- Second quarter revenue decreased 8% to $2.132 billion compared
to the prior year period (flat on a constant currency basis)
- Second quarter EPS
- GAAP basis: $1.72 compared to guidance of approximately $2.20.
Results included a $50 million pre-tax charge related to the
Company’s decision to exit from its Russia business, not previously
included in guidance
- Non-GAAP basis: $2.08 compared to guidance of approximately
$2.00
- Included an increased negative impact of $0.35 per share
related to foreign currency translation compared to guidance of
approximately $0.25
- Full year revenue outlook: Projected to decrease 4% to 3%
(increase 3% to 4% on a constant currency basis) compared to an
increase of 1% to 2% (increase 6% to 7% on a constant current
basis) previously
- Full year EPS outlook
- GAAP basis: Approximately $7.64 compared to approximately $9.20
previously
- Non-GAAP basis: Approximately $8.00 compared to approximately
$9.00 previously
- Includes increased negative impact of approximately $1.25 per
share related to foreign currency translation compared to
approximately $0.85 previously
- Company plans to reduce people costs in its global offices by
approximately 10% in order to streamline its organization, drive
efficiencies and fuel strategic investments in growth in line with
the PVH+ Plan
PVH Corp. [NYSE: PVH] today reported its 2022 second quarter
results and updated its full year outlook.
Stefan Larsson, Chief Executive Officer, commented, “Our Calvin
Klein and Tommy Hilfiger businesses continued to exhibit underlying
strength in the second quarter, despite the increasingly
challenging macroeconomic environment as the quarter progressed. We
continued to execute very well in Europe and Asia, where countries
not currently impacted by COVID are performing significantly above
pre-pandemic levels, while in North America we continue to be
impacted by ongoing supply chain pressures.”
Mr. Larsson added, “In light of continued macroeconomic
headwinds, we are intensifying our focus on driving growth through
the disciplined execution of our brand-focused, direct-to-consumer
and digitally-led PVH+ Plan, connecting Calvin Klein and TOMMY
HILFIGER closer to the consumer than ever before. This intensified
focus includes a strong emphasis on driving product strength and
consumer engagement, significantly upgrading our supply chain
capabilities to become more demand-driven, and simplifying how we
work, resulting in substantial cost efficiencies. Our iconic global
brands, Calvin Klein and TOMMY HILFIGER, have high consumer
relevance, and we are in the early phase of the multi-year PVH+
journey to unlock their full potential.”
Zac Coughlin, Chief Financial Officer, said, “A critical element
of our PVH+ Plan is to increase productivity and invest to grow. We
are leaning into this work by streamlining our organization,
implementing new ways of working and leveraging our scale. These
actions will enable us to reduce people costs in our global offices
by approximately 10% by the end of 2023 and reinvest strategically
in digital, supply chain and consumer engagement connected to the
PVH+ Plan. Through our strengthened execution, we remain committed
to delivering strong returns for our shareholders and achieving our
previously announced 2025 targets.”
PVH+ Plan Cost Efficiency Action:
In line with the fifth growth driver of the PVH+ Plan - drive
efficiencies and invest in growth - the Company is taking steps to
streamline its organization and simplify its ways of working. The
Company plans to reduce people costs in its global offices by
approximately 10% by the end of 2023 to drive efficiencies and
enable continued strategic investments to fuel growth, including in
digital, supply chain and consumer engagement. The Company expects
these reductions will generate annual cost savings of over $100
million, net of continued strategic people investments.
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.
Second Quarter Review:
- Revenue decreased 8% compared to the prior year period
(flat on a constant currency basis), inclusive of a 6% negative
impact related to (i) a 4% reduction resulting from the Heritage
Brands transaction (as defined under the heading “Non-GAAP
Exclusions”) and the exit from the Heritage Brands Retail business
and (ii) a 2% reduction resulting from the war in Ukraine,
including closures of Company stores in Russia, the cessation of
wholesale shipments to Russia and Belarus, and a reduction in
wholesale shipments to Ukraine. The Company’s underlying revenue
growth compared to the prior year period, excluding the negative
impacts of the items discussed above and foreign currency
translation, was primarily driven by solid performance in its
international businesses. The Company continued to experience
supply chain and logistics disruptions globally and impacts from
the COVID-19 pandemic in China, in addition to an increasingly
challenging macroeconomic environment, particularly affecting its
North America wholesale business.
