Fourth Quarter Business Review:
The Company’s calculations of the comparable store sales percentages throughout this press release are based on comparable weeks and, therefore, exclude the extra week in 2012. The extra week in 2012 was worth approximately $40 million of revenue and approximately $0.05 of earnings per share.
Revenue in the Tommy Hilfiger business increased 9% to $891.1 million from $815.8 million in the prior year’s fourth quarter, including a negative impact of approximately $10 million, or 1%, related to foreign currency translation. Revenue in the Tommy Hilfiger North America business increased 11%, with strong results in its retail business primarily attributable to (i) 5% comparable store sales growth; (ii) additional square footage expansion; and (iii) an increase due to the 53rd week of revenue (which increased overall Tommy Hilfiger North America revenue by 4%). Revenue in the Tommy Hilfiger International business increased 8%, driven by (i) a European retail comparable store sales increase of 9%; (ii) strength in the European wholesale business; and (iii) a 3% increase due to the extra week of revenue, partially offset by continued weakness in Japan, where the Company is currently in the process of strategically repositioning and investing in the brand, and a negative impact of 2% related to foreign currency translation.
On a non-GAAP basis, earnings before interest and taxes for the Tommy Hilfiger business increased 45% to $101.8 million from $70.2 million in the prior year’s fourth quarter, driven by the net revenue increase discussed above and a 290 basis point improvement in gross margin, driven by an increase in average unit retail selling prices and a decrease in product costs.
On a GAAP basis, earnings before interest and taxes for the Tommy Hilfiger business increased 73% to $96.1 million, as compared to $55.6 million in the prior year’s fourth quarter. This increase was due principally to the net impact of the overall revenue and gross margin increases noted above, combined with a decrease in integration and restructuring costs.