) reported an outstanding bottom-line performance in the second
quarter of fiscal 2012, with adjusted earnings per share rising
approximately 17% year over year to $1.25, beating its own guidance
range of $1.18 - $1.20. The year-over-year increase in earnings per
share was primarily driven by a lower effective tax rate. Moreover,
it exceeded the Zacks Consensus Estimate of $1.19 per share.
On a reported basis, excluding certain items, the company's
earnings increased 29% to $1.19 per share from 92 cents earned in
the year-ago quarter.
Quarter in detail
During the quarter, the company's total revenue remains almost
flat at $1,336.6 million compared with $1,334.4 million in the
previous-year quarter. The year-over-year revenue growth at the
company's Tommy Hilfiger and Calvin Klein segments were offset by
decline at its Heritage Brands segment and unfavorable foreign
currency exchange rates. Moreover, quarterly revenue marginally
missed the Zacks Consensus Estimate of $1,342 million.
PVH Corp.'s adjusted operating profit inched up 1.9% to $154.2
million from $151.4 million in the prior-year quarter. The
year-over-year improvement in operating profit was primarily
benefited from increased operating income at the company's Tommy
Hilfiger segment, which was partially offset by a decline in
operating income at its Calvin Klein and Heritage Brands segments.
Consequently, the company's operating margin grew 20 basis points
(bps) to 11.5% compared with 11.3% in the year-ago period.
Interest expenses declined 9.8% to $28.4 million from $31.4
million incurred during the second quarter of fiscal 2011,
primarily due to lower long-term debt level. Further, during the
second quarter, the company registered a drastic fall in its
adjusted effective tax rate resulting from benefit of synergy
coming from Tommy Hilfiger acquisition. The company's adjusted
effective tax rate came down to 26.9% from 34.7% in the prior-year
Revenue at the company's
segment increased 4% to $721.9 million from $692.9 million in the
previous-year period, primarily driven by an 11% and 15% increase
in comparable sales in North America and European market,
respectively. The segment was also benefited from a wholesale
growth of 9% in Europe.
The segment's adjusted operating profit grew 28% to $97.3
million from $75.8 million in the second quarter of fiscal 2011.
The increased operating profit was a result of revenue growth and
improved margins driven by higher average unit retail selling price
per unit along with synergies coming from Tommy Hilfiger's North
American integration partially offset by weak results in Japan.
segment's revenue improved 5% to $251.2 million compared with
$239.9 million in the year-ago quarter. The year-over-year increase
in revenue was primarily driven by an increase of 5% in the
comparable store sales in North America along with strong
performance in fragrance, women's sportswear, dresses, footwear and
handbags. However, these benefits were partially offset by a
decline of 10% in royalty revenue.
However, segment's operating profit declined 8.9% to $60.2
million from $66.1 million as the benefits from higher revenue were
more than offset by increased advertising expenses.
segment posted a disappointing result with revenue falling 10% year
over year to $363.5 million from $401.7 million in the second
quarter of fiscal 2011, primarily due to a decline of 10% in
wholesale business. Consequently, adjusted operating profit
declined nearly 25% to $23.2 million from $30.9 million in the
PVH Corp. expects total revenue to increase in the range of 1% -
2% from the previous fiscal level of $5.891 billion. The company
anticipates revenue at its Tommy Hilfiger and Calvin Klein segments
to grow in the range of 2% - 3% and 6% - 7%, respectively, while
its Heritage Brands segment's revenue to decline in between 4% and
5%. Moreover, the company intends to reduce its debt level by
approximately $300 million during fiscal 2012, which is expected to
bring down its interest expenses by nearly 12 cents a share. The
effective tax rate is assumed to be in between 23.5% and 24%.
On the basis of above assumptions and better-than-expected
fiscal second quarter bottom-line performance, the company has
raised its fiscal 2012 adjusted earnings guidance range. The
company now anticipates adjusted earnings to be in the range of
$6.25 to $6.32 per share, up from the previously guided range of
$6.15 - $6.25.
For third quarter fiscal 2012, the company is projecting a
decline of 2% - 3% in its total revenue. The company's Tommy
Hilfiger and Heritage Brands segments' revenue are expected to
decline in the range of 2% - 3% and 5% - 6%, respectively. Whereas,
revenue at the company's Calvin Klein segment is anticipated to
increase by 4%. Further, the effective tax rate during the quarter
is likely to remain between 23% and 23.5%.
On the basis of above assumptions, PVH Corp. expects adjusted
earnings per share to be in the range of $2.20 - $2.25 in the third
quarter of fiscal 2012 compared with the prior-year quarter's
earnings of $1.89 per share.
PVH Corp., which competes with
Ralph Lauren Corporation
), currently has a Zacks #2 Rank, which translates to a short-term
PVH Corp., formerly known as Phillips-Van Heusen Corporation, is
headquartered in New York, New York. PVH Corp. designs and markets
branded dress shirts, neckwear, sportswear, footwear and other
related products. The company markets its products at a wholesale
level through department store chains and directly to consumers
through retail stores. The company's portfolio of brands includes
its owned brands and its licensed brands.
PVH CORP (PVH): Free Stock Analysis Report
RALPH LAUREN CP (RL): Free Stock Analysis
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