) has beaten expectations yet again. The company posted
better-than-expected quarterly results, with adjusted earnings
per share for first-quarter fiscal 2013 rising 43.6% year over
year to $1.91, thereby beating its own guidance of $1.33 and the
Zacks Consensus Estimate of $1.37. The upside was primarily
driven by strong revenue growth resulting from the acquisition of
The Warnaco Group, Inc. and improved margins.
However, including one-time items, the company posted a loss
of 25 cents per share compared with earnings of $1.30 reported in
the comparable year-ago period.
Quarter in detail
During the quarter, total revenue of the company (including
the impact of $30.0 million of sales returns related to certain
Warnaco wholesale customers) jumped 33.8% to $1,910.2 million
compared with $1,427.4 million in the year-ago quarter. The
year-over-year surge in revenues was attributable to robust sales
performances across all segments of the company. However,
quarterly revenues fell short of the Zacks Consensus Estimate of
$1,951.0 million. Excluding the effect of sales returns, total
adjusted revenue came at $1,940.2 million.
PVH Corp.'s adjusted operating profit surged 51.4% to $241.3
million from $159.4 million in the year-ago comparable quarter.
The company's operating margin grew 120 basis points (bps) to
12.4% compared with 11.2% in the year-ago period. The
year-over-year rise in operating profit was primarily driven by
positive impact of the Warnaco acquisition and improved operating
results in all the segments of the company.
From the first quarter onwards, PVH Corp. has decided to
report its financial results under 3 business segments - a)
Calvin Klein which includes Calvin Klein North America and Calvin
Klein International segments, b) Tommy Hilfiger comprising Tommy
Hilfiger North America and Tommy Hilfiger International
businesses, and c) Heritage Brands consisting of Heritage Brands
Wholesale and Heritage Brands Retail segments.
's revenues jumped more than twofold to $607.9 million from
$262.1 million in the year-ago quarter. This year-over-year
increase in revenues came on the back of the Warnaco acquisition
and a 4% rise in comparable-store sales (comps) at PVH Corp.'s
Calvin Klein North America retail business. However, comps at the
company's Calvin Klein International segment fell 5%.
The segment's adjusted operating profit surged 81.5% to $105.8
million from $58.3 million primarily driven by the Warnaco
acquisition, strong sales at the Calvin Klein's North America
segment and an improved gross profit.
Revenues at the company's
segment increased 5.3% to $811.4 million from $770.4 million in
the year-ago period, due to 14% growth in North American
business. The segment's North American business mainly benefited
from a 5% rise in retail comps, square footage expansion and
robust wholesale revenues.
The segment's adjusted operating profit grew 15% to $118.2
million from $102.7 million in the first quarter of fiscal 2012.
The increased operating profit was a result of revenue growth and
improved margins driven by higher average unit retail selling
price per unit.
segment's revenues increased 24.3% year over year to $490.9
million, up from $394.9 million in first-quarter fiscal 2012. The
increase was primarily driven by the Warnaco acquisition,
partially offset by 7% negative impact due to the company's exit
from Izod and Timberland businesses. Adjusted operating profit
jumped over twofold to $39.1 million, up from $17.6 million in
the prior-year quarter - driven by higher gross profit from the
inclusion of Warnaco business and PVH Corp.'s exit from the lower
margin carrying businesses of Izod and Timberland.
PVH Corp. continues to expect fiscal 2013 total revenue to be
$8.2 billion. The company's Calvin Klein, Tommy Hilfiger and
Heritage Brands are anticipated to contribute $2.75 billion,
$3.40 billion and $2.05 billion, respectively toward its total
revenue. Moreover, the company still expects fiscal-2013 adjusted
earnings to come in at $7.00 per share. Currently, the Zacks
Consensus Estimate stands at $7.02 per share.
PVH Corp. intends to repay about $400 million of its debt and
projects a total interest expense of nearly $200 million in
fiscal 2013. Tax rate is likely to be in the range of
For second-quarter fiscal 2013, the company anticipates total
revenue of $1.9 billion with Calvin Klein, Tommy Hilfiger and
Heritage Brands contributing approximately $625 million, $775
million and $500 million, respectively.
During the quarter, the company is anticipating interest
expense of nearly $50 million and tax rate in the range of
Based on the above-mentioned assumption, PVH Corp. expects
second-quarter fiscal 2013 adjusted earnings to come in at
approximately $1.35 per share. Currently, the Zacks Consensus
Estimate stands at $1.36 per share.
Other Stocks to Consider
Currently, PVH Corp. carries a Zacks Rank #4 (Sell). Better
performing stocks in the apparel retail industry include
G-III Apparel Group, Ltd
Joe's Jeans Inc.
Michael Kors Holdings Ltd
), all of which have a Zacks Rank #2 (Buy).
G-III APPAREL (GIII): Free Stock Analysis
JOES JEANS INC (JOEZ): Free Stock Analysis
MICHAEL KORS (KORS): Free Stock Analysis
PVH CORP (PVH): Free Stock Analysis Report
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