PVH Lifts FY Guidance as Q2 Beats Plan

PVH Corp., the parent of Speedo and Izod, raised its full-year guidance after reporting above-plan second quarter results.

Net earnings slid 19.2 percent in the period to $102.2 million, or $1.22 a share. Earnings per share on a non-GAAP basis was $1.37, inclusive of a 31 cents a share negative impact primarily related to foreign currency exchange rates compared to the prior year. Results exceeded PVH’s own guidance range of $1.25 to $1.30 as well as Wall Street's consensus estimate of $1.29 a share.

Excluding the negative impact primarily related to foreign currency exchange rates, EPS on a non-GAAP basis was $1.68, an increase of 11 percent year over year.

Companywide revenue increased 2 percent on a currency-neutral basis while sliding 5.6 percent on a reported basis, to $1.86 billion.

Overall results continue to be impacted by the strengthening of the U.S. dollar against many foreign currencies. International represents about 45 percent of sales.

Among its major segments, Tommy Hilfiger revenues increased 5 percent on a currency-neutral basis (decreased 7 percent on a reported basis), to $870 million. Hilfiger’s North America revenues increased 3 percent on a currency-neutral basis (increased 1 percent on a GAAP basis) compared to the second quarter of 2014 due to square footage expansion in company-operated retail stores and modest growth in the wholesale business. International revenues advanced 6 percent.

Calvin Klein’s revenues increased 3 percent on a currency-neutral basis (decreased 4 percent on a reported basis), to $675 million. Calvin Klein’s revenues in North America were flat as a shift in shipments and tough comparisons against an underwear relaunch in 2014 led to a moderate decline in wholesale revenues. North American retail comps grew 4 percent.  International revenues were up 7 percent.

The Heritage Brands segment decreased 6 percent to $431 million. The decline was driven in part by the prior year’s second quarter having the benefit of the sales attributable to the launch of Izod at Kohl’s and a shift in the timing of wholesale shipments into the first quarter from the second quarter in the current year. Partially offsetting this decline was an 8 percent increase in retail comparable store sales in the Van Heusen business. The Heritage Brands segment also includes Arrow, Speedo, Warner's, Olga and its licensed brands.

Looking ahead, Emanuel Chirico, PVH’s chairman and CEO, said the due to the better-than-expected quarterly performance, PVH now expects to generate EPS growth on a non-GAAP and currency-neutral basis of 12 percent to 14 percent for 2015, up from its previous guidance of 11 percent to 12 percent. He adds, “We continue to believe, however, that the strength of the U.S. dollar and the changing consumer spending patterns for international tourists in the U.S., along with the volatility in the global environment, will remain a headwind.”