Earnings before interest and taxes on a GAAP basis for the quarter increased to $244 million from $113 million in the prior year period. Included in earnings before interest and taxes for the quarter were costs of $7 million incurred related to the TH China acquisition.
Net interest expense of $28 million was relatively flat as compared to the prior year period. The effective tax rate on a GAAP basis was 17.1 per cent as compared to 17.0 per cent in the prior year period. Inventory levels increased 22 per cent as compared to the prior year period due to a shift in the timing of inventory receipts as a result of the 53rd week in 2017 and an expected increase in second quarter of 2018 sales as compared to the prior year period.
"We are very pleased with our first quarter 2018 results, which exceeded our expectations. We experienced broad-based strength across our businesses globally and our performance underscored the power of our diversified business model and the continued momentum in our global designer lifestyle brands, Calvin Klein and Tommy Hilfiger," Emanuel Chirico, chairman and chief executive officer, said.
Revenue in the second quarter of 2018 is projected to increase approximately 10 per cent (increase approximately 9 per cent on a constant currency basis), compared to the prior year period. Second quarter EPS on a GAAP basis is projected to be in a range of $1.98 to $2.03 compared to $1.52 in the prior year period.
"We are applying our consumer-centric mindset by growing our presence where our consumers prefer to shop, creating exciting brand experiences across our distribution channels and capitalising on creative new ways to connect with the next generation of consumers. We are also driving our long-term vision by making investments to ensure that we adapt to the evolving consumer landscape, without compromising on our commitment to sustainable development throughout the business," Chirico continued.
For full year 2018, revenue is projected to increase approximately 6 per cent (increase approximately 5 per cent on a constant currency basis) as compared to 2017. The company currently projects that 2018 earnings per share on a GAAP basis will be in a range of $8.81 to $8.91 compared to $6.84 in 2017.
Net interest expense in 2018 is projected to decrease to approximately $120 million from $122 million in 2017. The Company estimates that the 2018 effective tax rate will be in a range of 14 to 15 per cent, which includes the estimated impact of the tax legislation.
"We are pleased to increase our earnings guidance for the year, despite the continuing volatility in the macroeconomic and geopolitical environments, which is resulting in a significantly lower foreign currency benefit than previously planned for the year. As I think about the strength of our teams, our brands and our platforms, I believe that PVH is in a powerful position to deliver a sustainable trajectory of long-term growth and stockholder value creation. Our strategic priorities will continue to serve as our guidelines for growth and I believe that we will execute on the significant opportunities that PVH has ahead of it," Chirico concluded. (RR)
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