PVH Corp Q3 earnings witness 11 percent rise
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Revenue stood at 2.23 billion dollars, a 2 percent increase over the prior year’s third quarter amount excluding 67 million dollars of revenue related to the Bass business, which was sold on the first day of the fourth quarter of 2013. Third quarter 2014 revenue was negatively impacted by approximately 30 million dollars, or 1 percent, due to foreign currency translation. Revenue increased 2 percent in the Calvin Klein business, which includes a 1 percent negative impact from foreign currency translation; 1 percent in the Tommy Hilfiger business, which includes a 2 percent negative impact from foreign currency translation; and increased 3 percent in the Heritage Brands business excluding a 10 percent decrease in the Heritage Brands business including the 2013 Bass revenue.
Commenting on these results, Emanuel Chirico, Chairman and Chief Executive Officer, noted, “Despite the anticipated difficult macroeconomic environment, we are very pleased with our third quarter performance, driven by the strength of our Tommy Hilfiger business and an improvement in our Calvin Klein business. During the quarter, we saw our global strategic initiatives in our Calvin Klein jeans business begin to take hold, with improved performance in our newly installed shop environments and store refits. Additionally, our acquisition integration efforts remain on track, with the last phase to be completed during 2015.”
Revenue in the Calvin Klein business increased to 816 million dollars from 800 million dollars in the prior year. Calvin Klein North America revenue increased 5 percent, due to retail comparable store sales growth of 5 percent. Also contributing to the revenue increase was moderate growth in the North America wholesale business. Calvin Klein International revenue decreased 1 percent compared to the prior year. Calvin Klein International retail comparable store sales declined 2 percent due to softness in Asia. Earnings before interest and taxes on a non-GAAP basis for the Calvin Klein business decreased to 142 million dollars from 144 million dollars in the prior year’s third quarter.
Revenue in the Tommy Hilfiger business increased to 930 million dollars from 921 million dollars in the prior year period. Tommy Hilfiger North America revenue increased 3 percent, principally due to retail comparable store sales growth of 1 percent. Tommy Hilfiger International revenue decreased 1 percent. Revenue growth from square footage expansion in the Tommy Hilfiger Europe retail business was partially offset by a comparable store sales decline of 5 percent. Earnings before interest and taxes for the Tommy Hilfiger business was 155 million dollars, a 9 percent increase over earnings of 143 million dollars on a non-GAAP basis in the prior year’s third quarter. On a GAAP basis, earnings before interest and taxes for the Tommy Hilfiger business decreased 7 percent.
Revenue for the Heritage Brands business increased to 487 million dollars compared to the prior year period. A 6 percent increase in the wholesale business was partially offset by a 6 percent comparable store sales decline in the retail business. Earnings before interest and taxes on a non-GAAP basis for the Heritage Brands business was 36 million dollars compared to 42 million dollars in the prior year’s third quarter. Earnings before interest and taxes on a GAAP basis for the Heritage Brands business increased to 32 million dollars from 14 million dollars in the prior year’s third quarter.
Earnings per share on a non-GAAP basis for the nine month period was 5.54 dollars compared to 5.60 dollars for the prior year period. GAAP earnings per share were 4.66 dollars compared to 2.19 dollars for the prior year period. Revenue was 6.17 billion dollars for the nine month period as compared to the prior year period’s 6.16 billion dollars on a non-GAAP basis and 6.13 billion dollars on a GAAP basis.
The revenue increase was due to a 2 percent, or 48 million dollars, increase on a non-GAAP basis in the Calvin Klein business and retail comparable store sales increase of 2 percent in North America. However revenues decreased 4 percent internationally. Revenue on a GAAP basis in the Calvin Klein business increased 4 percent. Group revenue rise is also attributable to a 5 percent, or 131 million dollars, increase in the Tommy Hilfiger business. Tommy Hilfiger North America revenue increased 5 percent and retail comparable store sales growth of 2 percent. Tommy Hilfiger International revenue increased 5 percent, driven principally by European retail comparable store sales growth of 1 percent.
Earnings before interest and taxes on a non-GAAP basis decreased to 718 million dollars from 760 million dollars in the prior year. GAAP earnings before interest and taxes increased to 524 million dollars from 353 million dollars in the prior year period. Contributing to the earnings increase was an increase in the Tommy Hilfiger business, partially offset by the earnings decreases on a non-GAAP basis in the Calvin Klein and Heritage Brands businesses.
As a result of recent unfavorable foreign exchange rates, principally the Euro, the company is revising its earnings per share guidance to 7.25 dollars - 7.30 dollars, as compared to previous guidance of 7.30 dollars - 7.40 dollars, each on a non-GAAP basis. The company’s revised guidance represents an increase of 3percent – 4 percent over its 2013 earnings per share on a non-GAAP basis of 7.03 dollars. Revenue is currently projected to be approximately 8.3 billion dollars, an increase of approximately 3 percent from the prior year excluding revenue of 176 million dollars related to the Bass business, and reflects a negative impact from foreign currency translation compared to both the company’s previous guidance and the prior year. Including Bass revenue in 2013, the revenue increase is expected to be approximately 1 percent over the prior year.
Earnings per share on a non-GAAP basis for the fourth quarter is currently projected to be in a range of 1.71 dollars - 1.76 dollars, or an increase of 20 percent – 23 percent, as compared to 1.43 dollars in the prior year’s fourth quarter. Revenue in the fourth quarter is currently expected to be approximately 2.1 billion dollars, an increase of approximately 3 percent compared to the prior year amount of 2.05 billion dollars.