Revenue in the Calvin Klein business increased 14% to $317.4 million from $278.5 million in the prior year’s fourth quarter, driven primarily by (i) strong growth in the North American wholesale business; (ii) new store openings and store expansions within the Company’s Calvin Klein outlet retail business; and (iii) a benefit of approximately 2% due to the extra week of revenue. These increases were partially offset by a 2% comparable store sales decline in the Company’s Calvin Klein North American outlet retail business. Calvin Klein royalty revenue increased 5% from continued global growth in women’s sportswear, dresses and handbags, which was partially offset by a decline in royalty revenue due to a reduction in the European bridge apparel and accessories business (relating to the Company’s announcement in the first quarter of 2012 that it would bring the business back in-house) and continued weakness in jeans in the United States and women’s underwear in Europe and the United States.
Earnings before interest and taxes for the Calvin Klein business increased 5% to $73.8 million as compared to the prior year’s fourth quarter amount of $70.1 million, driven principally by the revenue increases discussed above and increased gross margin in the North American apparel business due to product cost decreases. These increases were partially offset by increased advertising expense due, in large part, to the Calvin Klein Concept underwear commercial that was aired during the Super Bowl broadcast.
Heritage BrandsTotal revenue for the Heritage Brands business decreased 2% to $427.7 million as compared to $438.5 million in the prior year’s fourth quarter due to a $30 million, or 7%, negative impact related to the exit from the Izod women’s and Timberland wholesale sportswear businesses. Excluding the impact of exited businesses, revenue for the Heritage Brands business increased 4%, due principally to strong growth in the Company’s ongoing wholesale sportswear businesses and a benefit of approximately 2% due to the extra week of revenue. Comparable store sales for the Heritage Brands retail business were relatively flat to the prior year.