PVH shares climb as Q1 earnings beat estimates
- Q1 earnings soar to US$114.1m
- Sales grow 4% to $1.88bn
- Ups FY EPS guidance
PVH Corp saw its shares climb in after-hours trading as the US apparel giant published first-quarter earnings that beat analyst expectations, and lifted its full-year guidance.
Earnings in the three months ended 3 May amounted to US$114.1m, or $1.50 per share, from $35.2m a year earlier, beating Thomson Reuters consensus estimates of $1.38 per share.
The increase was driven primarily by a constant currency revenue increase of 4% to $1.88bn, gross margin improvements, particularly in Asia and Europe, and the strength of the Calvin Klein business.
The group's Calvin Klein business recorded a sales increase of 5%, while Tommy Hilfiger saw sales edge up 1%. The Heritage Brands business recorded sales growth of 5%.
"We are very pleased with our first quarter results, which exceeded our first quarter guidance, driven by the strength of our Calvin Klein business," said CEO Emanuel Chirico. "Strong underlying fundamentals in our international Calvin Klein and Tommy Hilfiger businesses was partially offset by softness in our US Calvin Klein and Tommy Hilfiger businesses, where a strong US dollar negatively impacted international tourist spending."
Chirico added that PVH was increasing its earnings guidance for the year, but would continue to take "a prudent approach" to planning the business, due to "unpredictable and volatile" foreign currency and global consumer spending.
The company is now expecting full-year EPS of $6.85 to $6.95 on a non-GAAP basis from $6.75 to $6.90.
"We believe that our proven business model is well-positioned to navigate through this environment and we are implementing local initiatives to drive traffic and sales, while carefully managing our inventories and looking for continued efficiencies across our business."
UBS Investment Bank analyst Michael Binetti believes PVH has the most self-help levers to accelerate growth. These, he says, are diminishing CK headwinds, CK traction, repairing Heritage margins, and license rollups.
"Our thesis is strengthened with 1Q earnings - CK is accelerating, Heritage issues are improving fast, PVH is actively commenting on licenses, and new buyback authorisation adds another layer of EPS defence."
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