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PVH reports rise in Q4 and FY14 earnings

By Prachi Singh

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Business |REPORT

Earnings per share on a non-GAAP basis at PVH Corp, increased 23 percent to 1.76 dollars, including a 0.10 dollars negative impact related to foreign currency exchange rates, in the fourth quarter. GAAP earnings per share were 0.62 dollars compared to prior year’s fourth quarter loss per share of 0.46 dollars.

Earnings per share on a non-GAAP basis for 2014 was 7.30 dollars compared to 7.03 dollars for the prior year. GAAP earnings per share were 5.27 dollars compared to 1.74 dollars for the prior year. Revenue was 8.24 billion dollars, against 8.22 billion dollars last year.

Revenue increased 5 percent on a constant currency basis and 1 percent on a GAAP basis over the prior year’s fourth quarter revenue of 2.05 billion dollars. Revenue changes by business from the prior year period included, a 6 percent increase in the Calvin Klein business on a constant currency basis and 2 percent on a GAAP basis); a 9 percent increase in the Tommy Hilfiger business on a constant currency basis and 2 percent on a GAAP basis; and a 3 percent decrease in the Heritage Brands business.

Commenting on these results, Emanuel Chirico, Chairman and Chief Executive Officer, noted, “2014 was a year of action for PVH, as we followed through with the investments initiated in 2013, which centered on our people, products, infrastructure, supply chain and distribution. We also announced the exit of our Izod retail business by the end of 2015 to focus on our higher margin businesses. We expect that our global lifestyle brands, Calvin Klein and Tommy Hilfiger, will continue to demonstrate strong underlying performance globally.”

Calvin Klein North America revenue increased 13 percent, driven by growth in the wholesale businesses, coupled with square footage expansion in company-operated retail stores. The underwear business experienced strong momentum in the department store channel and helped fuel the overall growth in the wholesale business. North America retail comparable store sales were relatively flat as a result of the highly promotional retail environment during the holiday period. Calvin Klein International revenue decreased 2 percent on a constant currency basis and 8 percent on a GAAP basis). Calvin Klein International retail comparable store sales declined 7 percent, as anticipated, largely due to a decrease in Asia.

Tommy Hilfiger North America revenue increased 9 percent, principally due to a double-digit percentage increase in the wholesale business. North America retail comparable store sales were relatively flat as a result of the highly promotional retail environment during the holiday period. Tommy Hilfiger international revenue increased 9 percent on a constant currency basis and decreased 4 percent on a GAAP basis. Europe revenue growth was driven by a 6 percent comparable store sales increase, square footage expansion in company-operated stores and a mid-single digit percentage revenue increase in the wholesale business.

The revenue increase in 2014 was due to a 3 percent increase in the Calvin Klein business compared to 2013, mid-single digit and high-single digit percentage increases in the North America wholesale and retail businesses, respectively; an increase in royalty revenue; and the absence of $30 million of sales returns recorded in 2013 for certain wholesale customers in Asia.

Retail comparable store sales increased 2 percent in North America and decreased 5 percent internationally. The decline in international retail comparable store sales was due in large part to a decrease in Asia. Also contributing to the retail comparable store decline was underperformance in Europe in the first half of the year. There was a 6 percent increase on a constant currency basis and 4 percent increase on a GAAP basis in the Tommy Hilfiger business compared to 2013. Tommy Hilfiger North America revenue increased 6 percent, principally due to high-single digit percentage wholesale growth, retail comparable store sales growth of 2 percent and square footage expansion in company-operated stores.

Tommy Hilfiger International revenue increased 5 percent on a constant currency basis and increased 3 percent on a GAAP basis, driven principally by European retail comparable store sales growth of 3 percent, square footage expansion in Company-operated stores and low-single digit percentage wholesale growth.

In 2015, the company expects its full year earnings per share results to be negatively impacted versus the prior year by approximately 1.20 dollars per share from foreign currency exchange rates and volatility in the global macroeconomic environment, particularly with respect to the company’s businesses in Russia.

PVH Corp