Calvin Klein Owner Surges After Forecast Exceeds Estimates

  • International growth helping offset slowdown in the U.S.
  • PVH’s shares see biggest rally in more than two years

PVH Corp., the maker of Calvin Klein and Tommy Hilfiger clothing, rose the most in more than two years after its earnings forecast beat estimates, fueling optimism that it can weather an apparel slump.

Earnings will be $7.30 to $7.40 a share this year, excluding some items, the company said on Wednesday. That topped the $7.26 estimated by analysts.

The outlook signaled that PVH is overcoming a shaky retail economy that’s been characterized by deep discounts. It’s also coping with heavy reliance on department-store chains such as Macy’s Inc. To adapt to the turmoil, the New York-based company has been expanding its international operations in places such as China and increasing marketing. Overseas growth helped offset sluggish sales in North America in the fourth quarter.

Earnings amounted to $1.23 a share last quarter, excluding some items. Analysts had estimated $1.19 on average, according to data compiled by Bloomberg. Sales came in at $2.11 billion, ahead of the $2.09 billion projection.

The results “exceeded both our sales and earnings guidance despite the volatile macroeconomic environment and the highly promotional retail market in the U.S.,” Chief Executive Officer Emanuel Chirico said in a statement.

The shares gained as much as 10 percent to $100 in New York, the biggest intraday gain since September 2014. PVH had been up less than 1 percent this year through Wednesday’s close.

True & Co.

PVH recently bought direct-to-consumer lingerie shop True & Co. The company doesn’t expect to make any big acquisitions for now, but it would consider M&A in the future, Chirico said in an interview.

“We’ve done very large deals in billions of dollars -- I don’t see something like that in the near term,” he said. “But clearly given the capacity in our balance sheet and our desire to grow, that potentially in 12 months could be part of the scenario.”

The stronger dollar has brought a decline in international tourism and spending at its North American stores, he said. The drop will probably continue throughout the year, though the region remains highly profitable, Chirico said. Underwear and jeans are two bright spots for the company.

PVH’s Calvin Klein division brought in former Christian Dior designer Raf Simons as its chief creative officer to bring more cachet to the brand. Tommy Hilfiger, meanwhile, is looking to social media and e-commerce to help bring buzz to that business.

PVH also will counter the U.S. slump with further expansion in Europe and Asia, where growth is accelerating. It plans to double the size of its China business in the next five years, Chirico said. More than 50 percent of PVH’s profit was generated from the international business, he added.

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