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PVH Q1 Sales Increase 2%, Profit Falls 54%

(Filed Under Financial and General Interest News). As PVH reported a 2% increase in sales, and a 54% drop in overall company profit in the first quarter of 2019, chairman Manny Chirico pointed out two bright spots in the company’s inner wear business.

During the conference call to discuss the results, he predicted that the company’s recently announced Nike men’s underwear license “has a potential of a $100 million business,” and noted that “our core intimates business continued to perform well” in the quarter.

Most of the rest of the information in the earnings release and the conference call focused on international and domestic market challenges and the company’s two most prominent apparel brands, Tommy Hilfiger and Calvin Klein. There was with no further mention of underwear, intimates or such house brands as Warner’s and Olga.

Chirico declared in the release that “while the global retail environment was challenging, the power of our diversified business model and the strength of our brands, global platforms and teams drove our businesses forward.” He added, “looking ahead, the volatile and challenging macroeconomic backdrop has continued into the second quarter, with particular softness across the U.S. and China retail landscape. Additionally, further volatility in foreign exchange rates is expected to pressure our full year earnings per share by an incremental $0.10 compared to our prior expectations. As such, we believe it is prudent to factor this into our updated full year earnings outlook.”

After that adjustment, the current projection is that “2019 earnings per share on a GAAP basis will be in a range of $9.05 to $9.15 compared to $9.65 in 2018.”

PVH earned $82 million on revenue of $2.3563 billion in the quarter ended May 5, 2019, compared to $179.4 million on sales of $2.3146 billion in the same period last year.

PVH said it expects full year 2019 revenue “to increase approximately 3% (increase approximately 5% on a constant currency basis) as compared to 2018. Revenue for the Tommy Hilfiger business is projected to increase approximately 6% (increase approximately 9% on a constant currency basis). Revenue for the Calvin Klein business is projected to be flat (increase approximately 2% on a constant currency basis). Revenue for the Heritage Brands business is projected to be flat.”

Referring to the fall 2020 launch of the licensed Nike men’s underwear, Chirico said he was “not sure how quickly” the program will get to $100 million in sales. “We’re viewing product and talking to key customers. There’s huge enthusiasm for the product and giving our expertise in that area on the men’s side. It seems like a huge opportunity. It opens up really new channels of distribution for us, as well as existing channels. So there is a strong department store distribution.”

He continued, “because of the Nike brand strength, it really goes from - it goes from Kohl’s, all the way up to Nordstrom and beyond. And then it opens up the whole athletic sporting goods market. That, I think, there’s a real opportunity to develop a great underwear presence for men’s in particular. That’s got - it has an athletic theme to it. It has performance product associated with it. And I think we know how to do that product better than anyone and understand that, and that’s why Nike picked us. And I think it’s a real opportunity as we go forward.” — NM

The full transcript of the conference call can be found here:

more Financial and General Interest News >>

Published 06-04-2019 by Nick Monjo

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