A Solid End to the Year
PVH's earnings are not necessarily easy to digest - the company made a major acquisition (Tommy Hilfiger) and that makes the year-on-year comparisons a little more difficult. To the company's credit, though, they give investors an unusually-extensive amount of financial detail and it looks like the quarter was solid with or without the acquisition.
As reported, revenue jumped almost 128% to just under $1.4 billion, and beat the average analyst guess. The inclusion of over $700 million in Tommy Hilfiger revenue clearly made a major difference, though the core organic growth rate looks like it came in at more than 12%. In particular, the Calvin Klein business rose over 18%, with licensing revenue (from the likes of Warnaco (Nasdaq:WRNC) and G-III Apparel (Nasdaq:GIII)) up 11%.
Profitability was more of a mixed story. Gross margin did improve almost three points, but that was still less than most analysts expected. Likewise, adjusted operating margin of over 9% was not bad but not great relative to expectations. All in all, then, PVH's outperformance this quarter was fueled by higher sales and lower taxes, offset by some margin challenges.
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