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PVH Third Quarter Earnings Above Guidance and Raises Full Year EPS Outlook image

PVH Third Quarter Earnings Above Guidance and Raises Full Year EPS Outlook

    • Revenue: Increased 4% to $2.363 billion compared to the prior year period (increased 1% on a constant currency basis); in line with guidance of an increase of mid single-digits (increase low single-digits on a constant currency basis).
    • EPS
      • GAAP basis: $2.66 exceeded guidance of approximately $2.43
      • Non-GAAP basis: $2.90 exceeded guidance of approximately $2.70
  • Full year outlook
    • Revenue: Projected to increase approximately 1% (increase 1% on a constant currency basis) compared to an increase of 3% to 4% (increase 2% to 3% on a constant currency basis) previously
      • Outlook includes the impact from the recently concluded sale of the Heritage Brands intimate apparel business.
    • EPS:
      • GAAP basis: Raising to approximately $9.75 from approximately $9.60 previously
      • Non-GAAP basis: Raising to approximately $10.45 from approximately $10.35 previously
  • Closed the sale of the Heritage Brands intimate apparel business in November 2023, with approximately $150 million of net proceeds to be utilized to repurchase shares in 2023. Planned share repurchases in 2023 to increase to approximately $550 million from up to $400 million previously.

New York, NY —  PVH Corp. reported its 2023 third quarter results and updated its full year outlook.

Stefan Larsson, Chief Executive Officer, commented, “We delivered another strong quarter, with high single-digit revenue growth for our direct-to-consumer businesses across Calvin Klein and TOMMY HILFIGER, with growth in all regions, and we exceeded our EPS guidance. Through our disciplined PVH+ Plan execution, we are gaining increasing traction in our product category offense and hero products, our cut-through marketing campaigns, and building out our demand-driven supply chain. We expanded gross margin, improved inventory productivity and increased our marketing investments, driving strong consumer engagement and overall, significantly improved profitability. We continue to see incredible strength in our iconic brands as we tap into their beloved DNA and build them into the most desirable lifestyle brands in the world.”

Mr. Larsson added, “I’m especially pleased with the outperformance in North America as we made significant progress towards unlocking our full potential, delivering a 13.1% non-GAAP EBIT margin in the region for Calvin Klein and TOMMY HILFIGER combined. Based on our solid year-to-date performance, we are raising our EPS guidance for the full year.”

Zac Coughlin, Chief Financial Officer, said, “Our disciplined execution of the PVH+ Plan drove strong gross margin expansion and double-digit non-GAAP EPS growth in the third quarter. For the full-year, we remain well-positioned to achieve a double-digit non-GAAP EBIT margin and have raised our EPS guidance. Reflecting our confidence, we have further increased our share repurchases to approximately $550 million this year. Through the PVH+ Plan, we are relentlessly focused on delivering strong profitability, significant cash flow and attractive returns for our shareholders, while pursuing sustained, long-term growth in a choppy macroenvironment.”

Non-GAAP Amounts:

Amounts stated to be on a non-GAAP basis exclude the items that are defined or described in greater detail near the end of this release under the heading “Non-GAAP Exclusions.” Amounts stated on a constant currency basis also are deemed to be on a non-GAAP basis. Reconciliations of amounts on a GAAP basis to amounts on a non-GAAP basis are presented after the Non-GAAP Exclusions section and identify and quantify all excluded items.

Third Quarter Review:

  • Revenue increased 4% compared to the prior year period (increased 1% on a constant currency basis) reflecting growth in the direct-to-consumer businesses in all regions. Overall revenue in the Company’s international businesses increased 1% on a constant currency basis over the prior year period, despite an increasingly challenging macroeconomic environment in Europe. In North America, revenue in the Tommy Hilfiger and Calvin Klein brand businesses combined grew 2% compared to the prior year period.
    • Direct-to-consumer revenue increased 8% compared to the prior year period (increased 6% on a constant currency basis), with growth in both the Company’s owned and operated stores and digital commerce business in all regions.
    • Wholesale revenue increased 1% compared to the prior year period (decreased 3% on a constant currency basis) as wholesale customers continue to take a cautious approach.
    • Total digital revenue increased 13% compared to the prior year period (increased 8% on a constant currency basis), with growth in both the Company’s owned and operated digital commerce revenue and its wholesale sales to traditional retailers’ ecommerce businesses and pure players. Total digital penetration as a percentage of total revenue was approximately 20%.
  • Gross margin was 56.7% compared to 55.9% in the prior year period. The increase reflects benefits from lower freight costs and a favorable shift in regional and channel mix, partially offset by higher product costs, including an approximately 100 basis point negative impact on inventory costs due to foreign currency exchange rates.
  • Inventory decreased 19% compared to the prior year period, in line with expectations, as the Company continues to proactively manage its inventory levels towards its previously announced goal of a 25% reduction in inventory as a percentage of sales.

