- PVH also buying remaining stake in Hilfiger's China operations
- Retailer says strong demand helped cope with dollar's surge
PVH Corp., the apparel company that owns the Calvin Klein and Tommy Hilfiger brands, gained after saying that 2015 profit came in at the high end of its projections.
Earnings will be at or above $7 a share in the period, excluding some items, the New York-based company said in a statement Monday. That was the top of its earlier forecast and above the $6.96 predicted by analysts.
Demand for the Calvin Klein and Tommy Hilfiger brands helped PVH cope with the strong dollar, which lowered the value of its overseas sales. The U.S. retail market also was challenging last quarter, when warm weather in much of the country hurt sales of winter clothing, Chief Executive Officer Emanuel Chirico said in the statement.
PVH’s designer brands “enabled us to successfully navigate through the difficult macroeconomic environment,” he said.
In a separate statement today, PVH said it will acquire the 55 percent stake in Tommy Hilfiger’s China operations owned by Apax Partners. The transaction, previously reported by Bloomberg, will cost about $172 million and is scheduled to close in the second quarter of 2016, the company said. The acquisition will slightly add to adjusted earnings per share this year, PVH said.
“We’re always chasing growth, profitable growth, and this has been a strategic initiative from Day 1, where we wanted to broaden our international expansion,” Chirico said in an interview. “We’re focusing on the two megabrands that we have and driving both those brands’ global growth.”
PVH will improve marketing and expand the Tommy Hilfiger assortment in China from mainly men’s sportswear to include women’s apparel, denim and footwear, Chirico said. The company will use its existing infrastructure from its Calvin Klein business to expand the brand, he said. Since 2012, the China business has doubled to a projected $140 million in revenue last year, PVH said.
PVH may consider an initial public offering of the China operations as early as 2016, a person familiar with the situation told Bloomberg in December. The company plans to run the China business internally, similarly to how it operates its Calvin Klein’s international business, a representative said in an e-mailed statement.
The stock rose 2.7 percent to $75.15 at the close of trading in New York on Tuesday. PVH shares rose as much 3.4 percent in late trading after the China acquisition was announced. The stock tumbled 43 percent last year, when slow mall traffic, the strong dollar and a decrease in tourist spending took a toll on U.S. retailers.
PVH, which calls itself the world’s largest shirt and neckwear company, also sells apparel under the Van Heusen, Izod and Kenneth Cole brands.