- Direct-to-Consumer revenue decreased 5% compared to the
prior year period (increased 3% on a constant currency basis),
inclusive of a 3% reduction resulting from the exit of the Heritage
Brands Retail business.
- Wholesale revenue decreased 11% compared to the prior
year period (decreased 3% on a constant currency basis), inclusive
of a 5% reduction resulting from the Heritage Brands
transaction.
- Total Digital revenue decreased 7% compared to the prior
year period (increased 4% on a constant currency basis). This
includes the sales through the Company’s digital commerce
businesses and sales to the digital businesses of its traditional
and pure play wholesale customers reflected in the
Direct-to-Consumer and Wholesale revenues above. Digital
penetration as a percentage of total revenue was approximately
25%.
- Gross Margin was 57.2% as compared to 57.7% in the prior
year period and included a negative impact of foreign currency
translation of approximately 40 basis points.
- Inventory increased 19% as of the end of the quarter
compared to the prior year period. Inventory levels at the start of
the second quarter were lean, particularly in North America, where
delayed receipts of inventory due to supply chain delays negatively
impacted revenue. The increase in ending inventory compared to the
prior year period was due to a combination of (i) abnormally low
inventory levels in all regions in the prior year period, (ii) a
planned increase in core product to mitigate the ongoing supply
chain and logistics disruptions, and (iii) elevated inventory
levels in the North America wholesale business due to lower than
expected demand. In-transit inventory increased over 50% compared
to the prior year period, primarily due to extended lead times from
ongoing supply chain and logistics disruptions.
Second Quarter Consolidated Results:
- Revenue decreased 8% to $2.132 billion compared to the
prior year period (flat on a constant currency basis).
- Tommy Hilfiger revenue decreased 5% compared to the
prior year period (increased 4% on a constant currency basis)
- Tommy Hilfiger International revenue decreased 9%
(increased 4% on a constant currency basis)
- Tommy Hilfiger North America revenue increased 6%
- Calvin Klein revenue decreased 1% compared to the prior
year period (increased 6% on a constant currency basis)
- Calvin Klein International revenue decreased 2%
(increased 10% on a constant currency basis)
- Calvin Klein North America revenue decreased 1%
- Heritage Brands revenue decreased 44% compared to the
prior year period, and includes a 37% decrease resulting from the
Heritage Brands transaction and the exit from the Heritage Brands
Retail business.
- Earnings before interest and taxes (“EBIT”) on a GAAP
basis was $177 million, inclusive of a $29 million negative impact
due to foreign currency translation, compared to $279 million in
the prior year period. EBIT on a GAAP basis included net costs of
$34 million in the current quarter and costs of $15 million in the
prior year period 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 $211 million,
inclusive of a $29 million negative impact due to foreign currency
translation, compared to $294 million in the prior year period.
Excluding the negative impact of foreign currency translation, the
decrease in EBIT on a non-GAAP basis was primarily driven by lower
expenses in the prior year period, as stores in certain regions
were closed and other stores were only beginning to re-open.
- Earnings per share (“EPS”) on a GAAP-basis was $1.72
compared to $2.51 in the prior year period. EPS on a non-GAAP basis
was $2.08 compared to $2.72 in the prior year period. EPS on a GAAP
basis for the current quarter included a $50 million pre-tax charge
recorded in connection with the Company’s decision to exit from its
Russia business, primarily consisting of noncash asset impairments.
EPS on both a GAAP and non-GAAP basis for the current quarter
included the negative impacts of (i) $0.35 per share related to
foreign currency translation and (ii) $0.17 per share related to
the Company’s businesses in Russia, Belarus and Ukraine that have
been significantly affected in the current quarter by the war in
Ukraine, apart from the one-time noncash asset impairments
discussed above. EPS on a GAAP basis for these periods also include
the other amounts for the applicable period described under the
heading “Non-GAAP Exclusions” later in this release. EPS on a
non-GAAP basis for these periods exclude these amounts.
