Tommy Hilfiger leads PVH revenue beat as sales dip at Calvin Klein
today Mar 28, 2019
New York-based apparel group PVH Corp. announced its financial results for the fourth quarter and full year 2018 on Wednesday, revealing quarterly sales and earnings that topped Wall Street estimates thanks to progress at its Tommy Hilfiger brand.
The company’s overall fourth-quarter revenue decreased 1% to $2.5 billion (or increased 2% on a constant currency basis), compared to the prior-year period. According to FactSet figures cited by MarketWatch, analysts had expected the company to report revenue of $2.4 billion.
Revenue at the Tommy Hilfiger brand was up 2% to $1.2 billion, with the label’s international revenue rising 3% to $721 million and sales in North America increasing 2% to $447 million. The brand’s comparable store sales increased 16% internationally and 5% in North America.
Calvin Klein fared less well, reporting a decrease of 2% in quarterly revenue, which totaled $953 million. The brand’s international revenue actually increased 2% to $523 million, with comparable store sales in the segment rising 6%. However, this progress was more than offset by a 7% decrease in the brand’s revenue in North America, where sales fell 7% to $430 million.
Revenue in PVH’s Heritage Brands business was also in decline, falling 5% to $363 million.
The company’s total net income for the fourth quarter came to $158.7 million, or $2.09 per share, up from $108.5 million, or $1.39 per share, in the prior-year period. Adjusted for one-time items, PVH’s earnings per share were $1.84, beating analysts’ predictions of $1.76.
The company’s full-year revenue for fiscal 2018 totaled $9.7 billion, up 8% from $8.9 billion in 2017.
Here too, Tommy Hilfiger led progress with a 12% increase in revenue, reflecting growth of 13% in international comparable store sales and 5% in North American comps.
Calvin Klein posted an 8% increase, with particularly strong growth seen in Europe and Asia, as well as in North American wholesale. Overall, the brand’s international comps increased 5%, while North America saw a smaller comps rise of 1%.
PVH’s total annual net income was $746.4 million, or $9.65 per share, compared to $537.8 million, or $6.84 per share, in the previous year.
“During 2018, we focused on adapting to the changing consumer landscape and geopolitical realities, while taking swift action to address the challenges in our Calvin Klein business,” explained PVH CEO Emanuel Chirico in a release. “Additionally, we focused on investing in our talent, supply chain, consumer data and insights, and digital capabilities, which we believe positions our businesses for long-term stockholder value creation.”
Looking forward to 2019, the company currently expects annual earnings per share to be in the range of $8.90 to $9.00. Revenue for the year is predicted to rise approximately 4%, reflecting increases of 6% at Tommy Hilfiger, 2% at Calvin Klein and 3% in PVH’s Heritage Brands business.
Over the course of the year, PVH also expects to complete its acquisitions of Gazal Corporation Limited – a transaction which will give the company full control of its PVH Australia joint venture – and the Tommy Hilfiger retail business in Central and Southeast Asia. These transactions are expected to contribute around $150 million in revenue to the company in 2019.
PVH Corp also confirmed in a post-release earnings call that it was in talks with its North America apparel partner G-III Apparel Group LTD to licence out the brand's women's jeans unit.
G-III also operates Tommy Hilfiger women's business, which helped boost PVH's strong financial results in the fourth quarter, lifting its shares nearly 18 percent in morning trading.
The New York-based company said the decision to licence out its women's jeans unit and exit its high-end collections label would lower its fiscal 2019 revenue by $100 million.
However, the restructuring of Calvin Klein and the lack of a need for big promotions in its jeans business were likely to improve profit margins in the second half of 2019, the company said.
Earnings per share for the first quarter are projected to be between $0.25 and $0.30, while quarterly revenue is expected to increase around 2%. Broken down by brand, revenue is expected to rise 4% at Tommy Hilfiger and 1% both at Calvin Klein and in the group’s Heritage Brands business.
Following the announcement of the company’s results, shares in PVH Corp. rose more than 7% in the extended session on Wednesday.
FashionNetwork.com, with reporting from Reuters
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