PVH Profit Rises on Strength at Tommy Hilfiger

PVH Corp., the parent of Speedo and Izod, reported second-quarter earnings rose 8.7 percent to $125.5 million, or $1.51 a share, topping its guidance between $1.40 to $1.45.

Revenue gained 4.0 percent to $1.98 billion, excluding $62 million of revenue related to the Bass footwear business that was sold in the fourth quarter of 2013. Net revenues inched up 0.3 percent to $1.98 billion.

We had anticipated a highly promotional retail environment particularly in North America, said Manny Chirico, chairman and CEO, on a conference call with analysts. Given that macro retail environment we are pleased with our second-quarter results, which exceeded our earnings guidance.

The quarterly gains were led by Tommy Hilfiger, which grew 8.9 percent to $870 million. Operating earnings for the Hilfiger segment increased 18 percent to $118 million on a non-GAAP basis.

Revenue in the Calvin Klein business inched up 0.5 percent to $675 million. Operating earnings on a non-GAAP basis declined 9.5 percent to $86 million due to strategic investments following last years acquisition of the Calvin Klein underwear and jeans businesses.

Revenue for the Heritage Brands segment (Van Heusen, Izod, Arrow, Speedo, Warner’s, Olga and its licensed dress shirt business) was relatively flat at $431 million excluding the year-ago Bass business. Including Bass, revenues dropped 13 percent. Operating profits on a non-GAAP basis were down 34.1 percent to $29 million, largely traced to increased promotional activity resulting from the continued competitive environment across the moderate tier channel.

As we begin the third quarter our Heritage wholesale businesses are well-positioned to deliver strong growth driven by our Van Heusen and Izod businesses, which are planned for growth with our key retail partners, said Chirico. In particular our Izod brand is launching at Kohl’s. This launch is being supported by a major marketing campaign, which will begin in early September and very strong retail presentations at all major Kohl’s doors. We are very excited about this new business and believe it will help drive our second-half Heritage business turnaround.

Looking ahead, EPS on a non-GAAP basis for the third quarter is currently projected to be in a range of $2.45 to $2.50 as compared to $2.30 in the prior years third quarter. Revenues are expected to rise 3 percent excluding Bass.

For the full year, PVH reaffirmed its EPS guidance of $7.30 to $7.40 on a non-GAAP basis, an increase of 4 percent to 5 percent. Second half EPS on a non-GAAP basis is expected to increase in excess of 15 percent over the prior year period. Revenue for the year is projected to gain 4 percent, excluding Bass.