Third Quarter Consolidated Results:

  • Revenue increased 4% to $2.363 billion compared to the prior year period (increased 1% on a constant currency basis).
    • Tommy Hilfiger revenue increased 4% compared to the prior year period (flat on a constant currency basis).
      • Tommy Hilfiger International revenue increased 3% (decreased 3% on a constant currency basis).
      • Tommy Hilfiger North America revenue increased 6%.
    • Calvin Klein revenue increased 6% compared to the prior year period (increased 3% on a constant currency basis).
      • Calvin Klein International revenue increased 10% (increased 6% on a constant currency basis).
      • Calvin Klein North America revenue decreased 1% driven by a decrease in the wholesale business.
    • Heritage Brands revenue decreased 11% compared to the prior year period.
  • Earnings (loss) before interest and taxes (“EBIT”) on a GAAP basis was $230 million, inclusive of a $9 million positive impact due to foreign currency translation, compared to $(214) million in the prior year period. Included in the third quarter of the prior year period were costs of $434 million, including a noncash goodwill impairment charge of $417 million and other costs described under the heading “Non-GAAP Exclusions” later in this release. Included in the third quarter of 2023 were costs of $19 million described under the heading “Non-GAAP Exclusions” later in this release. EBIT on a non-GAAP basis for these periods excludes these amounts.

    EBIT on a non-GAAP basis was $249 million, inclusive of a $9 million positive impact due to foreign currency translation, compared to $220 million in the prior year period. The increase was driven by the revenue growth and the gross margin improvement discussed above. The Company continues to take a disciplined approach to managing expenses, driving cost efficiencies while making targeted investments to drive its strategic initiatives.

  • Earnings (loss) per share (“EPS”)
    • GAAP basis: $2.66 compared to $(2.88) in the prior year period.
    • Non-GAAP basis: $2.90 compared to $2.60 in the prior year period.

EPS on both a GAAP and a non-GAAP basis for the third quarter of 2023 includes the positive impact of $0.13 per share related to foreign currency translation.

EPS on a GAAP basis for these periods also included the amounts for the applicable period described under the heading “Non-GAAP Exclusions” later in this release, including the $417 million pre-tax noncash goodwill impairment charge in the prior year period. EPS on a non-GAAP basis for these periods excluded these amounts.

  • Interest expense increased to $22 million from $19 million in the prior year period primarily due to higher interest rates.
  • Effective tax rate was 22.2% on a GAAP basis as compared to 19.8% in the prior year period. The effective tax rate was 22.1% on a non-GAAP basis as compared to 15.7% in the prior year period.

Stock Repurchase Program:
Delivering on its commitment under the PVH+ Plan to return excess cash to stockholders, the Company repurchased 0.9 million shares of its common stock for $68 million during the third quarter of 2023, bringing total share repurchases for the first nine months of 2023 to 3.2 million shares for $268 million.

Sale of the Heritage Brands Intimate Apparel Business:
The Company completed its previously announced sale of its Heritage Brands intimate apparel business on November 27, 2023. The $160 million cash purchase price is subject to adjustment. There is a potential earn out of up to $10 million based on calendar year 2024 net sales of a portion of the sold business.

2023 Outlook:

Full Year 2023 Guidance

  • Revenue is projected to increase approximately 1% as compared to 2022 (increase approximately 1% on a constant currency basis), including a benefit of less than 1% from the 53rd week in 2023 and a negative impact of less than 1% related to the sale of the Heritage Brands intimate apparel business.
  • EPS
    • GAAP basis: Approximately $9.75 compared to $3.03 in 2022.
    • Non-GAAP basis: Approximately $10.45 compared to $8.97 in 2022.

The 2023 EPS projections on both a GAAP and a non-GAAP basis include the estimated positive impact of approximately $0.10 per share related to foreign currency translation.
EPS on a GAAP basis for these periods also include the amounts described under the heading “Non-GAAP Exclusions” later in this release. EPS on a non-GAAP basis exclude these amounts.

