New York—Thanks to strong sales from its acquisition of The Warnaco Group and its Calvin Klein and Tommy Hilfiger brands, PVH Corp. reported Monday afternoon it’s a better-than-expected third quarter profit increase of 17.3%. Nonetheless, the company lowered its fourth quarter sales forecast due to the competitive retail environment.
For the quarter ended Nov. 3, PVH posted a profit of $196.7 million, or $2.37 a share, compared with a profit of $167.7 million, or $2.27 a share, a year ago. Excluding a loss tied to the sale of G.H. Bass & Co. and other items, adjusted profit fell to $2.30. That was ahead of the $2.25 a share analysts’ estimated.
Calvin Klein Sales Double
Net revenue grew 37.5% to $2.26 billion, boosted by a $503 million contribution from the Warnaco businesses and beating analysts’ estimate for $2.21 billion in sales. Gross margin narrowed to 51.9% from 52.9%.
By division, Calvin Klein sales more than doubled to $799.7 million from $319.6 million in the year-ago quarter driven by The Warnaco Group acquisition and a 3% rise in comparable store sales at PVH Corp.’s Calvin Klein North America retail business.
At Tommy Hilfiger, sales rose 10.4% to $920.7 million due to a 10% sales growth in the North American and 11% in international business. The segment’s North American business mainly benefited from a 3% rise in retail comps, along with square footage expansion and double-digit sales growth in the wholesale sportswear business.
In its Heritage Brands, sales rose 10% to $538.8 million from $489.5 million primarily driven by the newly-acquired Speedo and Warner’s and Olga women’s intimate apparel businesses, partially offset by negative impact due to the company’s exit from Izod women’s wholesale sportswear business and a 3% decline in comps.
“Despite our better than expected third quarter results, we believe the current holiday season will be very competitive and highly promotional,” Chairman/CEO Emanuel Chirico said.
Consequently, PVH slightly lowered its revenue forecast while reaffirming its earnings prediction, which fell bellows estimates.
The company expects to earn $1.40 per share for the fourth quarter on revenue of $2.08 billion. For fourth quarter, the company predicted per share earnings of $1.40 a share with revenue of $2.08 million. Analysts, however, estimated $1.53 a share on revenue of $2.11 billion.
For the full year, PVH now expects $7 a share on revenue of $8.24 billion, down from its previous estimate for $8.25 billion in sales. Analysts’ average estimate expects $7.07 a share on revenue of $8.25 billion.
The company’s Calvin Klein, Tommy Hilfiger and Heritage Brands are expected to contribute $2.79 billion, $3.44 billion and $2.01 billion, respectively toward total revenue.
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