Apparel maker PVH Corp. (PVH) said Tuesday after the markets closed that its third quarter profit rose 47% from last year, driven by continued strong performance of its higher-margin Calvin Klein and Tommy Hilfiger businesses.
The company's quarterly earnings per share, excluding items, also came in above analysts' expectations.
The company forecast fourth quarter earnings below analysts' current consensus estimate, but once again raised its full year earnings outlook.
Emanuel Chirico, Chairman and Chief Executive Officer, noted, "We are very pleased with our third quarter and year-to-date performance, which was primarily driven by the Tommy Hilfiger and Calvin Klein businesses continuing to exhibit strong global growth, allowing us to exceed our previous earnings guidance. "
PVH shares are currently gaining 0.80% in after hours trading after closing the day's regular trading session at $109.29, down $1.45 or 1.31%. The shares trade in a 52-week range of $66.27 to $115.82.
Third quarter revenue from the company's Tommy Hilfiger business, which was acquired in May 2010, grew 1% year-over-year to $833.6 million, due mainly to retail same-store sales growth of 9% in North America. Earnings before interest and taxes for the Tommy Hilfiger business increased 42% to $128.8 million, helped by higher revenue and improved gross margin as well as a decrease in integration and restructuring costs.
Revenue for the company's Calvin Klein business rose 6% to $319.6 million in the third quarter, driven mainly by a 9% increase in same-store sales within the company's Calvin Klein outlet retail business and an 11% increase in the North American wholesale business. Earnings before interest and taxes for the Calvin Klein business increased 7% to $92.4 million.
Revenue for the Heritage Brands business fell 7% to $489.5 million in the third quarter, due to a negative impact related to the exit from the Izod women's and Timberland sportswear businesses.
For the third quarter ended October 28, 2012, 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 net income of $165.4 million or $2.24 per share, compared to $112.2 million or $1.54 per share for the year-ago quarter.
Excluding items, adjusted net income for the third quarter was $173.5 million or $2.34 per share, compared to $138.2 million or $1.89 per share in the prior year quarter.
On average, 13 analysts polled by Thomson Reuters expected the company to earn $2.30 per share for the third quarter. Analysts' estimates typically exclude special items.
Last month, the company had raised its third quarter adjusted earnings guidance to a range of $2.28 to $2.30 per share from its prior guidance of $2.20 to $2.25 per share.
Total revenue for the third quarter fell 1% to $1.64 billion from $1.65 billion in the same quarter last year. Eleven analysts had a consensus revenue estimate of $1.64 billion for the third quarter.
The company attributed the decline to a 5% negative impact related to the exit from the Izod women's and Timberland wholesale sportswear businesses and foreign currency translation. On a constant currency basis and excluding the impact of exited businesses, third quarter revenue increased 4% from a year earlier.
Looking forward, the company expects fourth quarter revenue to increase 4% to 5% over the prior year's fourth quarter amount of $1.533 billion, which implies fourth quarter 2012 revenue of $1.594 billion to $1.610 billion.
The company also forecast fourth quarter adjusted earnings of $1.48 to $1.49 per share, including the negative impact Hurricane Sandy.
Analysts currently expect the company to earn $1.52 per share on revenue of $1.59 billion for the fourth quarter.
For the full year 2012, the company raised its adjusted earnings guidance to a range of $6.37 to $6.38 per share from its prior guidance of $6.32 to $6.37 per share. Analysts currently expect the company to earn $6.37 per share for the full year 2012.
PVH said it now expects full year revenues to increase about 2% from last year's revenue of $5.891 billion, compared to its prior forecast of 1% to 2% growth. Analysts currently expect the company's full year 2012 revenue to grow 1.8% to $6.00 billion.
"Taking into account the third quarter outperformance across our businesses, coupled with the impact of Hurricane Sandy, we have once again raised our full year earnings guidance, despite the uncertain global economic and market conditions," Chirico said.
The company's fourth quarter and full year 2012 guidance does not give effect to the pending acquisition of apparel company Warnaco Group, Inc. (WRC) and assumes the company continues on a standalone basis.
Late last month, PVH agreed to buy Warnaco in a cash and stock deal valued at around $2.9 billion. The deal is expected to close early next year. The acquisition will position PVH as one of the largest and most profitable global branded lifestyle apparel companies in the world, with over $8 billion in pro forma revenue.
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