  • Interest expense is projected to increase to approximately $93 million compared to $83 million in 2022 primarily due to higher interest rates.
  • Effective tax rate is projected to be approximately 22%.

Fourth Quarter 2023 Guidance

  • Revenue is projected to decrease 3% to 4% as compared to the fourth quarter of 2022 (decrease 3% to 4% on a constant currency basis). The benefit of the 53rd week in 2023 is mostly offset by the revenue reduction related to the sale of the Heritage Brands intimate apparel business.
  • EPS
    • GAAP basis: Approximately $3.48 compared to $2.18 in the prior year period.
    • Non-GAAP basis: Approximately $3.45 compared to $2.38 in the prior year period.

The fourth quarter 2023 EPS projections include the estimated positive impact of approximately $0.03 per share related to foreign currency translation.
EPS on a GAAP basis for these periods also include the amounts described under the heading “Non-GAAP Exclusions” later in this release. EPS on a non-GAAP basis exclude these amounts.

  • Interest expense is projected to increase to approximately $25 million compared to $22 million in the fourth quarter of 2022 primarily due to higher interest rates.
  • Effective tax rate is projected to be approximately 22%.

Please see the section entitled “Full Year and Quarterly Reconciliations of GAAP to Non-GAAP Amounts” at the end of this release for further detail and reconciliations of GAAP to non-GAAP amounts discussed in this section.

Non-GAAP Exclusions:

The discussions in this release that refer to non-GAAP amounts exclude the following:

  • Estimated pre-tax net gain of approximately $10 million to be recorded in the fourth quarter of 2023 in connection with the sale of the Company’s Heritage Brands intimate apparel business, which includes an estimated gain on the sale, less costs to sell, and severance and other termination benefits associated with the transaction.
  • Estimated pre-tax restructuring costs of approximately $65 million incurred and expected to be incurred in 2023 consisting principally of severance related to actions taken in the second and third quarters of 2023 under the plans initially announced in August 2022 to reduce people costs in the Company’s global offices by approximately 10% by the end of 2023, of which $39 million was incurred in the second quarter, $19 million was incurred in the third quarter and approximately $7 million is expected to be incurred in the fourth quarter.
  • Pre-tax gain of $78 million recorded in the fourth quarter of 2022 related to the recognized actuarial gain on retirement plans.
  • Pre-tax noncash goodwill impairment charge of $417 million recorded in the third quarter of 2022, which was non-operational and driven by a significant increase in discount rates.
  • Pre-tax restructuring costs of $20 million incurred in 2022, consisting principally of severance related to initial actions under the plans announced in August 2022 to reduce people costs in the Company’s global offices by approximately 10% by the end of 2023, of which $17 million was incurred in the third quarter and $4 million was incurred in the fourth quarter.
  • Pre-tax net costs of $43 million recorded in 2022 in connection with the Company’s decision to exit from its Russia business, primarily consisting of noncash asset impairments and a gain on contract terminations, of which $50 million of charges were recorded in the second quarter and an $8 million gain was recorded in the fourth quarter.
  • Pre-tax gain of $16 million recorded in the second quarter of 2022 in connection with the sale of the Company’s equity investment in Karl Lagerfeld Holding B.V.

PVH CORP.
Consolidated GAAP Statements of Operations
(In millions, except per share data)

Quarter Ended

Nine Months Ended

10/29/23

10/30/22

10/29/23

10/30/22

Net sales

$

2,225.8

$

2,144.7

$

6,382.1

$

6,182.4

Royalty revenue

108.0

105.4

272.8

273.7

Advertising and other revenue

29.1

30.7

72.9

79.4

Total revenue

$

2,362.9

$

2,280.8

$

6,727.8

$

6,535.5

Gross profit

$

1,339.4

$

1,274.2

$

3,862.0

$

3,732.4

Selling, general and administrative expenses

1,123.8

1,085.0

3,326.3

3,194.8

Goodwill impairment

417.1

417.1

Non-service related pension and postretirement income

0.5

3.4

1.4

10.2

Equity in net income of unconsolidated affiliates

13.7

10.5

34.8

42.6

Earnings (loss) before interest and taxes

229.8

(214.0

)

571.9

173.3

Interest expense, net

22.2

18.8

67.8

60.9

Pre-tax income (loss)

207.6

(232.8

)

504.1

112.4

Income tax expense (benefit)

46.0

(46.1

)

112.3

50.7

Net income (loss)

$

161.6

$

(186.7

)

$

391.8

$

61.7

Diluted net income (loss) per common share (1)

$

2.66

$

(2.88

)

$

6.29

$

0.92

Quarter Ended

Nine Months Ended

10/29/23

10/30/22

10/29/23

10/30/22

Depreciation and amortization expense

$

75.2

$

73.1

$

223.0

$

225.3

Please see following pages for information related to non-GAAP measures discussed in this release.

