From WWD Issue 03/29/2011
Further energized by its acquisition of Tommy Hilfiger, Phillips-Van Heusen Corp. on Monday posted results that bested analysts’ fourth-quarter earnings estimates by 11 cents a share and said it expects to be at least a $5.58 billion firm in 2011.
For the three months ended Jan. 30, PVH said income spiked 93.1 percent to $52.2 million, or 72 cents a diluted share, from $27 million, or 51 cents, in the comparable 2009 quarter. On a non-GAAP basis, income more than doubled to $67.5 million, or 93 cents, 11 cents above analysts’ consensus estimate of 82 cents carried by Yahoo Finance, and above the year-ago level of $32.5 million, or 61 cents. Total revenue more than doubled to $1.4 billion from $614.6 million, with sales following the same trend, reaching $1.29 billion from $534 million. The balance of revenue came from royalty income, advertising and other items.
Emanuel Chirico, chairman and chief executive officer, said, “The Tommy Hilfiger business has continued to exceed our expectations, and the integration of the two businesses has been seamless. Each of our Heritage Brands businesses, as well as our Calvin Klein business, also had an excellent year.”
He added that due to PVH’s strong cash flow performance, it has reduced debt since the Hilfiger acquisition by $400 million.
Total revenue for the Calvin Klein business rose 18 percent to $248.9 million for the quarter, while royalty revenue rose 11 percent, driven by growth in all product categories. At Tommy Hilfiger, the company posted revenue of $704.7 million in the quarter, which exceeded the top end of PVH’s previous guidance by $19.7 million. In its Heritage Brand businesses, revenue rose 10 percent to $444.5 million, driven by wholesale sales growth of 17 percent and a comparable-store retail sales gain of 2 percent.
For the year, income fell 66.8 percent to $53.8 million, or 80 cents a diluted share, from $161.9 million, or $3.08, in 2009. Income was impacted in part by the firm’s acceleration of integration and restructuring costs connected with the purchase of Tommy Hilfiger, hedging losses against the euro to the U.S. dollar exchange rates relating to the Hilfiger purchase price, as well as a higher interest expense due principally to the debt issued to fund its Hilfiger acquisition. Total revenue jumped 93.3 percent to $4.64 billion from $2.4 billion.
PVH guided 2011 revenue expectations in the range of $5.58 billion to $5.65 billion. It expects the Tommy Hilfiger business to be between $2.8 billion to $2.85 billion, versus $1.95 billion in 2010 for the nine months it owned the brand following the acquisition. Combined sales for the Heritage Brands and Calvin Klein businesses are expected to grow between 3 and 4 percent. Earnings per share on a GAAP basis are expected between $4.12 and $4.37, compared with 80 cents in 2010.
For the first quarter, the company expects EPS on a GAAP basis to be between 82 cents and 84 cents on revenue estimated at $1.32 billion to $1.35 billion.
The company will host a conference call today to discuss the results.
