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Strong Calvin Klein Performance Boosted PVH’s Fiscal 4Q15 Results

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Snapshot of PVH’s performance in fiscal 4Q15

Total revenue for Phillips-Van Heusen’s (PVH) fiscal 4Q15 ending January 31, 2016, stood at $2.1 billion, registering a rise of 2.1% compared to fiscal 4Q14.

The rise in PVH’s top line in 4Q15 was driven by a ~15% rise in Calvin Klein’s revenue, offset by ~2% fall in Tommy Hilfiger’s revenue and a ~10% fall in Heritage Brands’ revenue.

Strong Calvin Klein Performance Boosted PVH's Fiscal 4Q15 Results

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A look at profitability and margins

PVH recorded an improvement in its earnings and profitability during fiscal 4Q15. Earnings before interest and taxes (EBIT) for the quarter rose 7% on a constant currency basis compared to $203 million in 4Q14, driven by the following:

  • a 31% rise in the Calvin Klein business’s earnings, driven by higher operating margins in Europe and the strong performance of the underwear business
  • an 11% rise in the Heritage Brands business’s earnings, mainly on account of its shutting down the Izod retail business, which was operating at a loss
  • an 11% earnings fall in the Tommy Hilfiger business on a constant currency basis, due to the weakness in North American business

After including the impact of foreign currency exchange rates, PVH’s EBIT fell 10% year-over-year to $182 million in fiscal 4Q15.

Comparing profitabilities

After including the negative impact of exchange rates, the company’s EBIT margin stood at 8.3% for the quarter. PVH’s fiscal 4Q15 EBIT margin is lower than those of most of its peers.

Hanesbrands (HBI) and VF Corporation (VFC) reported operating margins of 11.2% and 11.6%, respectively, while Michael Kors (KORS) and Coach (COH) displayed even higher margins of 29% and 20%, respectively, during their last-reported quarters.

Investors wanting to get exposure to PVH can consider pooled investment vehicles such as the First Trust Large Cap Value AlphaDEX ETF (FTA), which invests 0.74% of its portfolio in PVH.

Read the next article to learn about PVH’s performance in fiscal 2015.

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