- Interest expense decreased to $20 million from $26
million in the prior year period.
- Effective tax rate was 26.4% on a GAAP basis as compared
to 28.1% in the prior year period. The effective tax rate was 26.9%
on a non-GAAP basis as compared to 26.2% in the prior year
period.
Stock Repurchase Program:
Delivering on its commitment under the PVH+ Plan to return
excess cash to shareholders, the Company repurchased 2.0 million
shares of its common stock for $124 million during the second
quarter of 2022 ($2.0 billion since inception) under the $3.0
billion stock repurchase program authorized by the Board of
Directors.
2022 Outlook:
The Company has updated its full year 2022 revenue and EPS
outlook to reflect its current expectations for the second half of
2022 based on the challenges in the macroeconomic environment and
trends within the retail industry, including (i) lower consumer
demand as a result of inflationary pressures, as consumers reduce
discretionary spend and certain wholesale customers take a more
cautious approach, particularly in North America and to a lesser
extent in Europe, and (ii) a more promotional environment,
particularly in the North America wholesale business, due to
elevated inventory levels industry-wide compared to consumer demand
in the region.
The Company’s updated full year 2022 outlook also reflects an
increased negative impact of foreign currency translation and a
reduction in the Company’s effective income tax rate as a result of
a favorable change in the mix of earnings between tax jurisdictions
and recognition of certain tax credits.
There continues to be significant uncertainty in the current
macroeconomic environment due to the supply chain and logistics
disruptions and inflationary pressures globally, the war in
Ukraine, the COVID-19 pandemic and foreign currency volatility. The
Company’s outlook assumes no material worsening of current
conditions. The Company’s 2022 results could differ materially from
its current outlook.
Full Year 2022 Guidance
- Revenue is projected to decrease 4% to 3% as compared to
2021 (increase 3% to 4% on a constant currency basis), inclusive of
a 4% negative impact related to (i) a 2% reduction resulting from
the Heritage Brands transaction and exit from the Heritage Brands
Retail business and (ii) a 2% reduction resulting from the impact
of the war in Ukraine.
- Operating margin is projected to be approximately
9%.
- EPS on a GAAP basis is projected to be approximately
$7.64 compared to $13.25 in 2021. EPS on a non-GAAP basis is
projected to be approximately $8.00 compared to $10.15 in 2021. The
2022 EPS projection on a GAAP basis includes a $50 million pre-tax
charge recorded in connection with the Company’s decision to exit
from its Russia business, primarily consisting of noncash asset
impairments. The 2022 EPS projections on both a GAAP and non-GAAP
basis include the estimated negative impacts of (i) approximately
$1.25 per share related to foreign currency translation and (ii)
approximately $0.60 per share related to the Company’s businesses
in Russia, Belarus and Ukraine that have been significantly
affected in the current year by the war in Ukraine, apart from the
one-time noncash asset impairments discussed above. EPS on a GAAP
basis for these periods also include the other amounts for the
applicable period 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 decrease to
approximately $85 million compared to $104 million in 2021
primarily due to the impact of voluntary debt repayments made in
2021.
- Effective tax rate is projected to increase as compared
to 2021 and be approximately 24%.
Third Quarter 2022 Guidance
- Revenue is projected to decrease 5% to 4% as compared to
the prior year period (increase 4% to 5% on a constant currency
basis), reflecting a 2% reduction resulting from the impact of the
war in Ukraine.
- EPS is projected to be in a range of $2.10 to $2.15
compared to $3.89 on a GAAP basis and $2.67 on a non-GAAP basis in
the prior year period. The third quarter 2022 EPS projection
includes the estimated negative impacts of (i) approximately $0.35
per share related to foreign currency translation and (ii) $0.18
per share related to the Company’s businesses in Russia, Belarus
and Ukraine that have been significantly affected in the current
year by the war in Ukraine. EPS on a GAAP basis for the prior year
period also included the amounts described under the heading
“Non-GAAP Exclusions” later in this release. EPS on a non-GAAP
basis for the prior year period excluded these amounts.
- Interest expense is projected to decrease to
approximately $20 million compared to $25 million in the prior year
period.
