US: PVH Q3 profit up on Calvin Klein and Tommy Hilfiger
- Net income rose 47.37% to $165.4m
- Revenue declined 1% to $1.6bn on disposals
- FY EPS guidance raised to $6.32-6.37
The company saw net income rise 47.4% over the quarter ended 28 October to reach US$165.4m, up from $112.2m in the same period last year.
However, revenue declined 1% to $1.6bn, as it exited the Izod women's, and Timberland wholesale sportswear businesses and was hit by negative currency impacts. Excluding the impact of these effects, revenue increased 4%.
Revenue in the Tommy Hilfiger brand rose 1% to $833.6m, while EBIT increased 42% to $128.8m, up on improving margins combined with costs incurred a year ago on its buyout of the Tommy Hilfiger India licence.
Calvin Klein saw revenue grow 6% over the quarter to $319.6m, driven primarily by a 9% increase in comparable store sales in its outlet retail business and an 11% increase in its North American wholesale business. The division saw EBIT increase 7% to $92.4m.
However, the Heritage Brands business saw revenue decline 7% to $489.5m, hit by a $50m impact relating to the exit from the Izod women's and Timberland wholesale sportswear businesses. Excluding the impact of these moves, revenue grew 3%.
The company has raised its full-year expectations, forecasting non GAAP earnings per share of $6.32-6.37, up on prior guidance of $6.25-6.32.
"We are very pleased with our third quarter and year-to-date performance, which was primarily driven by the Tommy Hilfiger and Calvin Klein businesses continuing to exhibit strong global growth, allowing us to exceed our previous earnings guidance, said chairman and CEO Emanuel Chirico.
"The Heritage Brands business saw some modest improvement in the quarter, which we believe demonstrates that this business is on the path to return to its historic profitability levels.
"Taking into account the third quarter outperformance across our businesses, coupled with the impact of Hurricane Sandy, we have once again raised our full year earnings guidance, despite the uncertain global economic and market conditions."
The company agreed to take over Warnaco at the end of October, in a deal that will bring together all Calvin Klein apparel categories in one place.
"Both the PVH and Warnaco management teams are working diligently to consummate the Warnaco acquisition. We currently expect this transaction to close in early 2013.
"As we highlighted when we announced the acquisition, this is a unique opportunity to reunite the 'House of Calvin Klein' to ensure a single global brand vision. This acquisition also allows us to align our strong operating platforms in North America and Europe with Warnaco's operations in Asia and Latin America, which will give the combined company strong established operations in every major consumer market worldwide.
"This will pave the way for enhanced revenue and earnings growth, while also improving operating margins in the future.
"As we head into the important holiday selling season, we remain firm in our belief that the strength of our brands, the sound execution of our business strategies, continued investment in our world-class brands and our strong credit profile will continue to drive long-term growth and will position us to deliver strong earnings results in the fourth quarter of 2012 and beyond."
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