(1)

Please see Note A in Notes to Consolidated GAAP Statements of Operations for the reconciliations of GAAP diluted net income (loss) per common share to diluted net income per common share on a non-GAAP basis.

 

Quarter Ended

Nine Months Ended

10/29/23

10/30/22

10/29/23

10/30/22

Non-GAAP Measures

Selling, general and administrative expenses (1)

$

1,105.0

$

1,068.3

$

3,268.5

$

3,127.6

Goodwill impairment (2)

Equity in net income of unconsolidated affiliates (3)

26.5

Earnings before interest and taxes (4)

248.6

219.8

629.7

641.5

Income tax expense (5)

50.0

31.5

125.1

138.4

Net income (6)

176.4

169.5

436.8

442.2

Diluted net income per common share (7)

$

2.90

$

2.60

$

7.01

$

6.60

(1)

Please see Table 3 for the reconciliations of GAAP selling, general and administrative (“SG&A”) expenses to SG&A expenses on a non-GAAP basis.

(2)

Please see Table 4 for the reconciliations of GAAP goodwill impairment to goodwill impairment on a non-GAAP basis.

(3)

Please see Table 5 for the reconciliation of GAAP equity in net income of unconsolidated affiliates to equity in net income of unconsolidated affiliates on a non-GAAP basis.

(4)

Please see Table 2 for the reconciliations of GAAP earnings (loss) before interest and taxes to earnings before interest and taxes on a non-GAAP basis.

(5)

Please see Table 6 for the reconciliations of GAAP income tax expense (benefit) to income tax expense on a non-GAAP basis and an explanation of the calculation of the tax effects associated with the pre-tax items identified as non-GAAP exclusions.

(6)

Please see Table 1 for the reconciliations of GAAP net income (loss) to net income on a non-GAAP basis.

(7)

Please see Note A in Notes to Consolidated GAAP Statements of Operations for the reconciliations of GAAP diluted net income (loss) per common share to diluted net income per common share on a non-GAAP basis.

PVH CORP.
Reconciliations of GAAP to Non-GAAP Amounts
(In millions, except per share data)

Table 1 – Reconciliations of GAAP net income (loss) to net income on a non-GAAP basis

Quarter Ended

Nine Months Ended

10/29/23

10/30/22

10/29/23

10/30/22

Net income (loss)

$

161.6

$

(186.7

)

$

391.8

$

61.7

Diluted net income (loss) per common share (1)

$

2.66

$

(2.88

)

$

6.29

$

0.92

Pre-tax items excluded:

SG&A expenses associated with the Russia business exit

50.5

SG&A expenses associated with the 2022 cost savings initiative

18.8

16.7

57.8

16.7

Goodwill impairment

417.1

417.1

Gain in connection with the Karl Lagerfeld transaction (recorded in equity in net income of unconsolidated affiliates)

(16.1

)

Tax effects of the pre-tax items above (2)

(4.0

)

(77.6

)

(12.8

)

(87.7

)

Net income on a non-GAAP basis

$

176.4

$

169.5

$

436.8

$

442.2

Diluted net income per common share on a non-GAAP basis (1)

$

2.90

$

2.60

$

7.01

$

6.60

(1)

Please see Note A in Notes to the Consolidated GAAP Statements of Operations for the reconciliations of GAAP diluted net income (loss) per common share to diluted net income per common share on a non-GAAP basis.