- Effective tax rate is projected to be approximately
18%.
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:
- Pre-tax charge of $50 million recorded in the second quarter of
2022 in connection with the Company’s decision to exit from its
Russia business, primarily consisting of noncash asset
impairments.
- 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.
- Pre-tax costs of $48 million incurred in 2021 in connection
with actions announced in March 2021 to streamline the Company’s
organization through reductions in its workforce, primarily in
certain international markets, and to reduce its real estate
footprint, including reductions in office space and select store
closures, consisting of noncash asset impairments, severance, and
contract termination and other costs, of which $43 million was
incurred in the first quarter, $2 million was incurred in the
second quarter, and $2 million was incurred in the third
quarter.
- Pre-tax costs of $21 million incurred in 2021 in connection
with the exit from the Heritage Brands Retail business announced in
July 2020 that was substantially completed in the second quarter of
2021, consisting of severance and other termination benefits,
accelerated amortization of lease assets and contract termination
and other costs, of which $8 million was incurred in the first
quarter and $13 million was incurred in the second quarter.
- Pre-tax net gain of $113 million recorded in the third quarter
of 2021 in connection with the sale of certain intellectual
property and other assets of the Company’s Heritage Brands business
that closed on the first day of the third quarter of 2021 (the
“Heritage Brands transaction”), which includes a gain on the sale,
less costs to sell, a net gain on the Company’s retirement plans
associated with the transaction, and severance costs.
- Pre-tax gain of $49 million recorded in the fourth quarter of
2021 related to the recognized actuarial gain on retirement
plans.
- One-time discrete tax benefits of $152 million recorded in the
fourth quarter of 2021 principally resulting from a tax accounting
method change made in conjunction with the Company’s 2020 U.S.
federal income tax return.
- Estimated tax effects associated with the above pre-tax items,
which are based on the Company’s assessment of deductibility. In
making this assessment, the Company evaluated each item that it had
identified above as a non-GAAP exclusion to determine if such item
is taxable or tax deductible, and if so, in what jurisdiction the
tax expense or tax deduction would occur. All items above were
identified as either primarily taxable or tax deductible, with the
tax effect taken at the applicable income tax rate in the local
jurisdiction, or as non-taxable or non-deductible, in which case
the Company assumed no tax effect.
As a supplement to the Company’s GAAP results, the Company
presents constant currency revenue information, which is a non-GAAP
financial measure. The Company presents results in this manner
because it is a global company that transacts business in multiple
currencies and reports financial information in U.S. dollars.
Foreign currency exchange rate fluctuations affect the amounts
reported by the Company in U.S. dollars with respect to its foreign
revenues. Exchange rate fluctuations can have a significant effect
on reported revenues. The Company believes presenting constant
currency revenue information provides useful information to
investors, as it provides information to assess how its businesses
performed excluding the effects of changes in foreign currency
exchange rates and assists investors in evaluating the
effectiveness of the Company’s operations and underlying business
trends in a manner that is consistent with management’s evaluation
of business performance.
The Company calculates constant currency revenue information by
translating its foreign revenues for the relevant period into U.S.
dollars at the average exchange rates in effect during the
comparable prior year period (rather than at the actual exchange
rates in effect during the relevant period).
Constant currency performance should be viewed in addition to,
and not in lieu of or as superior to, the Company’s operating
performance calculated in accordance with GAAP. The constant
currency revenue information presented may not be comparable to
similarly described measures reported by other companies.
Please see Tables 1 through 5 and the sections entitled
“Reconciliations of 2022 Constant Currency Revenue” and “Full Year
and Quarterly Reconciliations of GAAP to Non-GAAP Amounts” later in
this release for reconciliations of GAAP to non-GAAP amounts.
Conference Call Information:
The Company will host a conference call to discuss its second
quarter earnings release on Wednesday, August 31, 2022 at 9:00
a.m. EDT. Please log on to the Company’s website at
www.PVH.com and go to the Events page in the Investors
section to listen to the live webcast of the conference call. The
webcast will be available for replay for one year after it is held,
commencing approximately two hours after the live broadcast ends.
