Third quarter revenue at PVH Corp. increased 10 percent to 2.333 billion dollars compared to the prior year period.
The company said that the revenue increase compared to the prior year period reflects a 12 percent increase in the Tommy Hilfiger business, including an 11 percent increase in Tommy Hilfiger international revenue and a 13 percent increase in Tommy Hilfiger North America revenue, a 22 percent increase in the Calvin Klein business, including a 19 percent increase in Calvin Klein international revenue and a 27 percent increase in Calvin Klein North America revenue and a 36 percent decrease in the Heritage Brands business, which included a 40 percent decline resulting from the Heritage Brands transaction and the exit from the Heritage Brands retail business.
Commenting on the third quarter trading, Stefan Larsson, PVH chief executive officer, said: “Our third quarter earnings significantly exceeded our guidance, led by our international businesses, and we achieved overall stronger than expected margin performance across brands. While Covid-related challenges remain, we delivered double-digit revenue growth, which would have been even stronger, and above guidance, if not for the greater than anticipated impact of U.S. port delays that pushed wholesale shipments into the fourth quarter.”
Review of PVH’s third quarter performance
The company’s direct-to-consumer revenue for the third quarter was flat compared to the prior year period, inclusive of a 5 percent reduction from the exit of the Heritage Brands retail business. Digital commerce increased 21 percent, while the company’s retail stores continued to face pressure as a result of the pandemic, with the majority of the company’s stores in Australia temporarily closed for most of the current year’s third quarter.
Total wholesale revenue increased 17 percent compared to the prior year period. The company’s sales to the digital businesses of its traditional and pure play wholesale customers continued to exhibit double digit growth.
Gross margin was 57.7 percent compared to 52 percent in the prior year period. The company added that earnings per share on a GAAP basis was 3.89 dollars for the third quarter of 2021 compared to 98 cents in the prior year period, while earnings per share on a non-GAAP basis was 2.67 dollars compared to 1.32 dollars in the prior year period.
Earnings before interest and taxes on a GAAP basis for the quarter increased to 377 million dollars compared to 122 million dollars in the prior year period. Earnings before interest and taxes on a non-GAAP basis increased to 266 million dollars compared to 132 million dollars in the prior year period.
PVH updates FY21 outlook
The company further said, supply chain and logistics disruptions have impacted and continue to impact the company, including vessel, container and other transportation shortages, labor shortages and port congestion globally, as well as production delays in some of the company’s key sourcing countries. So the company’s 2021 results could differ materially from its current outlook.
Revenue in 2021 is projected to increase 27 percent to 28 percent or increase 25 percent to 26 percent on a constant currency basis as compared to 2020.
The company currently projects that earnings per share on a GAAP basis will be approximately 10.75 dollars compared to a loss per share of 15.96 dollars in 2020.
The company currently projects that 2021 earnings per share on a non-GAAP basis will be approximately 9.25 dollars compared to a loss per share of 1.97 dollars in 2020.
The company expects revenue and earnings in the fourth quarter of 2021 to continue to be impacted by the pandemic. While the international businesses have exceeded and are expected to continue to exceed 2019 pre-pandemic revenue levels in the fourth quarter of 2021, the North America businesses are expected to remain challenged, as international tourism, which is the source of a significant portion of regional revenue, is not expected to return to any significant level.
The Company expects gross margin to continue to realize improvements in the fourth quarter due to more full price selling and a favorable shift in regional sales mix, which are expected to more than offset higher freight costs.
Revenue in the fourth quarter is projected to increase 11 percent to 14 percent or increase 16 percent to 19 percent on a constant currency basis compared to the prior year period.
The company currently projects earnings per share on a GAAP basis will be approximately 3 dollars compared to a loss per share of 81 cents in the prior year period and earnings per share on a non-GAAP basis will be approximately 1.94 dollars compared to a loss per share of 38 cents in the prior year period.