PVH Results Top Estimates; Outlook Cautious

(RTTNews) - Apparel maker PVH Corp. (PVH) said Monday after the markets closed that it swung to a second quarter loss, hurt by costs associated with the acquisition of its former licensee Warnaco Group, Inc. and the related integration and restructuring.

However, the company's quarterly earnings per share, excluding items, came in above Wall Street expectations as did its quarterly revenue.

At the same time, the company forecast third quarter earnings below analysts' current consensus estimate, but reaffirmed its fiscal year 2013 earnings outlook.

Commenting on the results, Emanuel Chirico, PVH Chairman and Chief Executive Officer, said, "Our results for the quarter were driven by the outperformance of most of our newly acquired businesses coupled with organic growth in our Tommy Hilfiger and pre-acquisition Calvin Klein and wholesale Heritage Brands businesses, which more than offset the continued underperformance in our Tommy Hilfiger Japan, Bass retail and Calvin Klein Europe businesses."

PVH shares are currently losing 3.79% in after hours trading after closing the day's regular trading session at $132.11, up $2.14 or 1.65%. The shares trade in a 52-week range of $90.15 to $134.98.

PVH completed the acquisition of Warnaco Group on February 13. In March, the company revealed that it has commenced certain actions related to its plans to achieve savings and synergies arising out of its acquisition of Warnaco. PVH noted that it expected to cut about 900 to 1,000 jobs worldwide, although certain positions will be replaced in other company offices.

Second quarter revenue from the company's Tommy Hilfiger business, which was acquired in May 2010, rose 11% year-over-year to $799.3 million, with Tommy Hilfiger North America business up 10% and Tommy Hilfiger International business up 11%.

Revenue for the company's Calvin Klein business jumped 167% to $670.6 million in the second quarter, driven mainly by the Warnaco acquisition.

Total revenue for the Heritage Brands business increased 36% to $495 million in the second quarter, due mainly to the addition of $131 million of revenue related to Warnaco's Speedo swimwear and Warner's and Olga women's intimate apparel businesses.

For the second quarter ended August 4, 2013, the New York-based company, which was formerly known as Phillips-Van Heusen Corp. and changed its name to PVH Corp. in June 2011, reported a net loss of $16.0 million or $0.20 per share, compared to net income of $89.9 million or $1.22 per share for the year-ago quarter.

Excluding items, adjusted net income for the second quarter was $115.5 million or $1.39 per share, compared to $94.2 million or $1.28 per share in the prior year quarter.

On average, 18 analysts polled by Thomson Reuters expected the company to earn $1.37 per share for the second quarter. Analysts' estimates typically exclude special items.

Total revenue for the second quarter rose 47% to $1.97 billion from $1.34 billion in the same quarter last year. Thirteen analysts had a consensus revenue estimate of $1.89 billion for the second quarter.

Looking forward to the third quarter, the company forecasts revenue of about $2.2 billion and adjusted earnings of about $2.20. Analysts currently expect the company to earn $2.30 per share on revenue of $2.23 billion for the third quarter.

The company said it now expects fiscal 2013 adjusted revenue to be about $8.25 billion. The company also said it continues to expect fiscal 2013 adjusted earnings of about $7.00 per share. Analysts currently expect the company to earn $7.14 per share on revenue of $8.22 billion for the fiscal year 2013.

"we are continuing to hold our full year earnings per share guidance at $7.00 due to our cautious outlook that the apparel consumer environment will remain soft and sales volatility will continue, especially in Southern Europe," Chirico said.