(Filed Under wholesale Lingerie News). PVH Corp. reported a dramatic rise in earnings for the year and fourth quarter ended February 1, 2015. And, in a conference call to discuss the results, CEO Manny Chirico spent much time discussing the contribution, over the past year and going forward, of the Calvin Klein brand and underwear.
PVH had earnings of $438.9 million on sales of $7.849 billion for the year, compared to earnings of $143.4 million on sales of $7.806 billion for the 12 months ended February 2, 2014. In the fourth quarter the company earned $51.5 million on sales of $1.973 billion compared to a loss of $37.6 million on sales of $1.954 billion for the same period last year.
In announcing the results the company noted that “Revenue in the Calvin Klein business for the quarter increased 6% on a constant currency basis (increased 2% on a GAAP basis) from $688 million in the prior year’s fourth quarter. Calvin Klein North America revenue increased 13%, driven by growth in the wholesale businesses, coupled with square footage expansion in company-operated retail stores. The underwear business experienced strong momentum in the department store channel and helped fuel the overall growth in the wholesale business.”
PVH reported the total earnings for the Calvin Klein segment of its business, before interest and taxes, for the most recent year were $344.3 million compared to 106.3 million for the year ended February 2, 2014. Calvin Klein segment earnings (before interest and taxes) for the North American portion of its business last year were $225.5 million compared to $167 million.
Total world wide net sales for the Calvin Klein segment were $2.859 billion (and $1.551 billion for North America) for the year ended February 1, 2015 compared to a total of $2.767 billion (and $1.473 billion in North America) the year before.
In the conference call, Chirico emphasized that the Calvin Klein growth is “really being driven by outsized performance of the underwear business.” He said that men’s underwear is the bigger factor, but added “women’s also coming on very strong and really enhancing the overall brand presentation has been a big winner for us.”
In reporting the results, PVH also revealed Calvin Klein, “North America retail comparable store sales were relatively flat as a result of the highly promotional retail environment during the holiday period. Calvin Klein International revenue decreased 2% on a constant currency basis (decreased 8% on a GAAP basis) compared to the prior year. Calvin Klein International retail comparable store sales declined 7%, as anticipated, largely due to a decrease in Asia resulting from the timing of the Chinese New Year, as the fourth quarter of fiscal 2014 did not include a Chinese New Year, while the fourth quarter of fiscal 2013 did.”
Looking ahead at the first quarter of 2015, Chirico explained in the conference call that in North America, comparable Calvin Klein store sales “are running on plan up low single digits. We are seeing strong sales in our domestic permanent population stores, while our stores located in international tourist destinations like Miami, Orlando, New York and Las Vegas are feeling the pressure from the weaker international tourist traffic.”
Outside of the U.S., he noted, “significant improvement in our international sales trends. Retail comp store sales are running ahead of plan in the first quarter and trending up high single digits in Asia with particular strength in China and South East Asia. We are also seeing high single digit increases in our European businesses on a comp store basis, so both regions really are performing much stronger for us. In Europe the CK wholesale business continues to improve with our 2015 spring and fall order books, excluding Russia up about 10% over the prior year.”
During the conference call, Chirico spent time discussing techniques of promoting the flagship brand. “Our Calvin Klein jeans and underwear marketing initiatives have focused on reaching new consumers over the last 12 months. We have increasingly invested in and focused on our digital outreach through our #My Calvin Klein’s campaign and our subsequent extension of that campaign with our spring 2015 Calvin Klein jeans and other wear campaign featuring Justin Bieber and Lara Stone which launched in January. We have seen a significant increase in the number of fans since the launch and we have generated well over 30 million fan interactions to-date.” He added that a Twitter campaign featuring Bieber helped to more than double web traffic at CalvinKlein.com, and create “over $350 million of publicity value” for Calvin Klein underwear and jeans.
In discussing Calvin Klein underwear, Chirico pointed to “significantly improved and elevated packaging” and the launch of two global products, Intense Power and Air FX for spring 2015. Both “have seen very promising initial selling results.” The Intense Power featured Justin Bieber as its model and “has sold well at retail.” The Air FX line is performance underwear.
“In the U.S. over the last six months our men’s and woman’s businesses have picked up market share across the department store landscape. Average unit retails continue to be up about 10% year-over-year driven by full price selling of the new product launches. Overall underwear sales are running up high single digits at retail in the first quarter.”
He also noted that “In Asia we continue to see great performance on the elevated Black Label product across both men’s and women’s. Our women’s bra business in Asia continues to outperform every other region and the Perfectly Fit collection for women is ranked as the number one or number two performing collection in all key Asian regions. Overall sales in the first quarter are running up high single digits at retails.”
The complete PVH conference call can be found at: http://seekingalpha.com/article/3031746-pvh-pvh-ceo-manny-chirico-on-q4-2014-results-earnings-call-transcript?page=1
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