PVH Corp., parent of Tommy Hilfiger, Calvin Klein and Heritage Brands, reported earnings for the first quarter ended May 6 of $179.4 million, or $2.29 per share, up from $70.4 million, or $0.89 per share, in the year-ago quarter.

Excluding items, PVH Corp. reported adjusted earnings of $184.8 million, or $2.36 per share for the period, beating analysts’ estimates of $2.25 per share.

The company reported Q1 revenue of $2.3 billion, up 16 percent (up 10 percent on a constant currency basis) compared to the prior-year period and beating analysts’ estimates by $30 million.

After the strong performance, PVH raised its guidance for the quarter and the year.

“We are very pleased with our first quarter 2018 results, which exceeded our expectations,” said Emanuel Chirico, chairman and CEO. “We experienced broad-based strength across our businesses globally and our performance underscored the power of our diversified business model and the continued momentum in our global designer lifestyle brands, Calvin Klein and Tommy Hilfiger.

“We are applying our consumer-centric mindset by growing our presence where our consumers prefer to shop, creating exciting brand experiences across our distribution channels and capitalizing on creative new ways to connect with the next generation of consumers. We are also driving our long-term vision by making investments to ensure that we adapt to the evolving consumer landscape, without compromising on our commitment to sustainable development throughout the business.

“We are pleased to increase our earnings guidance for the year, despite the continuing volatility in the macroeconomic and geopolitical environments, which is resulting in a significantly lower foreign currency benefit than previously planned for the year. As I think about the strength of our teams, our brands and our platforms, I believe that PVH is in a powerful position to deliver a sustainable trajectory of long-term growth and stockholder value creation. Our strategic priorities will continue to serve as our guidelines for growth and I believe that we will execute on the significant opportunities that PVH has ahead of it.”

First Quarter Business Review

Due to the 53rd week in 2017, first quarter 2018 comparable store sales are more appropriately compared with the thirteen week period ended May 7, 2017, instead of the period ended April 30, 2017. All comparable store sales discussed in this release are presented on this one week shifted basis.

Calvin Klein

Revenue in the Calvin Klein business for the quarter increased 18 percent to$890 million (increased 12 percent on a constant currency basis) compared to the prior year period. Calvin Klein International revenue increased 25 percent to $475 million (increased 14 percent on a constant currency basis) compared to the prior year period, driven by continued outstanding performance inEurope and Asia, including a 9 percent increase in comparable store sales. Calvin Klein North America revenue increased 10 percent (also on a constant currency basis) to $415 million compared to the prior year period as a result of strong wholesale performance across all categories and a 5 percent increase in comparable store sales.

Earnings before interest and taxes for the quarter increased to $109 million, inclusive of a $5 million positive impact due to foreign currency translation, from $93 million in the prior year period, principally attributable to the revenue increase noted above.

Tommy Hilfiger

Revenue in the Tommy Hilfiger business for the quarter increased 21 percent to $1 billion (increased 11 percent on a constant currency basis) compared to the prior year period. Tommy Hilfiger International revenue increased 25 percent to $655 million (increased 10 percent on a constant currency basis) compared to the prior year period, driven by continued strong performance across all regions and channels, including a 9 percent increase in comparable store sales. Tommy Hilfiger North America revenue increased 13 percent (also on a constant currency basis) to $361 million compared to the prior year period, principally attributable to a 9 percent increase in comparable store sales and strong performance in the wholesale business.

Earnings before interest and taxes on a GAAP basis for the quarter increased to $132 million from $33 million in the prior year period. Included in earnings before interest and taxes for the quarter were costs of $7 million incurred related to the April 2016 acquisition of the 55 percent interest in the company’s former Tommy Hilfiger joint venture in China (“TH China”) that it did not already own (the “TH China acquisition”), consisting of noncash amortization of short-lived assets.

