PVH exceeds expectations driven by international Calvin Klein, Tommy Hilfiger businesses
PVH closed its fiscal year with a fourth quarter performance that met its sales and earnings guidance. Chairman and CEO Emanuel Chirico was very pleased with the performance despite the “volatile macroeconomic environment and the highly promotional retail market in the U.S.”
Net revenues for the year increased 2% to $8.2 billion, led by a 7% increase in the Calvin Klein business and a 4% increase in the Tommy Hilfiger business. Both segments offset the 10% decrease from Heritage Brands.
Calvin Klein and Tommy Hilfiger benefited from their respective international businesses, especially in Europe, which drove strong growth. International comparable sales increased 6% for Calvin Klein and 9% for Tommy Hilfiger, and both offset comparable sales declines in North America.
Declines in traffic and consumer spending impacted both brands, and Tommy Hilfiger was affected by the discontinuation of the directly-operated womenswear wholesale business in the US and Canada during this quarter, due to the wholesale licensing to G-III Apparel Group Ltd (the "G-III license").
Fourth quarter revenue was flat at $2.1 billion, Calvin Klein revenue fell 1% to $795 million, and Tommy Hilfiger revenue increased 3% to $932 million. Calvin Klein international revenue increased 11% to $385 million, but couldn’t offset the North America revenue decline of 11%.
Tommy Hilfiger posted an international revenue increase of 10%, driven primarily by a 7% increase in comparable store sales and the acquisition of the Tommy Hilfiger joint venture in China, while the North America revenue fell 6%.
Full year earnings per share fell to $6.80 on a non-GAAP basis but exceeded expectations, and fourth quarter earnings decreased to $1.23 on a non-GAAP basis also exceeding expectations. PVH also noted that its earnings on a non-GAAP basis fell due to a $35 million in marketing and Calvin Klein creative team changes.
For 2017, Chirico said the company will take a “prudent approach” due to the uncertain global retail landscape. PVH in March announced the agreement to acquire intimate apparel e-commerce website True&Co, which signifies the company’s commitment to digital.
In addition, the company on Wednesday announced the appointment of Amy McPherson, President and Managing Director of Marriott Europe, to its Board of Directors. The appointment, which is effective on April 25, 2017, increases the board to 12 members.
PVH projects its full year to increase 2%, full year GAAP earnings per share to range from $6.20 to $6.30, and full year non-GAAP earnings per share to range from $7.30 to $7.40.
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