PVH revenues jump 36 percent in 2013
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In the fourth quarter, earnings per share on a non-GAAP basis were 1.43 dollars, which exceeded the company’s guidance of 1.40 dollars, as compared to 1.60 dollars in the prior year’s fourth quarter. GAAP loss per share was 0.46 dollars as compared to the prior year’s fourth quarter earnings per share of 1.09 dollars. Revenue increased 25 percent to 2.052 billion dollars, as compared to 1.636 billion dollars in the prior year’s fourth quarter.
Commenting
Revenues in the Calvin Klein business increased 371 million dollars to 688 million dollars from 317 million dollars in the prior year’s fourth quarter. With respect to the newly acquired businesses, the North America underwear business performed well and exceeded plan, while the North America jeans business continued its weak performance, Calvin Klein International comparable store sales increased 1 percent. The Calvin Klein businesses in Brazil and Asia continued to exceed expectations. Within Asia, the China business maintained solid growth and the Korea business again showed improving trends as compared to previous quarters. The Calvin Klein business in Europe remained under pressure primarily due to the company’s initiative to restructure the sales distribution mix in this region and the business’ concentration in Southern Europe, in particular Italy.
Revenue in the Tommy Hilfiger business increased 1 percent to 902 million dollars as compared to 891 million dollars in the prior year’s fourth quarter. Flat revenue in the Tommy Hilfiger North America business relative to last year reflected relatively flat retail comparable store sales combined with one less week of revenue in the fourth quarter of 2013. Revenue in the Tommy Hilfiger International business increased 2 percent as compared to the prior year’s fourth quarter, driven by a 10 percent increase in each of the European wholesale and European retail businesses, including 7 percent retail comparable store sales growth. Also contributing to the European revenue growth was the positive impact of foreign currency translation resulting from a stronger Euro in the fourth quarter of 2013 as compared with the prior year period. These increases were partially offset by the continued underperformance in Japan, combined with the negative impact of foreign currency translation resulting from a weaker Yen as compared with the prior year period.
Total revenue for the Heritage Brands business increased 34 million dollars, or 8 percent, to 462 million dollars, as compared to 428 million dollars in the prior year’s fourth quarter. The newly acquired Speedo, Warner’s and Olga businesses contributed 115 million dollars of this increase, which was partially offset by the loss of 75 million dollars of revenue related to the sale of the Bass business on the first day of the fourth quarter of 2013. Excluding the Bass impact, revenue for the pre-acquisition Heritage Brands businesses decreased 2 percent, as a 3 percent increase in the pre-acquisition Heritage Brands wholesale business was more than offset by a 7 percent decline in comparable store sales and a revenue reduction due to square footage contraction resulting from closing underperforming stores in the Heritage Brands retail business.
In 2014, the New York-based company expects its results to be impacted by approximately 25 million dollars of incremental planned investments across the company’s acquired businesses focused on people, infrastructure, point of sale marketing, customer distribution restructuring and e-commerce in the first half of 2014; approximately 0.15 dollars per share negative impact from foreign currency due, in large part, to changes in the Canadian dollar and Brazilian Real; and approximately 0.10 dollars per share negative impact from the exited Bass retail business.
Earnings per share is currently projected to be in a range of 7.40 dollars to 7.50 dollars on a non-GAAP basis, as compared to 7.03 dollars in 2013, or an increase of 5 percent to 7 percent. Revenue in 2014 is currently projected to increase 3 percent to approximately 8.5 billion dollars, inclusive of a negative impact of 176 million dollars, or 2 percent, attributable to the exit from the Bass business. It is currently projected that revenue for the Calvin Klein business in 2014 will increase approximately 5 percent. Revenue for the Tommy Hilfiger business in 2014 is currently expected to increase approximately 7 percent. Revenue for the ongoing Heritage Brands business in 2014 is currently projected to increase approximately 4 percent. Including the negative impact related to the sale of the Bass business, revenue for the Heritage Brands business is currently projected to decrease approximately 5 percent.
In light of the difficult macroeconomic environment, the company is being cautious in its first quarter outlook. On a non-GAAP basis, earnings per share for the first quarter is projected to be in a range of 1.45 dollars to 1.50 dollars, as compared to1.91 dollars in the prior year’s first quarter. Revenue in the first quarter of 2014 is currently expected to be approximately 2 billion dollars, which represents an increase as compared to 2013 of approximately 2 percent on a non-GAAP basis and approximately 3 percent on a GAAP basis.