(2)

Please see Table 6 for an explanation of the calculation of the tax effects of the above items.
Table 2 – Reconciliations of GAAP earnings (loss) before interest and taxes to earnings before interest and taxes on a non-GAAP basis

Quarter Ended

Nine Months Ended

10/29/23

10/30/22

10/29/23

10/30/22

Earnings (loss) before interest and taxes

$

229.8

$

(214.0

)

$

571.9

$

173.3

Items excluded:

SG&A expenses associated with the Russia business exit

50.5

SG&A expenses associated with the 2022 cost savings initiative

18.8

16.7

57.8

16.7

Goodwill impairment

417.1

417.1

Gain in connection with the Karl Lagerfeld transaction (recorded in equity in net income of unconsolidated affiliates)

(16.1

)

Earnings before interest and taxes on a non-GAAP basis

$

248.6

$

219.8

$

629.7

$

641.5

PVH CORP.
Reconciliations of GAAP to Non-GAAP Amounts (continued)
(In millions, except per share data)

Table 3 – Reconciliations of GAAP SG&A expenses to SG&A expenses on a non-GAAP basis

Quarter Ended

Nine Months Ended

10/29/23

10/30/22

10/29/23

10/30/22

SG&A expenses

$

1,123.8

$

1,085.0

$

3,326.3

$

3,194.8

Items excluded:

Expenses associated with the Russia business exit

(50.5

)

Expenses associated with the 2022 cost savings initiative

(18.8

)

(16.7

)

(57.8

)

(16.7

)

SG&A expenses on a non-GAAP basis

$

1,105.0

$

1,068.3

$

3,268.5

$

3,127.6

Table 4 – Reconciliations of GAAP goodwill impairment to goodwill impairment on a non-GAAP basis

Quarter Ended

Nine Months Ended

10/30/22

10/30/22

Goodwill impairment

$

417.1

$

417.1

Item excluded:

Goodwill impairment

(417.1

)

(417.1

)

Goodwill impairment on a non-GAAP basis

$

$

Table 5 – Reconciliation of GAAP equity in net income of unconsolidated affiliates to equity in net income of unconsolidated affiliates on a non-GAAP basis

Nine Months Ended

10/30/22

Equity in net income of unconsolidated affiliates

$

42.6

Item excluded:

Gain in connection with the Karl Lagerfeld transaction

(16.1

)

Equity in net income of unconsolidated affiliates on a non-GAAP basis

$

26.5

PVH CORP.
Reconciliations of GAAP to Non-GAAP Amounts (continued)
(In millions, except per share data)

Table 6 – Reconciliations of GAAP income tax expense (benefit) to income tax expense on a non-GAAP basis

Quarter Ended

Nine Months Ended

10/29/23

10/30/22

10/29/23

10/30/22

Income tax expense (benefit)

$

46.0

$

(46.1

)

$

112.3

$

50.7

Item excluded:

Tax effects of pre-tax items identified as non-GAAP exclusions (1)

4.0

77.6

12.8

87.7

Income tax expense on a non-GAAP basis

$

50.0

$

31.5

$

125.1

$

138.4

(1)

The estimated tax effects associated with the Company’s exclusions on a non-GAAP basis are based on the Company’s assessment of deductibility. In making this assessment, the Company evaluated each pre-tax item that it had identified above as a non-GAAP exclusion to determine if such item was (i) taxable or tax deductible, in which case the tax effect was taken at the applicable income tax rate in the local jurisdiction, or (ii) non-taxable or non-deductible, in which case the Company assumed no tax effect.

PVH CORP.
Notes to Consolidated GAAP Statements of Operations
(In millions, except per share data)

A. The Company computed its diluted net income (loss) per common share as follows:

Quarter Ended

Quarter Ended

10/29/23

10/30/22

GAAP

Non-GAAP

GAAP

Non-GAAP

Results

Adjustments (1)

Results

Results

Adjustments (2)

Results

Net income (loss)

$

161.6

$

(14.8

)

$

176.4

$

(186.7

)

$

(356.2

)

$

169.5

Weighted average common shares

60.3

60.3

64.8

64.8

Weighted average dilutive securities

0.5

0.5

0.3

0.3

Total shares

60.8

60.8

64.8

65.1

Diluted net income (loss) per common share

$

2.66

$

2.90

$

(2.88

)

$

2.60

Nine Months Ended

Nine Months Ended

10/29/23

10/30/22

GAAP

Non-GAAP

GAAP

Non-GAAP

Results

Adjustments (1)

Results

Results

Adjustments (2)

Results

Net income

$

391.8

$

(45.0

)

$

436.8

$

61.7

$

(380.5

)

$

442.2

Weighted average common shares

61.7

61.7

66.5

66.5

Weighted average dilutive securities

0.6

0.6

0.5

0.5

Total shares

62.3

62.3

67.0

67.0

Diluted net income per common share

$

6.29

$

7.01

$

0.92

$

6.60

(1)

Represents the impact on net income in the periods ended October 29, 2023 from the elimination of (i) the restructuring costs related to the 2022 cost savings initiative; and (ii) the tax effects associated with the foregoing pre-tax item. Please see Table 1 for the reconciliations of GAAP net income to net income on a non-GAAP basis.

