PVH Q3 Profit Up While Sales Jump 38%

From Calvin Klein, the  Arches oversized zip hobo in leather.

From Calvin Klein, the Arches oversized zip hobo in leather.

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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Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com

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