Calvin Klein and Tommy Hilfiger boost PVH third quarter results
Revenue for the quarter increased 4% and earnings per share on a non-GAAP basis was $2.60, exceeding the guidance of $2.35 to $2.40. Calvin Klein revenue increased 9% to $891 million and international revenue increased 16% to $389 million. Calvin Klein North America revenue increased 5% to $502 million and comparable store sales increased 7%.
Calvin Klein’s Europe and China businesses had the strongest performance for the brand, as well as the Calvin Klein North American wholesale business, which drove the region’s revenue. Calvin Klein North America retail revenue was flat.
Tommy Hilfiger revenue also increased in the quarter to $927 million, and international revenue increased 16% to $525 million. The Tommy Hilfiger European business and the company’s joint venture in China drove revenue growth and offset the 7% decrease in North America revenue. The region was impacted by weak traffic and consumer spending, which resulted in an 11% decrease in comparable store sales.
Revenue for the Heritage Brands decreased 8% to $426 million.
Emanuel Chirico, Chairman and Chief Executive Officer, noted, “We believe that through the power of our designer lifestyle brands, Calvin Klein and Tommy Hilfiger, we can successfully navigate this uncertain environment. We expect our proven business model and talented associates will continue to drive the execution of our strategic initiatives in an ever-changing environment while delivering stockholder value.”
In the first nine months of 2016, revenue increased 3% to $6.10 billion and earnings per share on a non-GAAP basis increased to $5.57 from $5.53 in the prior year comparable period. This year, PVH agreed to form a joint venture with Grupo Axo to operate and manage distribution for the Calvin Klein, Tommy Hilfiger, Warner’s, Olga and Speedo brands in Mexico. The companies closed the agreement on Thursday.
Chirico added that the company increased its 2016 non-GAAP earnings guidance despite, what he calls, a volatile environment. “Although we are increasing our non-GAAP earnings guidance for the year,” he said, “we continue to take a prudent approach to planning the holiday season in light of the macroeconomic and geopolitical volatility around the world, as well as the strengthening dollar in the wake of the U.S. Presidential election.”
PVH expects its full year 2016 EPS to range from $6.51 to $6.56 on a GAAP basis and range from $6.70 to $6.75 on a non-GAAP basis. Fourth quarter EPS is expected to range from $0.99 to $1.04 on a GAAP basis and $1.13 to $1.18 on a non-GAAP basis. Fourth quarter revenue is also expected to decrease 1%.
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