PVH Corp, owner of the Calvin Klein and Tommy Hilfiger brands, says it expects margins to improve in the second half of next year if cotton prices continue to fall.

Speaking to analysts yesterday (31 August) as the company released its second-quarter results, PVH chairman and CEO Manny Chirico said the company expects to see a pull-back in costs of 8-10% next spring compared with autumn holiday prices.

"If those trends would continue, we could actually see a decline in cost as we go into the second half of next year," he said. "But that again is all on the come, so indications are that there should be some margin recovery if we are able to hold the retail prices into the second quarter of next year [and] into third and fourth quarter of next year as well." 

Chirico said the firm is working to mitigate cost increases through early sourcing and using downtime production, particularly in its core dress shirt lines.

Even so, ticket prices have risen "across the board" by "anywhere from 10% to 20%" - although the company said it is still waiting to see how consumers respond to these increases.

"The amount of promotions that will go after that, I think would clearly be determined over the next four to five weeks as we go forward as we really get into department store selling of back-to-school. ButI think it's still an open book at this point, particularly for the main floor," he said.

Before Hurricane Irene hit the US east coast last week, Chirico said the company was recording double-digit growth in its Calvin Klein and Tommy Hilfiger divisions, with same-store sales rising 10-12%.

While Chirico said the company lost around $3m in sales in its own stores over the weekend of the storm, he added that if the first two days of this month are any indication, there is a "good chance we could get a lot of that back in the next 10 days as we sell into the Labour day weekend, which is a huge weekend for us".

The comments came as the company swung to a second quarter profit, reporting better-than-expected results including strong growth in its Tommy Hilfiger and Calvin Klein business.

The firm said on Tuesday (30 August) that net income reached US$66.7m against a $70.6m loss in the same period of the previous year. Net sales were up 21% to $1.3bn.