New York—PVH Corp said Wednesday that it swung into a fourth quarter profit helped by increases at its Tommy Hilfiger and Calvin Klein brands in North America. While earnings beat estimates, PVH’s sales missed expectations.
For the three month ended Jan. 31, PVH posted net earnings of $51.5 million, or 62 cents a share, compared with a loss of $37.5 million, or 46 cents a share, last year. Results include an income tax benefit of $77.3 million, while the prior year recorded an expense of $152.2 million. Excluding items, adjusted earnings for the quarter were $1.76 per share. That beat analysts’ estimate for $1.73 a share.
Net sales rose 1% to $2.07 billion from $2.05 billion in the prior year and just missing the $2.10 billion analysts had expected. On a constant currency basis, sales for the quarter were up 5%.
Among brands, sales grew 2% for both Calvin Klein and Tommy Hilfiger brands, while Heritage Brands fell 3%.
Calvin Klein North America revenue increased 13%, driven by growth in the wholesale businesses, coupled with square footage expansion in company-operated retail stores.
Tommy Hilfiger North America revenue increased 9%, principally due to a double-digit percentage increase in the wholesale business that was attributable, in part, to a shift in timing of shipments into the fourth quarter of 2014 from the third quarter, combined with square footage expansion in company-operated retail stores. North America retail comparable store sales were relatively flat as a result of the highly promotional retail environment during the holiday period, PVH said.
Negative Currency Impact
Meanwhile, selling and general expenses for the quarter were higher at $1.07 billion, compared with $909.5 million last year.
“Overall, we are pleased with our fourth quarter results, which matched the top end of our earnings guidance, despite the highly challenging market environment and foreign currency headwinds,” said Manny Chirico, chairman/ceo. “The Calvin Klein and Tommy Hilfiger businesses delivered improved year over year results, driven by the strength of their global consumer appeal. 2014 was a year of action for PVH, as we followed through with the investments initiated in 2013, which centered on our people, products, infrastructure, supply chain and distribution. We also announced the exit of our Izod retail business by the end of 2015 to focus on our higher margin businesses.”
However, PVH provided a lackluster forecast for first quarter and full year 2015. For the first quarter, PVH expects adjusted earnings of $1.35 to $1.40 a share and sales to drop 6% from the prior-year quarter. Analysts expect earnings of $1.52 per share and sales to fall 0.2%.
For the full year 2015, PVH expects adjusted earnings of $6.75 to $6.90 a share and sales to decline 4% from the prior year. Analysts expect earnings of $7.37 a share on flat sales.
PVH notes that its forecast includes a negative foreign currency impact of 30 cents a share in the first quarter and $1.30 a share for the full year.