Calvin Klein Owner Jumps After Increasing Profit Forecast

  • PVH to stay prudent in 2016 amid volatile U.S. market
  • Company’s ‘winning apparel playbook’ to continue: analyst

PVH Corp., the maker of Calvin Klein and Tommy Hilfiger apparel, jumped as much as 7.6 percent after raising its full-year profit forecast and reporting first-quarter earnings that beat analysts’ estimates.

Adjusted earnings will probably be $6.45 to $6.55 a share during the 2016 fiscal year, the New York-based company said in a statement Wednesday. That’s up from the previous forecast of $6.30 to $6.50 a share in March, the company said.

The apparel company said its first-quarter earnings were $1.50 per share, including the effects of currency-exchange rates. That’s above its own forecast as well as the $1.43 average estimate of analysts surveyed by Bloomberg.

The shares rose as high as $96.67 in New York, the biggest intraday gain since March 24. The stock was already up 22 percent this year before Thursday.

“The company’s core Tommy Hilfiger and Calvin Klein brands continue to demonstrate the winning apparel playbook for full year 2017: take share in domestic markets, grow internationally and leverage strong brands to drive higher returns,” Eric Beder, an analyst at Wunderlich Securities Inc., said in a note Thursday. “We believe PVH has the ability to continue this formula in full year 2017 and beyond.”

PVH bucked the sluggish sales trend that’s hurt apparel sellers like Nordstrom Inc. and Macy’s Inc., which have suffered from slower traffic at many malls. The strong U.S. dollar also hurt clothing companies by reducing the value of sales overseas.

PVH will continue to “take a prudent approach to planning our business, as foreign currency and global consumer spending remain unpredictable and the U.S. retail market is increasingly volatile and promotional,” Chief Executive Officer Emanuel Chirico said in the statement.

Of the two brands, Calvin Klein was the better performer. Revenue of the Calvin Klein business rose 13 percent on a constant-currency basis. The results were driven by a strong performance in the North American wholesale operation, particularly underwear.

Tommy Hilfiger revenue increased 4 percent on a constant-currency basis, with a 5 percent drop in North America offset by a 11 percent rise in international sales. The gain was boosted by the company’s acquisition of the 55 percent interest in its China joint venture that it didn’t already own.

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