US: PVH Corp lifts FY outlook as Q3 profit jumps 12.4%
- Q3 profit rose 12.4% to $112.2m
- Revenue climbed 9% to $1.65bn
- Lifts FY forecast for earnings of $5.23 to $5.25 per share
"The Tommy Hilfiger and Calvin Klein businesses represent approximately three quarters of our overall revenues and their strong global performance has more than offset some of the challenges we have been facing with certain of our more moderate heritage businesses," noted chairman and CEO Emanuel Chirico.
The company said net income in the three months to 30 October rose to $112.2m or $1.54 per share, from $99.8m or $1.39 per share in the same period last year. Excluding one-time costs, including the buyout of the Tommy Hilfiger license in India, earnings rose to $1.89 per share.
Revenue climbed 9% to $1.65bn, helped by gains of $118.2m in the Tommy Hilfiger business and an increase of $28.7m at Calvin Klein. This was partially offset by a decline of $9.2m in the Heritage Brands.
Total revenue for Calvin Klein exceeded the company's guidance, rising 11% over last year to $301.2m - including growth of 12% in retail same-store sales and "equally strong" performance at wholesale. Royalty revenue also rose 8%.
Gains were seen across most product categories and regions, PVH said, with underwear, outerwear and women's sportswear singled out along with "outstanding growth" in South America and Asia. This was offset, in part, by weakness in the domestic jeanswear business.
Earnings before interest and taxes for the Calvin Klein business rose 13% to $85.7m in the quarter, up from $75.6m a year ago. Within the Calvin Klein apparel business, gross margin rates were down slightly, as higher product costs were partially mitigated by increases in selling prices.
The Tommy Hilfiger business, meanwhile, booked a 17% rise in revenue, helped by double digit growth in the European wholesale division, and 15% same-store sales growth in North America and 5% in Europe. Earnings before interest and taxes were up 46% to $90.5m.
In the Heritage Brands business, total revenue fell 2% to $526.3m, with a 4% rise in dress furnishings more than offset by a 7% drop in the sportswear division, largely due to underperformance at Izod and the soon-to-be discontinued Timberland division. Same-store sales were flat during the quarter.
Looking ahead the company, formerly known as Phillips-Van Heusen Corp, lifted its full-year forecast for earnings of $5.23 to $5.25 per share - up from the high end of earlier guidance of $5.12 per share share. It also sees full-year revenues rising 26% on 2010 to between $5.825bn and $5.845bn.
"Given the current momentum of our business, including a strong Thanksgiving weekend, and despite the uncertain global economic and market conditions, we believe we are well-positioned for another solid holiday season," Chirico added.
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