(2)

Represents the impact on net (loss) income in the periods ended October 30, 2022 from the elimination of (i) the costs related to the Russia business exit; (ii) the gain recorded in connection with the Karl Lagerfeld transaction; (iii) the noncash goodwill impairment charge, which was driven by a significant increase in discount rates; (iv) the restructuring costs related to the 2022 cost savings initiative; and (v) the tax effects associated with the foregoing pre-tax items. Please see Table 1 for the reconciliation of GAAP net (loss) income to net income on a non-GAAP basis. Adjustments to weighted average dilutive securities for the quarter ended October 30, 2022 represent the dilutive impact of securities included in the non-GAAP diluted net income per share calculations. The GAAP diluted net loss per share calculation for the quarter ended October 30, 2022 excluded these potentially dilutive securities because there was a GAAP net loss for the period, and, as such, the inclusion of these securities would have been anti-dilutive.

PVH CORP.
Consolidated Balance Sheets
(In millions)

10/29/23

10/30/22

ASSETS

Current Assets:

Cash and Cash Equivalents

$

357.6

$

457.0

Receivables

1,062.6

1,002.3

Inventories

1,476.9

1,821.2

Other

310.5

374.2

Assets Held For Sale (1)

139.5

Total Current Assets

3,347.1

3,654.7

Property, Plant and Equipment

848.0

844.6

Operating Lease Right-of-Use Assets

1,234.6

1,177.1

Goodwill and Other Intangible Assets

5,362.6

5,358.4

Other Assets

374.8

371.1

TOTAL ASSETS

$

11,167.1

$

11,405.9

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts Payable and Accrued Expenses

$

1,842.8

$

2,240.8

Current Portion of Operating Lease Liabilities

319.5

329.4

Short-Term Borrowings

18.0

98.0

Current Portion of Long-Term Debt

665.2

37.3

Other Liabilities

610.4

702.4

Long-Term Portion of Operating Lease Liabilities

1,085.6

1,066.1

Long-Term Debt

1,571.3

2,109.1

Stockholders’ Equity

5,054.3

4,822.8

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

11,167.1

$

11,405.9

Note: Year over year balances are impacted by changes in foreign currency exchange rates.

(1)

Assets held for sale include the assets of the Company’s Heritage Brands intimate apparel business, primarily $43 million of inventory and $96 million of intangible assets. The Company completed the sale of the business on November 27, 2023.

PVH CORP.
Segment Data
(In millions)

REVENUE BY SEGMENT

Quarter Ended

Quarter Ended

10/29/23

10/30/22

Tommy Hilfiger North America

Net sales

$

326.9

$

307.2

Royalty revenue

25.6

24.3

Advertising and other revenue

6.7

6.7

Total

359.2

338.2

Tommy Hilfiger International

Net sales

831.1

805.9

Royalty revenue

15.6

16.9

Advertising and other revenue

4.0

5.9

Total

850.7

828.7

Total Tommy Hilfiger

Net sales

1,158.0

1,113.1

Royalty revenue

41.2

41.2

Advertising and other revenue

10.7

12.6

Total

1,209.9

1,166.9

Calvin Klein North America

Net sales

310.0

314.7

Royalty revenue

51.0

49.8

Advertising and other revenue

14.5

15.8

Total

375.5

380.3

Calvin Klein International

Net sales

627.4

570.0

Royalty revenue

15.5

14.1

Advertising and other revenue

3.8

2.1

Total

646.7

586.2

Total Calvin Klein

Net sales

937.4

884.7

Royalty revenue

66.5

63.9

Advertising and other revenue

18.3

17.9

Total

1,022.2

966.5

Heritage Brands Wholesale

Net sales

130.4

146.9

Royalty revenue

0.3

0.3

Advertising and other revenue

0.1

0.2

Total

130.8

147.4

Total Revenue

Net sales

2,225.8

2,144.7

Royalty revenue

108.0

105.4

Advertising and other revenue

29.1

30.7

Total

$

2,362.9

$

2,280.8

PVH CORP.
Segment Data (continued)
(In millions)

EARNINGS (LOSS) BEFORE INTEREST AND TAXES BY SEGMENT

Quarter Ended

Quarter Ended

10/29/23

10/30/22

Results

Results

Under

Non-GAAP

Under

Non-GAAP

GAAP

Adjustments (1)

