PVH profit in 2013 dented by Warnaco acquisition

The owner of Calvin Klein view its earnings per share (EPS) rose 34 percent to 1.60 dollars, beating Wall Street forecast by 10 cents. Sales rose 7 percent to 1.64 billion dollars, above estimates for 1.60 billion. However, PVH advanced that its

profit for the present year will be dented by its deal to acquire Warnaco.

PVH made the announcement as it reported that its fourth-quarter net income more than doubled and the quarter handily beat market expectations, reported the CNBC.

The company earned 80.7 million dollars, or 1.09 dollar per share, for the quarter that ended Feb. 3. A year ago, during the comparable period, PVH earnings were 35.5 million dollars, or 48 cents per share. On an adjusted basis, PVH earned 1.60 dollars per share, ahead of last year's 1.19 dollars per share. Its revenue increased to 1.64 billion dollars from 1.53 billion.

Analysts polled by FactSet were expecting the company to earn 1.50 dollars per share on revenue of 1.6 billion dollars.

Brand-wise, revenue in the Tommy Hilfiger brand increased 9 percent to 891.1 million dollars, while revenue at the Calvin Klein unit rose 14 percent to 317.4 million dollars.

CEO and Chairman Emanuel Chirico said the strength of the company's brands helped it navigate tough global economic conditions during the year, as well as the pressure from higher costs and volatility swings in foreign currency.

However, PVH said that its earnings before interest and taxes on an adjusted basis from the acquired Warnaco businesses will be 20 percent lower than its original plan, due to the added investments.

The company said it expects now adjusted earnings of dollars per share on revenue of 8.2 billion dollars for its 2013 fiscal year. Analysts had forecast earnings of 7.44 dollars per share for the year on revenue of 7.9 billion dollars.

It also said that the saving it expected from combining the companies will come in at 25 million dollars for the year, that´s it half its initial expectation of approximately 50 million dollars. PVH (PVH) EPS guidance for Q1 and 2013 EPS was below consensus.

Warnaco acquisition requires more investment

The company said late Wednesday that the investments needed in Warnaco are higher than it initially anticipated so it can rebuild its Calvin Klein denim and underwear business. Thus, PVH Corp. says its Warnaco acquisition will require more investments than it initially anticipated and weigh on its earnings for the year.

The clothing company also declared that 2013 will be a transitional year as it invests in its brands, and its shares sank in after-hours trading Wednesday.

PVH, previously known as Phillips-Van Heusen Corp., bought rival The Warnaco Group in a deal worth 2.9 billion dollars that closed Feb. 13 and cemented its control of the Calvin Klein clothing brand.

Company CEO and Chairman Emanuel Chirico said that he sees 2013 as a year of investment and transition for the Warnaco business and PVH. "We will build the foundation for long-term sustainable growth for our businesses across the world," Chirico said in a statement. "I believe we will emerge stronger and the investments we will make this year will help drive the Calvin Klein business going forward."

PVH plans to invest in its supply chain, product design, marketing and staff to help improve its business, along with lowering excess inventory levels and reducing sales of its brand in off-price sites. Given these additional investments, the company expects the Warnaco deal will prove reduce its 2013 earnings by 25 cents per share.