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PVH Chairman & CEO pleased with Q1 results
01 Jun '11
5 min read
First Quarter Business Review:
Calvin Klein
Total revenue for the Calvin Klein business increased 17% over the prior year's first quarter to $245.6 million, driven by strong performance across all divisions. The Calvin Klein wholesale and retail businesses performed very well during the quarter, posting a 23% increase in revenue as compared to the prior year's first quarter, including retail comparable store sales growth of 14%.
Calvin Klein continued to experience significant global growth, with royalty revenue increasing 10% as compared to the prior year's first quarter, driven by strong performance across virtually all product categories, with jeans, underwear, fragrance, watches, women's sportswear and dresses continuing to perform particularly well. Revenue in the Calvin Klein business included a benefit of approximately $2 million from a weaker U.S. dollar in the quarter versus the prior year's first quarter.
Earnings before interest and taxes for the Calvin Klein business was $55.1 million in the first quarter, an increase of 9% over the prior year's first quarter. This increase was due to the revenue increases discussed above, partially offset by a planned increase of approximately $9 million in advertising expenses related principally to the launch in the first quarter of 2011 of the global marketing campaign supporting the introduction of the new lifestyle brand for jeans, underwear and fragrance under the ck one label.
Tommy Hilfiger
The Tommy Hilfiger business generated revenue of $715.4 million and non-GAAP earnings before interest and taxes of $90.6 million, or an operating margin of 12.7%, all of which significantly exceeded the top end of the Company's previous guidance. The strong performance was due to significantly better than planned growth in both Europe and North America, with double-digit retail comparable store sales growth in both regions, combined with higher than projected gross margins and the favorable impact of a weaker than anticipated U.S. dollar.
The Tommy Hilfiger business contributed GAAP earnings before interest and taxes of $66.7 million, or an operating margin of 9.3%, in the first quarter, which also exceeded the Company's previous guidance.
Heritage Brands
The Heritage Brands business generated revenue of $408.1 million in the first quarter, which was flat to the prior year's first quarter. The wholesale business experienced revenue growth in the low single-digits, while revenue for the retail businesses declined 2%. The Van Heusen and Izod retail businesses posted a combined 3% comparable store sales increase, which was offset by an 8% comparable store sales decline in the Bass retail business. The Bass retail business, which is heavily penetrated in the Northeast and Midwest, was negatively impacted during the quarter by the unusually cool weather that affected those regions during much of the first quarter.
Earnings before interest and taxes for the Heritage Brands business was $38.6 million, as compared to $48.0 million in the prior year's first quarter. The decrease was driven principally by pressure on gross margins due to higher product costs and increased promotional selling, particularly at Bass retail, as well as at the Izod and Timberland wholesale sportswear businesses.
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Calvin Klein
Total revenue for the Calvin Klein business increased 17% over the prior year's first quarter to $245.6 million, driven by strong performance across all divisions. The Calvin Klein wholesale and retail businesses performed very well during the quarter, posting a 23% increase in revenue as compared to the prior year's first quarter, including retail comparable store sales growth of 14%.
Calvin Klein continued to experience significant global growth, with royalty revenue increasing 10% as compared to the prior year's first quarter, driven by strong performance across virtually all product categories, with jeans, underwear, fragrance, watches, women's sportswear and dresses continuing to perform particularly well. Revenue in the Calvin Klein business included a benefit of approximately $2 million from a weaker U.S. dollar in the quarter versus the prior year's first quarter.
Earnings before interest and taxes for the Calvin Klein business was $55.1 million in the first quarter, an increase of 9% over the prior year's first quarter. This increase was due to the revenue increases discussed above, partially offset by a planned increase of approximately $9 million in advertising expenses related principally to the launch in the first quarter of 2011 of the global marketing campaign supporting the introduction of the new lifestyle brand for jeans, underwear and fragrance under the ck one label.
Tommy Hilfiger
The Tommy Hilfiger business generated revenue of $715.4 million and non-GAAP earnings before interest and taxes of $90.6 million, or an operating margin of 12.7%, all of which significantly exceeded the top end of the Company's previous guidance. The strong performance was due to significantly better than planned growth in both Europe and North America, with double-digit retail comparable store sales growth in both regions, combined with higher than projected gross margins and the favorable impact of a weaker than anticipated U.S. dollar.
The Tommy Hilfiger business contributed GAAP earnings before interest and taxes of $66.7 million, or an operating margin of 9.3%, in the first quarter, which also exceeded the Company's previous guidance.
Heritage Brands
The Heritage Brands business generated revenue of $408.1 million in the first quarter, which was flat to the prior year's first quarter. The wholesale business experienced revenue growth in the low single-digits, while revenue for the retail businesses declined 2%. The Van Heusen and Izod retail businesses posted a combined 3% comparable store sales increase, which was offset by an 8% comparable store sales decline in the Bass retail business. The Bass retail business, which is heavily penetrated in the Northeast and Midwest, was negatively impacted during the quarter by the unusually cool weather that affected those regions during much of the first quarter.
Earnings before interest and taxes for the Heritage Brands business was $38.6 million, as compared to $48.0 million in the prior year's first quarter. The decrease was driven principally by pressure on gross margins due to higher product costs and increased promotional selling, particularly at Bass retail, as well as at the Izod and Timberland wholesale sportswear businesses.
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Phillips-Van Heusen Corporation
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