PVH says Q4 EPS of 1.26 dollars exceeded guidance

Fourth quarter revenue at PVH of 2.1 billion dollars was flat compared to the prior year period. Revenue for 2016 increased 2 percent and 4 percent on a constant currency to 8.2 billion dollars compared to the prior year. The company said, 2016 EPS exceeded guidance and on GAAP basis was 1.26 dollars in the fourth quarter and 6.79 dollars for the full year. Non-GAAP was 1.23 dollars in the fourth quarter and 6.80 dollars for the full year.

Commenting on these results, Emanuel Chirico, Chairman and CEO, said in a statement, “We are very pleased with our fourth quarter results, which exceeded both our sales and earnings guidance despite the volatile macroeconomic environment and the highly promotional retail market in the US. We continued to demonstrate strong momentum in our Calvin Klein and Tommy Hilfiger businesses.”

Fourth quarter business segment review

Revenue in the Calvin Klein business for the quarter decreased 1 percent to 795 million and was flat on a constant currency basis compared to the prior year period. PVH said this includes a reduction of approximately 25 million dollars resulting from the November 2016 deconsolidation of the company’s subsidiary that principally operated and managed its Calvin Klein business in Mexico in connection with the formation of a joint venture in Mexico.

Calvin Klein International revenue increased 11 percent to 385 million dollars and increased 14 percent on a constant currency basis compared to the prior year period, including a 6 percent increase in comparable store sales, due to continued strong performance in Europe and China. Calvin Klein North America revenue decreased 11 percent, also on a constant currency basis to 409 million dollars. North America comparable store sales decreased 2 percent.

Revenue in the Tommy Hilfiger increased 3 percent to 932 million dollars and 5 percent on a constant currency compared to the prior year period. Tommy Hilfiger international revenue increased 10 percent or 14 percent on constant currency to 513 million dollars driven by positive performance in Europe, including a 7 percent increase in comparable store sales, and the April 2016 acquisition of the 55 percent interest in the company’s former joint venture for Tommy Hilfiger in China.

Tommy Hilfiger North America revenue decreased 4 percent, also on a constant currency basis to 419 million dollars due to a 7 percent comparable store sales decline and the discontinuation of the company’s directly operated womenswear wholesale business in the US and Canada during the quarter in connection with the licensing of this business to G-III Apparel Group.

Revenue in the Heritage Brands business for the quarter decreased 5 percent to 381 million dollars compared to the prior year period, principally resulting from the discontinuation of several licensed product lines in the dress furnishings business. Comparable store sales were flat compared to the prior year.

Earnings per share for the quarter was 1.26 dollars on a GAAP basis compared to 1.63 dollars in the prior year period. Earnings per share were 1.23 dollars on a non-GAAP basis compared to$1.52 in the prior year period. Earnings before interest and taxes on a GAAP basis for the quarter decreased to 154 million dollars compared to 176 million dollars in the prior year period. Earnings before interest and taxes on a non-GAAP basis for the quarter was 147 million dollars compared to 183 million dollars in the prior year period.

Full year revenues rose 2 percent

Revenue for 2016 increased 2 percent and 4 percent on a constant currency to 8.2 billion dollars compared to the prior year. The company said, revenue change was due to a 7 percent or 9 percent increase on constant currency in the Calvin Klein business compared to the prior year, driven by the continued significant growth in Europe, China and the North America wholesale business, partially offset by a decrease due to the Mexico deconsolidation.

International comparable store sales increased 6 percent, while North America comparable store sales decreased 4 percent, primarily driven by declines in traffic and consumer spending in Calvin Klein’s US stores located in international tourist locations. The company reported a 4 percent or 5 percent increase on constant currency in the Tommy Hilfiger business compared to the prior year, driven principally by strong growth across Europe, including a 9 percent increase in comparable store sales, and the inclusion of the revenue of the China business after completion of the TH China acquisition in April 2016.

Tommy Hilfiger North America comparable store sales declined 9 percent, driven by weak traffic and consumer spending in Tommy Hilfiger’s US stores located in international tourist locations. Also negatively impacting Tommy Hilfiger North America revenue was the discontinuation of the company’s directly operated women’s wear wholesale business in the US and Canada in connection with the G-III license.

A 10 percent decrease in the Heritage Brands business compared to the prior year, principally driven by the rationalization initiatives in the business, partially offset by a 7 percent increase in comparable store sales.

Earnings before interest and taxes on a GAAP basis for 2016 increased to 789 million dollars compared to the prior year of 761 million dollars due in large part to a net gain of 76 million dollars. Earnings before interest and taxes on a non-GAAP basis was 794 million dollars, inclusive of a 145 million dollars negative impact due to foreign currency exchange rates, compared to 842 million dollars in the prior year.

Forecasts 5 percent revenue growth for Calvin Klein in FY17

In FY17, the company expects GAAP EPS to range between 6.20 dollars to 6.30 dollars and from 0.73 dollar to 0.75 dollar in the first quarter. On non-GAAP basis, EPS is expected to range between 7.30 dollars to 7.40 dollars for the full year and 1.58 to 1.60 dollars in the first quarter.

PVH said negatively impacting the revenue in 2017 as compared to 2016 is a decrease due to the Mexico deconsolidation, which resulted in the company no longer recognizing revenues from a directly operated business in Mexico, and a decrease due to the G-III license, which resulted in the discontinuation of the company’s directly operated women’s wear wholesale business in the US and Canada in the fourth quarter of 2016.

Full year revenue for the Calvin Klein business is projected to increase approximately 5 percent or approximately 7 percent on a constant currency basis, which includes the negative impact of the Mexico deconsolidation. Revenue for the Tommy Hilfiger business is projected to increase approximately 1 percent or approximately 4 percent on a constant currency basis, which includes the negative impact of the G-III license. Revenue for the Heritage Brands business is projected to decrease approximately 1 percent.

Revenue in the first quarter of 2017 is projected to increase approximately 2 percent or approximately 4 percent on a constant currency basis compared to the prior year period. Negatively impacting revenue, the company said, is a reduction in revenue resulting from the Mexico deconsolidation and the G-III license, partially offset by an increase in revenue from the Tommy Hilfiger China business, which was acquired in April 2016, as the first quarter of 2017 will include a full quarter of revenue, while the first quarter of 2016 included less than one month of revenue.

Revenue for the Calvin Klein business in the first quarter is projected to increase approximately 3 percent or approximately 5 percent on a constant currency basis, which includes the negative impact of the Mexico deconsolidation. Revenue for the Tommy Hilfiger business is projected to increase approximately 4 percent or approximately 8 percent on a constant currency, which includes an increase in revenue from the Tommy Hilfiger China business, partially offset by the negative impact of the G-III license. Revenue for the Heritage Brands business is projected to decrease approximately 3 percent.

Summing up

Revenues up 8.2 bn dollars
Q4 sales 2.1 bn dollars

Picture:Calvin Klein website

 

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