Please log on to www.PVH.com as described above to listen to the
replay. In addition, an audio replay of the conference call is
available for 48 hours starting approximately two hours after it is
held. The replay of the conference call can be accessed by calling
(domestic) 888-203-1112 and (international) 719-457-0820 and using
passcode 7703357. The conference call and webcast consist of
copyrighted material. They may not be re-recorded, reproduced,
re-transmitted, rebroadcast or otherwise used without the Company’s
express written permission. Your participation represents your
consent to these terms and conditions, which are governed by New
York law.
SAFE HARBOR STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995: Forward-looking
statements in this press release and made during the conference
call/webcast, including, without limitation, statements relating to
the Company’s future revenue, earnings, plans, strategies,
objectives, expectations and intentions are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Investors are cautioned that such forward-looking
statements are inherently subject to risks and uncertainties, many
of which cannot be predicted with accuracy, and some of which might
not be anticipated, including, without limitation, (i) the
Company’s plans, strategies, objectives, expectations and
intentions are subject to change at any time at the discretion of
the Company; (ii) the Company’s ability to realize anticipated
benefits and savings from divestitures, restructurings and similar
plans, such as the planned cost efficiency action discussed in this
press release, and the Company’s 2021 sale of certain intellectual
property and other assets of, and exiting from, its Heritage Brands
business to focus on its Calvin Klein and Tommy Hilfiger
businesses; (iii) the Company has significant levels of outstanding
debt and borrowing capacity and uses a significant portion of its
cash flows to service its indebtedness, as a result of which the
Company might not have sufficient funds to operate its businesses
in the manner it intends or has operated in the past; (iv) the
levels of sales of the Company’s apparel, footwear and related
products, both to its wholesale customers and in its retail stores
and its directly operated digital commerce sites, the levels of
sales of the Company’s licensees at wholesale and retail, and the
extent of discounts and promotional pricing in which the Company
and its licensees and other business partners are required to
engage, all of which can be affected by weather conditions, changes
in the economy (including inflationary pressures like those
currently being seen globally), fuel prices, reductions in travel,
fashion trends, consolidations, repositionings and bankruptcies in
the retail industries, consumer sentiment and other factors; (v)
the Company’s ability to manage its growth and inventory; (vi)
quota restrictions, the imposition of safeguard controls and the
imposition of new or increased duties or tariffs on goods from the
countries where the Company or its licensees produce goods under
its trademarks, any of which, among other things, could limit the
ability to produce products in cost-effective countries, or in
countries that have the labor and technical expertise needed, or
require the Company to absorb costs or try to pass costs onto
consumers, which could materially impact the Company’s revenue and
profitability; (vii) the availability and cost of raw materials;
(viii) the Company’s ability to adjust timely to changes in trade
regulations and the migration and development of manufacturers
(which can affect where the Company’s products can best be
produced); (ix) the regulation or prohibition of the transaction of
business with specific individuals or entities and their affiliates
or goods manufactured in (or containing raw materials or components
from) certain regions, such as the listing of a person or entity as
a Specially Designated National or Blocked Person by the U.S.
Department of the Treasury’s Office of Foreign Assets Control and
the issuance of Withhold Release Orders by the U.S. Customs and
Border Patrol; (x) changes in available factory and shipping
capacity, wage and shipping cost escalation, and store closures in
any of the countries where the Company’s or its licensees’ or
wholesale customers’ or other business partners’ stores are located
or products are sold or produced or are planned to be sold or
produced, as a result of civil conflict, war or terrorist acts, the
threat of any of the foregoing, or political or labor instability,
such as the current war in Ukraine that has led to the Company’s
decision to exit from its Russia business, including the closure of
its retail stores in Russia and the cessation of its wholesale
operations in Russia and Belarus, and the temporary cessation of
business by many of its business partners in Ukraine; (xi) disease
epidemics and health-related concerns, such as the ongoing COVID-19
pandemic, which could result in (and, in the case of the COVID-19
pandemic, has resulted in some of the following) supply-chain
disruptions due to closed factories, reduced workforces and
production capacity, shipping delays, container and trucker
shortages, port congestion and other logistics problems, closed
stores, and reduced consumer traffic and purchasing, or governments
implement mandatory business closures, travel restrictions or the
like, and market or other changes that could result (or, with
respect to the COVID-19 pandemic, could continue to result) in
shortages of inventory available to be delivered to the Company’s
stores and customers, order cancellations and lost sales, as well
as in noncash impairments of the Company’s goodwill and other
intangible assets, operating lease right-of-use assets, and
property, plant and equipment; (xii) actions taken towards
sustainability and social and environmental responsibility as part
of the Company’s sustainability and social and environmental
strategy may not be achieved or may be perceived to be falsely
claimed, which could diminish consumer trust in the Company’s
brands, as well as the Company’s brands’ value; (xiii) the failure
of the Company’s licensees to market successfully licensed products
or to preserve the value of the Company’s brands, or their misuse
of the Company’s brands; (xiv) significant fluctuations of the U.S.