Results

GAAP

Adjustments (2)

Results

Tommy Hilfiger North America

$

39.5

$

(5.4

)

$

44.9

$

(169.9

)

$

(181.4

)

$

11.5

Tommy Hilfiger International

90.8

(3.6

)

94.4

121.7

(2.1

)

123.8

Total Tommy Hilfiger

130.3

(9.0

)

139.3

(48.2

)

(183.5

)

135.3

Calvin Klein North America

48.8

(2.6

)

51.4

(140.0

)

(166.6

)

26.6

Calvin Klein International

94.9

(1.7

)

96.6

12.1

(80.0

)

92.1

Total Calvin Klein

143.7

(4.3

)

148.0

(127.9

)

(246.6

)

118.7

Heritage Brands Wholesale

3.9

(3.2

)

7.1

7.3

(2.2

)

9.5

Corporate

(48.1

)

(2.3

)

(45.8

)

(45.2

)

(1.5

)

(43.7

)

Total earnings (loss) before interest and taxes

$

229.8

$

(18.8

)

$

248.6

$

(214.0

)

$

(433.8

)

$

219.8

(1)

The adjustments for the quarter ended October 29, 2023 represent the elimination of the restructuring costs related to the 2022 cost savings initiative.

(2)

The adjustments for the quarter ended October 30, 2022 represent the elimination of (i) the noncash goodwill impairment charge, which was driven by a significant increase in discount rates; and (ii) the restructuring costs related to the 2022 cost savings initiative.

PVH CORP.
Segment Data (continued)
(In millions)

REVENUE BY SEGMENT

Nine Months Ended

Nine Months Ended

10/29/23

10/30/22

Tommy Hilfiger North America

Net sales

$

891.2

$

830.9

Royalty revenue

64.4

62.2

Advertising and other revenue

15.5

16.1

Total

971.1

909.2

Tommy Hilfiger International

Net sales

2,444.1

2,345.7

Royalty revenue

45.2

46.3

Advertising and other revenue

13.0

15.1

Total

2,502.3

2,407.1

Total Tommy Hilfiger

Net sales

3,335.3

3,176.6

Royalty revenue

109.6

108.5

Advertising and other revenue

28.5

31.2

Total

3,473.4

3,316.3

Calvin Klein North America

Net sales

807.6

872.6

Royalty revenue

121.1

126.2

Advertising and other revenue

35.9

41.3

Total

964.6

1,040.1

Calvin Klein International

Net sales

1,836.0

1,677.8

Royalty revenue

41.3

38.3

Advertising and other revenue

8.2

6.5

Total

1,885.5

1,722.6

Total Calvin Klein

Net sales

2,643.6

2,550.4

Royalty revenue

162.4

164.5

Advertising and other revenue

44.1

47.8

Total

2,850.1

2,762.7

Heritage Brands Wholesale

Net sales

403.2

455.4

Royalty revenue

0.8

0.7

Advertising and other revenue

0.3

0.4

Total

404.3

456.5

Total Revenue

Net sales

6,382.1

6,182.4

Royalty revenue

272.8

273.7

Advertising and other revenue

72.9

79.4

Total

$

6,727.8

$

6,535.5

PVH CORP.
Segment Data (continued)
(In millions)

EARNINGS BEFORE INTEREST AND TAXES BY SEGMENT

Nine Months Ended

Nine Months Ended

10/29/23

10/30/22

Results

Results

Under

Non-GAAP

Under

Non-GAAP

GAAP

Adjustments (1)

Results

GAAP

Adjustments (2)

Results

Tommy Hilfiger North America

$

55.0

$

(11.8

)

$

66.8

$

(184.8

)

$

(181.4

)

$

(3.4

)

Tommy Hilfiger International

290.5

(15.9

)

306.4

349.6

(38.8

)

388.4

Total Tommy Hilfiger

345.5

(27.7

)

373.2

164.8

(220.2

)

385.0

Calvin Klein North America

71.4

(8.5

)

79.9

(106.4

)

(166.6

)

60.2

Calvin Klein International

275.5

(10.2

)

285.7

187.6

(93.8

)

281.4

Total Calvin Klein

346.9

(18.7

)

365.6

81.2

(260.4

)

341.6

Heritage Brands Wholesale

21.5

(7.8

)

29.3

37.5

(2.2

)

39.7

Corporate

(142.0

)

(3.6

)

(138.4

)

(110.2

)

14.6

(124.8

)

Total earnings before interest and taxes

$

571.9

$

(57.8

)

$

629.7

$

173.3

$

(468.2

)

$

641.5

(1)

The adjustments for the nine months ended October 29, 2023 represent the elimination of the restructuring costs related to the 2022 cost savings initiative.

