PVH Corp. (PVH)
Q1 2012 Earnings Call
May 24, 2012 08:30 am ET
Emanuel Chirico – Chairman and Chief Executive Officer
Mike Shaffer – Executive Vice President and Chief Operating & Financial Officer
Robert Scott Drbul – Barclays Capital, Inc.
Adrianne T. Shapira – Goldman Sachs & Co.
Omar Saad – International Strategy & Investment Group, Inc.
Evren Dogan Kopelman – Wells Fargo Advisors LLC
Howard Tubin – RBC Capital Markets Equity Research
Robert F. Ohmes – Bank of America/Merrill Lynch
Jeff P. Klinefelter – Piper Jaffray, Inc.
David Weiner – Deutsche Bank Securities, Inc.
Carla Casella – JPMorgan Securities LLC
John D. Kernan – Cowen & Co.
Christian Buss – Credit Suisse Securities (USA) LLC (Broker)
Previous Statements by PVH
» Phillips-Van Heusen's CEO Discusses Q4 2011 Results - Earnings Call Transcript
» Phillips-Van Heusen's CEO Presents at 14th Annual ICR XChange Conference (Transcript)
» PVH's CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Phillips-Van Heusen Corporation's CEO Discusses Q2 2011 Results - Earnings Call Transcript
Please standby, we’re about to begin. Good day, everyone, and welcome to the PVH Corp. First Quarter 2012 Earnings Conference. This webcast and conference call is being recorded on behalf of PVH Corp. and consist of copyrighted material. It may not be recorded, rebroadcast or otherwise used without PVH’s expressed written permission. Your participation in the question-and-answer session constitutes your consent to having any comments or statements you make appear on any transcript or broadcast of this call.
The information made available on this webcast and conference call contains certain forward-looking statements that reflect PVH’s view of future events and financial performance as of March 23, 2012. All statements are subject to risks and uncertainties indicated from time-to-time in the company’s SEC filings, including those identified in the company’s Safe Harbor statement that is part of the earnings press release that is the subject of this webcast and call.
These include the company’s ready to change its strategy, objective, expectations and intensions, it’s need to use significant cash flow to service its debt obligations, it’s vulnerability to weather, economic conditions, fuel prices, fashion trends, lost of retail accounts, disease, epidemics, war and terrorism, availability of raw materials and other factors. It’s reliance on the sales of its licensees and retail customers, and it’s exposure to the behavior of its associates, business partners and licensors. Therefore, the company’s future results of operations could differ materially from historical results or current expectations, as more fully discussed in its SEC filings. The company does not undertake any obligation to update publicly any forward-looking statements including without limitation any estimate regarding revenue or earnings.
The information made available also includes certain non-GAAP financial measures as defined under SEC rules. A reconciliation of these measures is included in the company’s earnings release which can be found on the company’s website www.pvh.com and its current report on Form 8-K furnished with the SEC in advance of this webcast and call. On today’s call, we have Mike Shaffer, EVP, Chief Operating Officer, and Chief Financial Officer, PVH Corp. and Manny Chirico, Chairman and CEO of PVH Corp.
At this time, I’ll turn the conference over to Manny Chirico. Please go ahead, Sir.
Thank you, [Voger]. Joining Mike and myself on the call is Dana Perlman, our Treasurer and Senior Vice President in charge of Investor Relations; Allen Sirkin, our President and Chief Operating Officer; and Ken Duane, our CEO of our North American Wholesale.
In general, we are very pleased with our first quarter results. We beat the top end of the guidance by $0.05. And given the momentum in our business, we also increased our 2012 earnings guidance by $0.05 to US$6.15 to US$6.25.
Let me jump into some of the businesses, I’ll start with the Tommy Hilfiger business. The Tommy business continued its strong momentum during the quarter. We posted an 8% revenue increase and a 13% increase in operating income.
When you take out the foreign currency headwinds that we felt in the first quarter, our operating performance was just outstanding on a constant currency revenue basis. They were up 11% and operating income was up 18% for the quarter.
Focusing in on our International businesses, the Tommy international revenues were up 9% in local currencies. Our retail comps in Europe posted a 5% increase for the quarter, while wholesale revenues were up 9%.
Geographically, we continue to see strong growth in Central, Northern and Eastern Europe, partially offset by the softness in Spain and Italy. On a product category basis, we saw a strong performance in men’s and women’s sportswear denim and footwear. Overall saw a strong sell-throughs within our retail department store counts throughout Europe and feel like, we’re gaining significant market share during this turbulent time in Europe.
Moving to our North American business, we posted a 12% increase for the quarter driven by a 16% comp store sales increase in our retail businesses and mid single-digit growth in the Tommy wholesale businesses. We continue to elevate product and gain an additional [four] space in top doors at Macy’s, which is fueling the brands exposure. We see tremendous momentum in this business and strongly believe that the significant investments we are making in product and in our marketing programs are paying dividends for us with the consumer.
In North America, we experience to get 10% increase in our average unit retails at the door at both wholesale and retail. We strongly feel that our marketing and product initiatives only intensify in the second half of the year and believe we are well position to continue to exceed our plans for the balance of the year. For 2012, we are planning our overall Tommy revenues to grow 7% to 8% on a constant currency basis. Given the uncertain economic environment, we are planning our revenue growth more conservatively for the balance of the year than the current business trends would indicate.