PVH Profit Tops Estimate, Sales Misses; Slashes FY Outlook

(RTTNews) - Apparel company PVH Corp (PVH), Wednesday reported a an increase in third-quarter profit, despite a marginal drop in sales, on lower expenses and growth in brands such as Tommy Hilfiger and Calvin Klein.

The company detailed some weak guidance for the fourth quarter and slashed its outlook for the full year, citing unfavorable foreign exchange rates with the U.S. dollar strengthening against major currencies in the last few months.

"Despite the anticipated difficult macroeconomic environment, we are very pleased with our third quarter performance, driven by the strength of our Tommy Hilfiger business and an improvement in our Calvin Klein business," said Emanuel Chirico, the company's chief executive officer.

Chirico also said that PVH's global strategic initiatives in Calvin Klein jeans business has begun to take hold, with strength in new stores.

Under Chirico, PVH has been trying to battle out the tough economic conditions, intense promotional activity in North America and volatility in some key international markets.

PVH, based in New York, reported first-quarter net earnings of $225.7 million or $2.71 per share, compared with $196.7 million or $2.37 per share last year.

Excluding items, adjusted earnings for the quarter were $2.56 per share, compared with $2.30 per share a year ago.

On average, 19 analysts polled by Thomson Reuters estimated earnings of $2.48 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the third quarter edged down to $2.23 billion from $2.26 billion in the prior year. Fourteen analysts had a consensus revenue estimate of $2.26 billion for the quarter.

Revenues were negatively impacted by about $30 million, or 1 percent, due to foreign currency translation, the company said in a statement.

Revenue from the company's Tommy Hilfiger business rose 1 percent for the quarter, and Calvin Klein business climbed 2 percent. Revenue at Heritage Brands business fell 10 percent, reflecting the sale of Bass division in the fourth quarter of 2013.

Selling and general expenses for the quarter decreased to $893 million from $927 million a year ago, and interest expense down by about $14 million, largely boosting the profit.

For the fourth quarter, PVH projects adjusted earnings of $1.71 to $1.76 per share on revenues of about $2.1 billion. Analysts currently expect earnings of $1.91 per share on revenues of $2.18 billion for the quarter.

For the full year, the company now expect adjusted earnings of $7.25 to $7.30 per share on revenues of about $8.3 billion. Earlier PVH expected earnings of $7.30 to $7.40 per share on revenues of about $8.4 billion.

Analysts currently expect earnings of $7.37 per share on revenues of $8.38 billion for the year.

PVH closed Wednesday at $124.40, up $2.58 or 2.12%, on a volume of 1.3 million shares on the NYSE. In after hours, the stock dropped $1.75 or 1.41%, at $122.65.