PVH Q4 Sales Up 25% But Swings into Loss on Warnaco Costs

In What's New, Industry News by Jeff Prine

From Calvin Klein White Label for Spring

From Calvin Klein White Label for Spring

New York—PVH Corp. said late Tuesday afternoon that its Warnaco Group acquisition helped boost its fourth quarter sales, but costs related to the buy pushed the apparel company into a loss.

For the quarter ended Feb. 2, the parent to Tommy Hilfiger, Calvin Klein and an array of licenses posted a net loss of $37.5 million, or 46 cents a share, compared with net income of $80.7 million, or $1.09 a share, in the year-ago quarter. Excluding expenses tied to the integration of Warnaco and corporate restructuring, among other items, adjusted profit fell to $1.43 from $1.60 a share. Analysts’ average estimate expected earnings of $1.42 a share.

Net revenue increased 25% to $2.05 billion, just shy of analysts’ estimate for $2.07 billion in sales. While costs associated with Warnaco acquisition hurt earnings, it added some $479 million to the results.

Calvin Klein Sales Jump 117%!

At its Calvin Klein business, sales were up a whopping 117% to $688 million driven mainly by the Warnaco acquisition which was completed in February 2013.

PVH also reported that Tom Murry, chief executive at Calvin Klein, will leave in July and retire. But he will continue to serve as advisor to Steve Shiffman, president and chief commercial officer, who will become chief executive officer.

Tommy Hilfiger division posted a 1% increase in sales to $902 million with Tommy Hilfiger North America business relatively flat with last year and Tommy Hilfiger International business up 2%.

Total revenue for the Heritage Brands business increased 8% to $462 million due mainly to the addition of $115 million of revenue related to Warnaco’s Speedo swimwear and Warner’s and Olga women’s intimate apparel businesses.

Gross margin narrowed to 52.1% from 53.8% in the year ago period.

“We are pleased with our 2013 fourth quarter results, which exceeded our previous guidance for earnings per share, despite the difficult retail environment,” said Manny Chirico, chief executive. “While our newly acquired Calvin Klein jeans business, particularly in North America and Europe, struggled in 2013, we believe that our focused investments will drive future profitability.”

For the upcoming first quarter, PVH, citing “difficult macroeconomic environment,” forecast adjusted profit of $7.40 to $7.50 a share on $8.5 billion in revenue. Analysts’ had projected a profit of $7.81 a share and $8.6 billion in revenue.

Looking ahead to the full year forecast, PVH projected an adjusted profit of $7.40 to $7.50 a share on $8.5 billion in revenue, while analysts had expected a profit of $7.81 a share and $8.6 billion in revenue.

“PVH’s guidance for 2014 is comprised of revenue growth accelerating through the year,” said Michael Binetti, UBS analyst. “We believe orders for both big brands (Tommy and CK) accelerated for the fall—which should support PVH’s outlook for accelerating corporate revenue growth through the year.”


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