underwear stores. North America retail comparable store sales decreased 3 percent.

Calvin Klein International revenue increased 7 percent on a constant currency basis and decreased 6 percent on a GAAP basis. The increase on a constant currency basis was driven by strong momentum in the European and Chinese businesses. Calvin Klein International retail comparable store sales increased 2 percent as a result of strong performance in Europe and China, partially offset by softness in Korea and Hong Kong.

Tommy Hilfiger North America revenue increased 2 percent on a constant currency basis and was flat on a GAAP basis compared to the third quarter of 2014, as growth in the wholesale business was mostly offset by softness in the retail business. North America retail comparable store sales declined 7 percent. International revenue increased 6 percent on a constant currency basis and decreased 8 percent on a GAAP basis from the prior year period driven by strong performance in the European business, including a 10 percent increase in retail comparable store sales attributable to growth across all major markets.

Revenue in the Heritage Brands business for the quarter decreased 5 percent from 487 million dollars in the prior year’s third quarter primarily due to the continued rationalization of the Heritage Brands business, which includes the exit from the Izod retail business and the discontinuation of several licensed product lines in the dress furnishings business, as the company focuses on its more profitable businesses. Partially offsetting this decrease was an 11 percent increase in comparable store sales in the Van Heusen retail business as a result of initiatives introduced in 2015.

Nine months consolidated results

Earnings per share on a non-GAAP basis for the first nine months of 2015 was 5.53 dollars, inclusive of a 1.02 dollars negative impact compared to the prior year primarily related to foreign currency exchange rates. Earnings per share on a non-GAAP basis excluding the negative impact primarily related to foreign currency exchange rates was 6.55 dollars, or an increase of 18 percent compared to earnings per share on a non-GAAP basis of 5.54 dollars in the prior year period. GAAP earnings per share was 5.26 dollars compared to 4.66 dollars in the prior year period.

Revenue increased 3 percent on a constant currency basis but decreased 4 percent on a GAAP basis compared to 6.17 billion dollars in the prior year period. The revenue change was due to a 5 percent increase on a constant currency basis or 2 percent decrease on a GAAP basis in the Calvin Klein business compared to the prior year period, primarily driven by strong performance in Europe and Asia. International retail comparable store sales increased 5 percent. North America retail comparable store sales were flat to the prior year period primarily as a result of both the decline in traffic and spending trends in the company’s US stores located in international tourist locations and unseasonably warm weather in the third quarter of the current year.

A 3 percent increase on a constant currency basis and 7 percent decrease on a GAAP basis) in the Tommy Hilfiger business compared to the prior year period. Tommy Hilfiger North America revenue increased 2 percent on a constant currency basis and decreased 1 percent on a GAAP basis inclusive of a 3 percent decrease in retail comparable store sales. International revenue increased 5 percent on a constant currency basis but decreased 13 percent on a GAAP basis, driven principally by European retail comparable store sales growth of 7 percent and low single-digit percentage wholesale growth on a constant currency basis.

A 2 percent decrease in the Heritage Brands business compared to the prior year period, as an 11 percent retail comparable store sales increase in the Van Heusen business was more than offset by the revenue decrease attributable to the exit from the Izod retail business, as well as the prior year’s comparable period having the benefit of the sales attributable to the launch of Izod at Kohl’s.

FY15 guidance reflects negative impact of currency fluctuation

The Company currently continues to project that earnings per share for the full year 2015 will be in a range of 6.90 dollars to 7 dollars on a non-GAAP basis, which includes approximately 1.35 dollars negative impact related to foreign currency exchange rates and pressures on the company’s Russia businesses.

Revenue is currently projected to increase approximately 3percent on a constant currency basis and decrease approximately 3 percent on a GAAP basis as compared to 2014. It is currently projected that revenue for the Calvin Klein business will increase approximately 8 percent on a constant currency basis and increase approximately 1 percent on a GAAP basis. Revenue for the Tommy Hilfiger business is currently projected to increase approximately 3 percent on a constant currency basis and decrease approximately 7 percent on a GAAP basis. Revenue for the Heritage Brands business is currently projected to decrease approximately 3 percent on a GAAP basis.

Revenue in the fourth quarter of 2015 is currently projected to increase approximately 5 percent on a constant currency basis and remain flat on a GAAP basis compared to the prior year’s fourth quarter. It is currently projected that revenue for the Calvin Klein business in the fourth quarter will increase approximately 15 percent on a constant currency basis and increase approximately 10 percent on a GAAP basis. Revenue for the Tommy Hilfiger business is currently projected to increase approximately 1 percent on a constant currency basis and decrease approximately 5 percent on a GAAP basis and revenue for the Heritage Brands business in the fourth quarter is currently projected to decrease approximately 4 percent on a GAAP basis due to the exit from the Izod retail business.