PVH exceeds Q4 and full year expectations led by Calvin Klein
PVH Corp. announced Wednesday evening its financial results for the fourth quarter and full year of fiscal 2015. The company included guidance for 2016.
The revenue for the fourth quarter increased 7% on a constant currency basis to $2.1 billion from $2.07 billion in the prior year’s fourth quarter. The Calvin Klein and Tommy Hilfiger businesses increased 21% and 5%, respectively, and the Heritage Brands decreased 10% led primarily by the exit from the Izod retail business. Earnings per share on a non-GAAP basis were $1.52, inclusive of a $0.36 negative impact, and the EPS increased to $1.63 from $0.62 on a GAAP basis.
The full year revenue increased 4% (decreased 3% on a GAAP basis), which was due to a 9% increase in the Calvin Klein business on a constant currency basis and a 4% increase in the Tommy Hilfiger business also on a constant currency basis. The Heritage Brands business decreased 4% compared to a 10% increase in the prior year.
Emanuel Chirico, Chairman and Chief Executive Officer, noted, “We are very pleased with our fourth quarter and full year 2015 results, which exceeded our expectations despite the difficult macroeconomic environment and the highly promotional retail market in the U.S. We grew 2015 annual earnings per share 15% on a non-GAAP and constant currency basis, consistent with our long-term targets. Our Calvin Klein business was a highlight, as investments we made over the last few years continued to generate solid results, and we saw strength across all regions where we operate. Our Tommy Hilfiger business also saw positive momentum in its international markets, highlighting the power of the brand. Lastly, our Heritage Brands business produced a notable improvement in profitability.”
Calvin Klein fourth quarter revenue increased 21% (increased 15% on a GAAP basis) and North America revenue increased 22% (increased 18% on a GAAP basis). The growth in North America was due to the square footage expansion in stores including the conversion of Izod stores to Calvin Klein Accessory and Calvin Klein Underwear stores.
The Tommy Hilfiger business increased in North America and internationally on a constant currency basis by 1% and 5%, respectively (decreased 1% and 2% on a GAAP basis). The North America retail comparable store sales declined 7% compared to the prior year driven by weaker traffic.
Mr. Chirico concluded, “While the global retail landscape continues to be uncertain with major foreign currencies largely weakening against the U.S. dollar and unpredictable and volatile global consumer spending, we believe that we can successfully navigate this environment and have taken a prudent approach to our 2016 plan. We announced that we will acquire the remaining 55% stake in our Tommy Hilfiger China joint venture, providing us with the opportunity to further strengthen our market position in China, and that we will leverage G-III Apparel Group’s womenswear expertise by licensing them our Tommy Hilfiger womenswear North America wholesale business, which will help drive the business beginning with the 2016 holiday season.”
The company projects its 2016 revenue to increase 2%, for its Calvin Klein business to increase 6%, Tommy Hilfiger by 3% and Heritage Brands to decrease 7%. PVH also expects to generate $500 million of free cash flow in 2016 and use this to fund the acquisition of the remaining 55% interest that it does not already own in TH Asia, its joint venture for Tommy Hilfiger in China, and to make similar levels of debt repayments and stock repurchases as in 2015.
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