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PVH says Q1 earnings of 0.89 dollar exceeded guidance

First quarter revenue at PVH increased 4 percent or 5 percent on a constant currency basis to 2 billion dollars compared to the prior year period. On GAAP basis, EPS was 0.89 dollar compared to the company’s earlier guidance of guidance of 0.73 dollar to 0.75 dollar. Non-GAAP EPS was 1.65 dollars compared to guidance of 1.58 dollars to 1.60 dollars. PVH has now raised full year GAAP EPS expectation to 6.24 dollars to 6.34 dollars from 6.20 dollars to 6.30 dollars previously and non-GAAP EPS outlook to 7.40 dollars to 7.50 dollars from 7.30 dollars to 7.40 dollars previously.

Commenting on these results, Emanuel Chirico, the company’s Chairman and CEO, noted in a press release, “We continue to experience strong momentum in our Calvin Klein and Tommy Hilfiger businesses, which allowed us to exceed both our sales and earnings guidance for the first quarter despite the volatile macroeconomic environment and the highly promotional retail market in the US. We are pleased to increase our earnings guidance for the year despite the volatility that continues to persist in the macroeconomic environment.”

Review of Q1 results across businesses

Revenue in the Calvin Klein business for the quarter increased 5 percent or 6 percent on constant currency basis to 756 million dollars compared to the prior year period, which includes a reduction of approximately $15 million resulting from the November 2016 deconsolidation of the company’s Calvin Klein business in Mexico. Calvin Klein International revenue increased 11 percent or 13 percent on a constant currency basis to 380 million dollars due to continued strength in Europe and China. Calvin Klein International comparable store sales increased 3 percent.

Calvin Klein North America revenue decreased 1 percent to 375 million dollars due to the Mexico deconsolidation and a 5 percent decline in North America comparable store sales. GAAP EBITDA increased to 93 million dollars compared to 90 million dollars in the prior year period.

Revenue in the Tommy Hilfiger business increased 6 percent or 9 percent on a constant currency basis to 842 million dollars. Tommy Hilfiger International revenue increased 15 percent or 19 percent to 524 million dollars driven by positive performance across all channels and markets in Europe, as well as the inclusion of a full quarter of revenue from the China business as a result of the April 2016 acquisition of the 55 percent interest in the company’s former Tommy Hilfiger joint venture in China. Tommy Hilfiger International comparable store sales increased 14 percent.

Tommy Hilfiger North America revenue decreased 5 percent to 318 million dollars due to a reduction of approximately 20 million dollars resulting from the discontinuation of the company’s directly operated womenswear wholesale business in the US and Canada during the fourth quarter of 2016 in connection with the licensing of this business to G-III Apparel Group and a 4 percent comparable store sales decline.

Revenue in the Heritage Brands business for the quarter decreased 3 percent to 391 million dollars, while comparable store sales remained flat.

FY17 revenues expected to rise 3 percent

Revenue in 2017 is projected to increase approximately 3 percent or approximately 5 percent on a constant currency basis as compared to 2016. Negatively impacting revenue in 2017 as compared to 2016 is a reduction in revenue due to the effects of the Mexico deconsolidation and the G-III license. Revenue for the Calvin Klein business is projected to increase approximately 6 percent or approximately 7 percent on a constant currency basis, which includes the negative impact of the Mexico deconsolidation. Revenue for the Tommy Hilfiger business is projected to increase approximately 2 percent or 4 percent on a constant currency basis, which includes the negative impact of the G-III license. Revenue for the Heritage Brands business is projected to be flat compared to the prior year.

The company expects its second quarter 2017 earnings per share results will be negatively impacted compared to the second quarter of 2016 by 0.07 dollar per share related to foreign currency exchange rates due to the stronger US dollar against other currencies in which the Company transacts significant levels of business. Earnings per share on a GAAP basis is projected to be in a range of 1.35 dollars to 1.38 dollars compared to 1.11 dollars in the prior year period. On non-GAAP basis the company projects earnings per share will be in a range of 1.60 dollars to 1.63 dollars compared to 1.47 dollars in the prior year period.

Revenue in the second quarter is projected to increase approximately 5 percent or 7 percent on a constant currency basis compared to the prior year period. Negatively impacting revenue in the second quarter of 2017 as compared to the prior year period is a reduction in revenue due to the effects of the Mexico deconsolidation and the G-III license. Revenue for the Calvin Klein business in the second quarter is projected to increase approximately 6 percent or 8 percent on a constant currency basis, which includes the negative impact of the Mexico deconsolidation. Revenue for the Tommy Hilfiger business is projected to increase approximately 1 percent or 4 percent on a constant currency basis, which includes the negative impact of the G-III license. Revenue for the Heritage Brands business is projected to increase approximately 10 percent, due to a planned shift in the timing of wholesale shipments into the second quarter from the first quarter as compared to the prior year period.

Picture:PVH website