plummeted Wednesday after the clothing designer said it would lose money in the first quarter, partly because of seasonally low shipping patterns in Europe, which is one of its strongest business regions.
In addition, the company now expects full-year 2005 earnings at the low end of previous guidance, as sales should come in below 2004's total.
The stock was recently down $1.84, or 11.9%, to $13.66 in early Wednesday trading.
Tommy Hilfiger expects to lose 10 cents to 13 cents a share in the first quarter, sharply lower than both the analyst consensus estimate for a profit of 3 cents a share and the year-ago profit of 11 cents a share. The company also cited a higher-than-expected drop in U.S. wholesale revenue for the expected first-quarter loss.
For fiscal 2005, the company now expects earnings to be at the low end of its guidance from February, when it had said earnings per share would be below that of fiscal 2004 by the high-single-digit to mid-teen percentage range, excluding items. The company earned $137.1 million, or $1.50 a share, in fiscal 2004, before items.
Hong Kong-based Tommy Hilfiger also now anticipates that sales in 2005 will decline in the high single digits from 2004's total sales of $1.88 billion. The new estimate compares with the company's previous estimate for a drop in the mid-single digits.
The company had said in February that it expected revenue contraction in its U.S. wholesale business and that it was evaluating the performance of its worldwide retail stores. Since then, the company has reduced the number of its specialty stores.
Virtually ignored by investors was the company's accompanying fourth-quarter earnings report, which showed a swing to a profit from a loss a year earlier on strong results in its European businesses. Results beat analysts' consensus, excluding items.
The company earned $26.9 million, or 29 cents a share, in the fourth quarter. That compared with a loss of $113.8 million, or $1.26 a share, in the year-ago quarter, which included a goodwill impairment charge.
Before items, the company earned $36.7 million, or 40 cents a share, which bested the Wall Street consensus for 37 cents a share. That compared with $28.3 million, or 31 cents a share, in the year-earlier period.
"Our performance for the quarter exceeded earlier expectations due to stronger-than-anticipated European operating results and favorable currency translations," said the company in a statement. "Our focus during the quarter remained on implementing the necessary steps to improve the productivity of our business and position the company for a return to long-term growth."
Fourth-quarter revenue rose to $510.1 million from $498 million a year ago. Revenue at Tommy Hilfiger Europe increased 40% to $163.6 million. But revenue in the U.S. business declined to $296.2 million from $337.8 million last year, and wholesale segment revenue was flat at $406.8 million. Retail segment revenue jumped 16.7% to $85.3 million.
The company said favorable currency translation added $23.2 million to overall sales in Europe.
As of March 31, Tommy Hilfiger had 167 stores worldwide, including 132 outlet stores and 35 specialty stores, compared with a total of 166 stores a year earlier, including 115 outlets and 51 specialty stores.