dollar against foreign currencies in which the Company transacts
significant levels of business; (xv) the Company’s retirement plan
expenses recorded throughout the year are calculated using
actuarial valuations that incorporate assumptions and estimates
about financial market, economic and demographic conditions, and
differences between estimated and actual results give rise to gains
and losses, which can be significant, that are recorded immediately
in earnings, generally in the fourth quarter of the year; (xvi) the
impact of new and revised tax legislation and regulations; and
(xvii) other risks and uncertainties indicated from time to time in
the Company’s filings with the Securities and Exchange Commission
(“SEC”).
This press release includes, and the
conference call/webcast will include, certain non-GAAP financial
measures, as defined under SEC rules. Reconciliations of these
measures are included in the financial information following this
Safe Harbor Statement, as well as in the Company’s Current Report
on Form 8-K furnished to the SEC in connection with this earnings
release, which is available on the Company’s website at www.PVH.com
and on the SEC’s website at www.sec.gov.
The Company does not undertake any
obligation to update publicly any forward-looking statement,
including, without limitation, any estimate regarding revenue or
earnings, whether as a result of the receipt of new information,
future events or otherwise.
PVH CORP.
Consolidated GAAP Statements of
Operations
(In millions, except per share
data)
Quarter Ended
Six Months Ended
7/31/22
8/1/21
7/31/22
8/1/21
Net sales
$
2,031.1
$
2,221.5
$
4,037.7
$
4,202.0
Royalty revenue
78.3
72.9
168.3
150.6
Advertising and other revenue
22.6
18.8
48.7
39.9
Total revenue
$
2,132.0
$
2,313.2
$
4,254.7
$
4,392.5
Gross profit on net sales
$
1,118.6
$
1,241.9
$
2,241.2
$
2,372.2
Gross profit on royalty, advertising and
other revenue
100.9
91.7
217.0
190.5
Total gross profit
1,219.5
1,333.6
2,458.2
2,562.7
Selling, general and administrative
expenses
1,070.4
1,062.0
2,109.8
2,101.4
Non-service related pension and
postretirement income
(3.2
)
(3.3
)
(6.8
)
(7.3
)
Equity in net income of unconsolidated
affiliates
24.7
4.1
32.1
7.8
Earnings before interest and taxes
177.0
279.0
387.3
476.4
Interest expense, net
20.3
26.3
42.1
55.7
Pre-tax income
156.7
252.7
345.2
420.7
Income tax expense
41.4
70.9
96.8
139.2
Net income
115.3
181.8
248.4
281.5
Less: Net loss attributable to redeemable
non-controlling interest (1)
(0.1
)
(0.3
)
Net income attributable to PVH Corp.
$
115.3
$
181.9
$
248.4
$
281.8
Diluted net income per common share
attributable to PVH Corp. (2)
$
1.72
$
2.51
$
3.66
$
3.89
Quarter Ended
Six Months Ended
7/31/22
8/1/21
7/31/22
8/1/21
Depreciation and amortization expense
$
75.4
$
78.3
$
152.2
$
155.9
Please see following pages for information related to non-GAAP
measures discussed in this release.
