PVH posts strong revenue growth in Europe, raises outlook

Third quarter revenue at PVH Corp. increased 3 percent or 4 percent on constant currency to 2.6 billion dollars. The company’s earnings per share on a GAAP basis were 2.82 dollars compared to 3.15 dollars in the prior year period, while earnings per share on a non-GAAP basis were 3.10 dollars compared to 3.21dollars in the prior year period. For the full year, on GAAP basis, the company has raised earnings outlook to 8.04 dollars to 8.06 dollars from 7.95 dollars to 8.05 dollars previously and non-GAAP basis, PVH expects full year earnings per share to be in the range of 9.43 dollars to 9.45 dollars from 9.30 dollars to 9.40 dollars previously.

Commenting on the third quarter results, Emanuel Chirico, the company’s Chairman and Chief Executive Officer, said in a statement: “We are pleased with our third quarter results, which exceeded our expectations despite the difficult market environment. During the quarter, we experienced continued outperformance by our European businesses while experiencing volatility in our businesses in North America and across China, including the impact of the ongoing protests in Hong Kong.”

Tommy Hilfiger and Calvin Klein continue their growth momentum

Revenue in the Tommy Hilfiger business for the quarter increased 10 percent or 12 percent on constant currency basis to 1.2 billion dollars. The company said, Tommy Hilfiger International revenue increased 16 percent or 20 percent on constant currency to 821 million dollars, primarily driven by continued outperformance in Europe and the addition of revenue resulting from the Australia and TH CSAP acquisitions. International comparable store sales increased 8 percent. Tommy Hilfiger North America revenue of 423 million dollars was flat compared to the prior year period, as growth in the North America wholesale business was offset by a 5 percent decline in North America comparable store sales due to continued weakness in traffic and consumer spending trends, especially in stores located in international tourist locations.

Revenue in the Calvin Klein business for the quarter increased 1 percent or 3 percent on constant currency basis to 969 million dollars. Calvin Klein International revenue increased 7 percent or 10 percent on constant currency basis to 514 million dollars again driven by continued solid growth in Europe and the addition of revenue resulting from the Australia acquisition. These increases, PVH added, were partially offset by softness in Asia due, in part, to the business disruptions caused by the ongoing protests in Hong Kong and the trade tensions between the US and China. International comparable store sales decreased 2 percent. Calvin Klein North America revenue decreased 5 percent to 455 million dollars compared to the prior year period, due to a decrease in the wholesale business, including the effect of licensing the company’s directly operated women’s jeanswear wholesale business in the US and Canada to G-III Apparel Group, Ltd. and a 4 percent decline in North America comparable store sales due to continued weakness in traffic and consumer spending trends, especially in stores located in international tourist locations.

Revenue in the Heritage Brands business for the quarter decreased 13 percent to 375 million dollars due to weakness in the North America wholesale business and a 2 percent decline in comparable store sales.

Highlights of PVH’s nine months results

Revenue for the first nine months at PVH increased 2 percent or 5 percent on a constant currency basis to 7.3 billion dollars due to 7 percent or 11 percent increase on a constant currency basis driven principally by outperformance in Europe and the addition of revenue resulting from the Australia acquisition. International comparable store sales increased 9 percent, while North America comparable store sales decreased 6 percent.

The company reported 2 percent decrease or 1 percent increase on a constant currency basis with continued growth in Europe and the addition of revenue resulting from the Australia acquisition more than offset by the negative impacts of foreign currency translation, softness experienced in Asia due, in part, to the business disruptions caused by the ongoing protests in Hong Kong and the trade tensions between the US and China, the reduction of revenue resulting from the closure of the Calvin Klein 205 W39 NYC brand, and the effect of the G-III license. International comparable store sales decreased 2 percent, while North America comparable store sales decreased 4 percent.

There was a 4 percent decrease in the Heritage Brands business compared to the prior year period, primarily due to weakness in the North America wholesale business and a 3 percent decline in comparable store sales.

Earnings per share on a GAAP basis were 6.46 dollars for the first nine months of 2019 compared to 7.56 dollars in the prior year period and earnings per share on a non-GAAP basis were 7.64 dollars compared to 7.75 dollars in the prior year period.

Commenting on the outlook, the company said, revenue in 2019 is projected to increase approximately 1 percent or approximately 4 percent on a constant currency basis. Revenue for the Tommy Hilfiger business is projected to increase approximately 6 percent or approximately 9 percent on a constant currency basis and revenue for the Calvin Klein business is projected to decrease approximately 2 percent or to be flat on a constant currency basis. Revenue for the Heritage Brands business is projected to decrease approximately 3 percent.

The Company currently projects that fourth quarter earnings per share on a GAAP basis will be in a range of 1.56 dollars to 1.58 dollars compared to 2.09 dollars in the prior year period and earnings per share on a non-GAAP basis will be in a range of 1.77 dollars to 1.79 dollars compared to 1.84 dollars in the prior year period. Revenue in the fourth quarter is projected to be flat or increase approximately 2 percent on a constant currency basis compared to the prior year period. Revenue for the Tommy Hilfiger business is projected to increase approximately 4 percent or approximately 6 percent on a constant currency basis. Revenue for the Calvin Klein business is projected to decrease approximately 5 percent or approximately 3 percent on a constant currency basis and revenue for the Heritage Brands business quarter is projected to increase 1 percent.

Picture:Tommy Hilfiger website