Included in earnings before interest and taxes for the prior year period were costs of (i) $54 million incurred in connection with the agreements to restructure the company’s supply chain relationship with Li & Fung Trading Limited (“Li & Fung”), under which the company terminated its non-exclusive buying agency agreement with Li & Fung during 2017 (the “Li & Fung termination”); (ii) $7 million incurred related to the TH China acquisition, primarily consisting of noncash amortization of short-lived assets and (iii) $7 million incurred in connection with the relocation of the Tommy Hilfiger office in New York, including noncash depreciation expense. Earnings before interest and taxes on a non-GAAP basis discussed below excludes these amounts.

Earnings before interest and taxes on a non-GAAP basis for the quarter increased to $139 million, inclusive of a $12 million positive impact due to foreign currency translation, from $101 million in the prior year period. The earnings increase was principally due to the strong revenue increase noted above, as well as gross margin improvements across all regions and channels.

Heritage Brands

Revenue in the Heritage Brands business for the quarter increased 5 percent to $409 million compared to the prior year period, principally due to a shift in the timing of shipments into the first quarter from the second quarter as compared to the prior year periods. Comparable store sales increased 1 percent.

Earnings before interest and taxes for the quarter increased to $42 million, from $32 million in the prior year period, primarily driven by the increase in revenue noted above, as well as gross margin improvements.

First Quarter Consolidated Results

First quarter revenue increased 16 percent to $2.3 billion (increased 10 percent on a constant currency basis) compared to the prior year period.

Earnings per share on a GAAP basis was $2.29 for the first quarter of 2018 compared to $0.89 in the prior year period. These results include the amounts with respect to the applicable period. Earnings per share on a non-GAAP basis for these periods, as discussed below, exclude these amounts.

Earnings per share on a non-GAAP basis were $2.36 for the first quarter of 2018 compared to $1.65 in the prior year period. Earnings per share on both a GAAP and non-GAAP basis for the first quarter of 2018 included the $0.20 positive impact related to foreign currency translation.

Earnings before interest and taxes on a GAAP basis for the quarter increased to $244 million from $113 million in the prior year period. Included in earnings before interest and taxes for the quarter were costs of $7 million incurred related to the TH China acquisition. Included in earnings before interest and taxes for the prior year period were $79 million of costs consisting of (i) $54 million incurred in connection with the Li & Fung termination; (ii) $9 million incurred in connection with the noncash settlement of certain of the company’s retirement plan benefit obligations; (iii) $7 million incurred in connection with the relocation of the Tommy Hilfiger office in New York, including noncash depreciation expense; (iv) $7 million incurred related to the TH China acquisition and (v) $2 million incurred in connection with the consolidation within the company’s warehouse and distribution network in North America. Earnings before interest and taxes on a non-GAAP basis discussed below excludes these amounts.

Earnings before interest and taxes on a non-GAAP basis for the quarter was $251 million compared to $193 million in the prior year period. The improvement in earnings was driven by growth across all businesses.

Net interest expense of $28 million was relatively flat as compared to the prior year period. The effective tax rate on a GAAP basis was 17.1 percent as compared to 17 percent in the prior year period. The effective tax rate on a non-GAAP basis was 17.3 percent as compared to 20.7 percent in the prior year period.

Inventory levels increased 22 percent as compared to the prior year period due to a shift in the timing of inventory receipts as a result of the 53rd week in 2017 and an expected increase in second quarter of 2018 sales as compared to the prior year period.

Stock Repurchase Program

During the first quarter of 2018, the company repurchased 400,000 shares of its common stock for $54 million (7.1 million shares for $745 million since inception) under the $1.250 billion stock repurchase program authorized by the Board of Directors through June 3, 2020. Stock repurchases under the program may be made from time to time over the period through open market purchases, accelerated share repurchase programs, privately negotiated transactions or other methods, as the company deems appropriate. Purchases are made based on a variety of factors, such as price, corporate requirements and overall market conditions, applicable legal requirements and limitations, restrictions under the company’s debt arrangements, trading restrictions under the company’s insider trading policy and other relevant factors. The program may be modified by the Board, including to increase or decrease the repurchase limitation or extend, suspend or terminate the program, at any time, without prior notice.

