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PVH Corp. Profits Pop Even as Currency Issues Curb Growth

PVH Corp. scored significant gains in revenue and earnings in the first quarter, amid what it said was a volatile economic environment.

In a Nutshell: Lead by the strength of its Calvin Klein and Tommy Hilfiger brands, PVH Corp. posted strong revenue and earnings gains in the first quarter. The company said it was increasing its earnings guidance for the year, despite the continuing volatility in the macroeconomic and geopolitical environments, which is resulting in a significantly lower foreign currency benefit than previously planned for the year.

Sales: Revenue for the first quarter ended May 6 increased 16 percent to $2.3 billion from $1.99 billion in the year-ago period. Revenue in the Calvin Klein business in the quarter rose 18 percent year over year to $890 million. Calvin Klein International revenue increased 25 percent to $475 million, driven by continued strong performance in Europe and Asia, including a 9 percent gain in comparable store sales. Calvin Klein North America revenue was up 10 percent to $415 million thanks to a solid wholesale performance across all categories.

Revenue in the Tommy Hilfiger business for the quarter was ahead 21 percent to $1 billion compared to the prior-year period. Tommy Hilfiger International revenue rose 25 percent to $655 million year to year, pushed by continued strength across all regions and channels. Tommy Hilfiger North America revenue gained 13 percent to $361 million, with a 9 percent increase in comparable store sales and strong performance in the wholesale business.

Earnings: Earnings before interest and taxes (EBIT) in the quarter more than doubled to $244 million from $113 million in the prior-year period. Included in EBIT were $7 million in costs related to the TH China acquisition, while EBIT for the prior year period included $79 million in costs, $54 million of which as incurred in connection with the Li & Fung contract termination.

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Calvin Klein EBIT increased 17.2% to $109 million, inclusive of a $5 million positive impact due to foreign currency translation, from $93 million in the prior-year period. EBIT for Tommy Hilfiger increased to $132 million from $33 million in the year-ago quarter.

CEO’s Take: Emanuel Chirico, chairman and CEO, said: “We experienced broad-based strength across our businesses globally and our performance underscored the power of our diversified business model and the continued momentum in our global designer lifestyle brands, Calvin Klein and Tommy Hilfiger. We are applying our consumer-centric mindset by growing our presence where our consumers prefer to shop, creating exciting brand experiences across our distribution channels and capitalizing on creative new ways to connect with the next generation of consumers. We are also driving our long-term vision by making investments to ensure that we adapt to the evolving consumer landscape, without compromising on our commitment to sustainable development throughout the business.”