(1)
The Company and Arvind Limited had a joint venture in
Ethiopia in which the Company owned a 75% interest until May 31,
2021. The Company, since May 31, 2021, managed and effectively
owned all economic interests in the joint venture. The Company
closed in the fourth quarter of 2021 the manufacturing facility
that was the joint venture’s sole operation.
(2)
Please see Note A in Notes to Consolidated GAAP Statements
of Operations for the reconciliations of GAAP diluted net income
per common share to diluted net income per common share on a
non-GAAP basis.
PVH CORP. Non-GAAP Measures
The Company believes it is useful to investors to present its
results for the periods ended July 31, 2022 and August 1, 2021 on a
non-GAAP basis by excluding (i) the costs incurred in the second
quarter of 2022 in connection with the Company’s decision to exit
from its Russia business, including the closure of its retail
stores in Russia and the cessation of its wholesale operations in
Russia and Belarus, consisting of noncash asset impairments,
contract termination and other costs, and severance; (ii) the gain
recorded in the second quarter of 2022 in connection with the sale
of the Company’s equity investment in Karl Lagerfeld Holding B.V.
(the “Karl Lagerfeld transaction”); (iii) the costs incurred in the
first and second quarters of 2021 in connection with actions
announced in March 2021 to streamline the Company’s organization
through reductions in its workforce, primarily in certain
international markets, and to reduce its real estate footprint,
including reductions in office space and select store closures,
consisting of noncash asset impairments, severance, and contract
termination and other costs; (iv) the costs incurred in the first
and second quarters of 2021 related to exiting the Heritage Brands
Retail business, consisting of severance and other termination
benefits, accelerated amortization of lease assets, and contract
termination and other costs; and (v) the tax effects associated
with the foregoing pre-tax items. The Company excludes these
amounts because it deems them to be non-recurring or
non-operational and believes that their exclusion (i) facilitates
comparing the results being reported against past and future
results by eliminating amounts that it believes are not comparable
between periods, thereby permitting management to evaluate
performance and investors to make decisions based on the ongoing
operations of the Company, and (ii) assists investors in evaluating
the effectiveness of the Company’s operations and underlying
business trends in a manner that is consistent with management’s
evaluation of business performance. The Company believes that
investors often look at ongoing operations of an enterprise as a
measure of assessing performance. The Company uses its results
excluding these amounts to evaluate its operating performance and
to discuss its business with investment institutions, the Company’s
Board of Directors and others. The Company’s results excluding the
items described above are also the basis for certain incentive
compensation calculations. The non-GAAP measures should be viewed
in addition to, and not in lieu of or superior to, the Company’s
operating performance measures calculated in accordance with GAAP.
The information presented on a non-GAAP basis may not be comparable
to similarly titled measures reported by other companies.
The following table presents the non-GAAP measures that are
discussed in this release. Please see Tables 1 through 5 for the
reconciliations of the GAAP amounts to amounts on a non-GAAP
basis.
Quarter Ended
Six Months Ended
7/31/22
8/1/21
7/31/22
8/1/21
Non-GAAP Measures
Selling, general and administrative
expenses (1)
$
1,019.9
$
1,047.1
$
2,059.3
$
2,035.2
Equity in net income of unconsolidated
affiliates (2)
8.6
16.0
Earnings before interest and taxes (3)
211.4
293.9
421.7
542.6
Income tax expense (4)
51.5
70.2
106.9
150.9
Net income attributable to PVH Corp.
(5)
139.6
197.5
272.7
336.3
Diluted net income per common share
attributable to PVH Corp. (6)
$
2.08
$
2.72
$
4.02
$
4.64
(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 equity in
net income of unconsolidated affiliates to equity in net income of
unconsolidated affiliates on a non-GAAP basis.
(3)
Please see Table 2 for the reconciliations of GAAP earnings
before interest and taxes to earnings before interest and taxes on
a non-GAAP basis.
(4)
Please see Table 5 for the reconciliations of GAAP income
tax expense 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.
(5)
Please see Table 1 for the reconciliations of GAAP net
income to net income on a non-GAAP basis.
(6)
Please see Note A in Notes to Consolidated GAAP Statements
of Operations for the reconciliations of GAAP diluted net income
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 to net income on a non-GAAP
basis
Quarter Ended
Six Months Ended
7/31/22
8/1/21
7/31/22
8/1/21
Net income attributable to PVH Corp.