2018 Outlook

The company’s effective tax rate projections for 2018 include estimates of the impacts of the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Legislation”) enacted on December 22, 2017, including (i) the reduction of the corporate income tax rate from 35 percent to 21 percent, (ii) the implementation of a modified territorial tax system, (iii) the introduction of a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations (known as “GILTI”) and (iv) the introduction of a base erosion anti-abuse tax measure (known as “BEAT”) that taxes certain payments between U.S. corporations and their subsidiaries. These projections are subject to adjustment in 2018, including as a result of changes in the provisional net tax benefit of $53 million recorded in the fourth quarter of 2017, during the measurement period allowed by the Securities and Exchange Commission, as regulatory guidance needs to be issued in regard to the Tax Legislation and as the company completes its final analysis of the impacts of the Tax Legislation.

Full Year Guidance

The company currently projects that 2018 earnings per share on a GAAP basis will be in a range of $8.81 to $8.91 compared to $6.84 in 2017. The company currently projects that 2018 earnings per share on a non-GAAP basis will be in a range of $9.05 to $9.15 compared to $7.94 in 2017. Both the GAAP and non-GAAP projections include the expected positive impact of approximately $0.12 per share related to foreign currency translation.

Revenue in 2018 is projected to increase approximately 6 percent (increase approximately 5 percent on a constant currency basis) as compared to 2017. Revenue for the Calvin Klein business is projected to increase approximately 8 percent (increase approximately 7 percent on a constant currency basis). Revenue for the Tommy Hilfiger business is projected to increase approximately 7 percent (increase approximately 6 percent on a constant currency basis). Revenue for the Heritage Brands business is projected to be relatively flat.

Net interest expense in 2018 is projected to decrease to approximately$120 million from $122 million in 2017. The company estimates that the 2018 effective tax rate will be in a range of 14 percent to 15 percent, which includes the estimated impact of the Tax Legislation.

The company’s estimate of 2018 earnings per share on a non-GAAP basis excludes approximately $25 million of pre-tax costs to be incurred related to the TH China acquisition, consisting of noncash amortization of short-lived assets and the resulting estimated tax effect.

Second Quarter Guidance

Second quarter 2018 earnings per share on a GAAP basis are projected to be in a range of $1.98 to $2.03 compared to $1.52 in the prior year period. The company projects that second quarter 2018 earnings per share on a non-GAAP basis will be in a range of $2.05 to $2.10 compared to $1.69 in the prior year period. Both the GAAP and non-GAAP projections include the expected positive impact of approximately $0.03 per share related to foreign currency translation.

Revenue in the second quarter of 2018 is projected to increase approximately 10 percent (increase approximately 9 percent on a constant currency basis) compared to the prior year period. Revenue for the Calvin Klein business in the second quarter is projected to increase approximately 15 percent (increase approximately 14 percent on a constant currency basis). Revenue for the Tommy Hilfiger business in the second quarter is projected to increase approximately 13 percent (increase approximately 12 percent on a constant currency basis). Revenue for the Heritage Brands business in the second quarter is projected to decrease approximately 4 percent compared to the prior year period.

Net interest expense in the second quarter of 2018 is projected to be relatively flat compared to $30 million in the prior year period. The company estimates that the second quarter 2018 effective tax rate will be in a range of 19 percent to 20 percent, which includes the estimated impact of the Tax Legislation.

The company’s estimate of second quarter 2018 earnings per share on a non-GAAP basis excludes approximately $7 million of pre-tax costs to be incurred related to the TH China acquisition, consisting of noncash amortization of short-lived assets, and the resulting estimated tax effect.