) posted yet another better-than-expected quarterly results. The
company's second quarter fiscal 2013 adjusted earnings per share
rose 8.6% year over year to $1.39 and beat its own guidance of
$1.35 and the Zacks Consensus Estimate of $1.37. The upside was
primarily driven by strong revenue growth from the acquisition of
The Warnaco Group, Inc. and improved margins.
However, including acquisition, integration and restructuring
costs related to Warnaco Group, the company posted a loss of 20
cents per share compared with earnings of $1.22 reported in the
comparable year-ago period.
Quarter in Detail
During the quarter, PVH Corp.'s total revenue jumped 47.0% to
$1,964.8 million compared with $1,336.6 million in the year-ago
quarter. The year-over-year increase in revenues was attributable
to robust sales performances across all segments of the
company. Moreover, quarterly revenues surpassed the Zacks
Consensus Estimate of $1,882.0 million.
PVH Corp.'s adjusted operating profit rose 35.2% to $213.3
million from $157.8 million in the year-ago comparable quarter.
However, the company's operating margin contracted 90 basis
points (bps) to 10.9% from the year-ago period. The
year-over-year decline in operating margin was primarily due to
increased selling, general and administrative (SG&A)
expenses, which more than offset the positive impact of the
Warnaco Group acquisition.
From the beginning of first-quarter fiscal 2013, 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
's revenues jumped more than twofold to $670.6 million from
$251.2 million in the year-ago quarter. This year-over-year
increase in revenues came on the back of the Warnaco acquisition
and a 6% 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 dropped 1%.
The segment's adjusted operating profit rose 58.3% to $95.3
million from $60.2 million, primarily driven by the Warnaco
acquisition, strong sales at the Calvin Klein's North America
segment and an improved gross profit resulting from higher
average unit retail selling price.
Revenues at the company's
segment increased 10.7% to $799.3 million from $721.9 million in
the year-ago period, due to 10% growth in the North American
business and 11% rise in international business. The segment's
North American business mainly benefited from a 7% rise in retail
comps, along with square footage expansion. Further, double-digit
growth in the European wholesale business, 6% rise in the
European retail business and retail square footage expansion
drove the segment's international revenues.
The segment's adjusted operating profit grew 2.6% to $99.8
million from $97.2 million in the second quarter of fiscal 2012.
The increased operating profit was due to revenue growth at the
segment's North American business, partially offset by weak
performance in Japan and margin pressure in Europe.
segment's revenues increased 36.2% year over year to $495.0
million, up from $363.5 million in second-quarter fiscal 2012.
The increase was primarily driven by the newly acquired Speedo
swim product and Warner's and Olga women's intimate apparel
businesses, partially offset by a 2% negative impact due to the
company's exit from Izod women's and Timberland wholesale
Adjusted operating profit jumped 92.2% year over year to $44.4
million, driven by increased revenues but partially offset by
decline in gross margin at the segment's retail business due to
higher promotional spending.
Despite posting better-than-expected second-quarter results,
PVH Corp. remains cautious for the remaining period of fiscal
2013 due to the prevalent uncertain macroeconomic situation.
However, it has slightly raised the fiscal 2013 revenue guidance
to $8.25 billion from $8.2 billion projected earlier.
The company's Calvin Klein, Tommy Hilfiger and Heritage Brands
are anticipated to contribute $2.75 billion, $3.42 billion and
$2.08 billion, respectively toward the 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 $7.18 per share.
PVH Corp. reiterated its intention to repay about $400 million
of debt, and projects total interest expense of $195-$200 million
in fiscal 2013. Tax rate is likely to be in the range of
For third-quarter fiscal 2013, the company expects total
revenue of $2.2 billion with Calvin Klein, Tommy Hilfiger and
Heritage Brands contributing approximately $750 million, $900
million and $550 million, respectively.
During the quarter, the company is anticipating interest
expense of nearly $50 million and tax rate of approximately
Based on the above-mentioned assumption, PVH Corp. expects
third-quarter fiscal 2013 adjusted earnings to come in at
approximately $2.20 per share. Currently, the Zacks Consensus
Estimate stands at $2.34 per share.
Other Stocks to Consider
Currently, PVH Corp. carries a Zacks Rank #3 (Hold).
Better-performing stocks in the apparel retail industry include
Joe's Jeans Inc.
Michael Kors Holdings Ltd
G-III Apparel Group, Ltd
). While Joe's Jeans and Michael Kors both carry Zacks Rank #1
(Strong Buy), G-III Apparel has 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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