(2)

The adjustments for the nine months ended October 30, 2022 represent the elimination of (i) the costs related to the Russia business exit; (ii) the gain recorded in connection with the Karl Lagerfeld transaction; (iii) the noncash goodwill impairment charge, which was driven by a significant increase in discount rates; and (iv) the restructuring costs related to the 2022 cost savings initiative.

 

GAAP Revenue

% Change

Quarter Ended

GAAP

Positive Impact of Foreign Exchange

Constant Currency

10/29/23

10/30/22

Tommy Hilfiger International

$

850.7

$

828.7

2.7

%

5.3

%

(2.6

)%

Total Tommy Hilfiger

1,209.9

1,166.9

3.7

%

3.6

%

0.1

%

Calvin Klein International

646.7

586.2

10.3

%

4.2

%

6.1

%

Total Calvin Klein

1,022.2

966.5

5.8

%

2.5

%

3.3

%

Total Revenue

$

2,362.9

$

2,280.8

3.6

%

2.9

%

0.7

%

Total Direct-to-Consumer

$

924.2

$

857.6

7.8

%

2.2

%

5.6

%

Wholesale

$

1,301.6

$

1,287.1

1.1

%

3.7

%

(2.6

)%

Total Digital

$

487.6

$

432.7

12.7

%

5.2

%

7.5

%

The GAAP net income per common share amounts presented in the above table, as well as the amounts excluded in providing non-GAAP earnings guidance, would be expected to change as a result of (i) acquisition, restructuring, divestment or similar transactions or activities, (ii) the timing and strategy of restructuring and integration initiatives or other one-time events, such as the 2022 cost savings initiative, that the Company engages in or suffers during the period, (iii) any market or other changes affecting the Company’s expected actuarial gain or loss on retirement plans, including the recent volatility in the financial markets, (iv) changes in the expected impacts of inflationary pressures, as well as unexpected additional impacts of the war in Ukraine and its broader macroeconomic implications, or (v) any discrete tax events including changes in tax rates or tax law and events arising from audits or the resolution of uncertain tax positions.

PVH CORP.
Full Year and Quarterly Reconciliations of GAAP to Non-GAAP Amounts (continued)

Reconciliations of GAAP Diluted Net Income Per Common Share to Diluted Net Income Per Common Share on a Non-GAAP Basis

Full Year 2022

Fourth Quarter 2022

(Actual)

(Actual)

(In millions, except per share data)

Results Under GAAP

Adjustments (1)

Non-GAAP Results

Results Under GAAP

Adjustments (2)

Non-GAAP Results

Net income

$

200.4

$

(393.2

)

$

593.6

$

138.7

$

(12.7

)

$

151.4

Total weighted average shares

66.2

66.2

63.7

63.7

Diluted net income per common share

$

3.03

$

8.97

$

2.18

$

2.38

(1)

Represents the impact on net income in the year ended January 29, 2023 from the elimination of (i) a $78.4 million recognized actuarial gain on retirement plans in the fourth quarter of 2022, (ii) $43.0 million of net costs incurred in connection with the Russia business exit, consisting of noncash asset impairments, contract termination and other costs, and severance recorded in the second quarter of 2022, partially offset by a gain on contract terminations recorded in the fourth quarter of 2022; (iii) a $16.1 million gain recorded in the second quarter of 2022 in connection with the Karl Lagerfeld transaction; (iv) a $417.1 million noncash goodwill impairment charge recorded in the third quarter of 2022, which was non-operational and driven by a significant increase in discount rates; (v) $20.2 million of restructuring costs incurred in the third and fourth quarters of 2022 related to the 2022 cost savings initiative; and (vi) a $7.4 million net tax expense associated with the foregoing pre-tax items.

(2)

Represents the impact on net income in the quarter ended January 29, 2023 from the from the elimination (i) a $78.4 million recognized actuarial gain on retirement plans, (ii) a $7.5 million gain on contract terminations related to the Russia business exit; (iii) $3.5 million of restructuring costs related to the 2022 cost savings initiative; and (iv) a $95.1 million tax expense associated with the foregoing pre-tax items.

 

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