PVH Corp. (NYSE: PVH) reported 2012 second quarter and year to date results.
The discussions of historical results in this release that refer to non-GAAP amounts exclude the items which are described in this release under the heading “Non-GAAP Exclusions.” Reconciliations of GAAP to non-GAAP amounts are presented later in this release and identify and quantify all excluded items.
Overview of Second Quarter Results:
- Earnings per share was $1.25 on a non-GAAP basis, which exceeded the Company’s guidance and represents a 17% increase over the prior year period’s non-GAAP earnings per share of $1.07.
- GAAP earnings per share was $1.19 and represents a 29% increase over the prior year period’s GAAP earnings per share of $0.92.
Second Quarter Business Review:
- Revenue of $1.337 billion was relatively flat as compared to the prior year period and was negatively impacted by $56 million, or 4%, attributable to foreign currency translation ($41 million) and the exit from the Izod women’s and Timberland wholesale sportswear businesses ($15 million). On a constant currency basis and excluding the impact of exited businesses, revenue increased 4%.
Revenue in the Tommy Hilfiger business increased 4% over the prior year’s second quarter to $721.9 million, including a negative impact of $39 million, or 6%, related to foreign currency translation. On a constant currency basis, Tommy Hilfiger revenue increased 10%. The strong revenue increase was due principally to (i) retail comparable store sales growth of 11% in North America; and (ii) European retail comparable store sales growth of 15% and European wholesale growth of 9%, despite the ongoing challenging economic conditions in Europe.
On a non-GAAP basis, earnings before interest and taxes for the Tommy Hilfiger business increased 28% to $97.3 million from $75.8 million in the prior year’s second quarter, driven by the revenue increases discussed above and an improvement in operating margin. The operating margin increase was driven primarily by higher gross margins resulting from a significant increase in average unit retail selling prices globally, combined with the leveraging of expenses and operating expense synergies resulting from the Tommy Hilfiger North America integration. These positive results were partially offset by weakness in Japan, where the Company is currently in the process of strategically repositioning and investing in the brand.