$
115.3
$
181.9
$
248.4
$
281.8
Diluted net income per common share
attributable to PVH Corp. (1)
$
1.72
$
2.51
$
3.66
$
3.89
Pre-tax items excluded:
SG&A expenses associated with actions
to reduce the Company’s workforce, primarily in international
markets, and its real estate footprint
1.8
45.1
SG&A expenses associated with exiting
the Heritage Brands Retail business
13.1
21.1
SG&A expenses associated with the
Company’s decision to exit from its Russia business
50.5
50.5
Gain in connection with the Karl Lagerfeld
transaction (recorded in equity in net income of unconsolidated
affiliates)
(16.1
)
(16.1
)
Tax effects of the pre-tax items above
(2)
(10.1
)
0.7
(10.1
)
(11.7
)
Net income on a non-GAAP basis
attributable to PVH Corp.
$
139.6
$
197.5
$
272.7
$
336.3
Diluted net income per common share on a
non-GAAP basis attributable to PVH Corp. (1)
$
2.08
$
2.72
$
4.02
$
4.64
(1)
Please see Note A in Notes to the Consolidated GAAP
Statements of Operations for the reconciliation of GAAP diluted net
income per common share to diluted net income per common share on a
non-GAAP basis.
(2)
Please see Table 5 for an explanation of the calculation of
the tax effects of the above items.
Table 2 -
Reconciliations of GAAP earnings before interest and taxes to
earnings before interest and taxes on a non-GAAP basis
Quarter Ended
Six Months Ended
7/31/22
8/1/21
7/31/22
8/1/21
Earnings before interest and taxes
$
177.0
$
279.0
$
387.3
$
476.4
Items excluded:
SG&A expenses associated with actions
to reduce the Company’s workforce, primarily in international
markets, and its real estate footprint
1.8
45.1
SG&A expenses associated with exiting
the Heritage Brands Retail business
13.1
21.1
SG&A expenses associated with the
Company’s decision to exit from its Russia business
50.5
50.5
Gain in connection with the Karl Lagerfeld
transaction (recorded in equity in net income of unconsolidated
affiliates)
(16.1
)
(16.1
)
Earnings before interest and taxes on a
non-GAAP basis
$
211.4
$
293.9
$
421.7
$
542.6
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
Six Months Ended
7/31/22
8/1/21
7/31/22
8/1/21
SG&A expenses
$
1,070.4
$
1,062.0
$
2,109.8
$
2,101.4
Items excluded:
Expenses associated with actions to reduce
the Company’s workforce, primarily in international markets, and
its real estate footprint
(1.8
)
(45.1
)
Expenses associated with exiting the
Heritage Brands Retail business
(13.1
)
(21.1
)
Expenses associated with the Company’s
decision to exit from its Russia business
(50.5
)
(50.5
)
SG&A expenses on a non-GAAP basis
$
1,019.9
$
1,047.1
$
2,059.3
$
2,035.2
Table 4 -
Reconciliations of GAAP equity in net income of unconsolidated
affiliates to equity in net income of unconsolidated affiliates on
a non-GAAP basis
Quarter Ended
Six Months Ended
7/31/22
7/31/22
Equity in net income of unconsolidated
affiliates
$
24.7
$
32.1
Item excluded:
Gain in connection with the Karl Lagerfeld
transaction
(16.1
)
(16.1
)
Equity in net income of unconsolidated
affiliates on a non-GAAP basis
$
8.6
$
16.0
Table 5 -
Reconciliations of GAAP income tax expense to income tax expense on
a non-GAAP basis
Quarter Ended
Six Months Ended
7/31/22
8/1/21
7/31/22
8/1/21
Income tax expense
$
41.4
$
70.9
$
96.8
$
139.2
Item excluded:
Tax effects of pre-tax items identified as
non-GAAP exclusions (1)
10.1
(0.7
)
10.1
11.7
Income tax expense on a non-GAAP basis
$
51.5
$
70.2
$
106.9
$
150.9
(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 is taxable or tax
deductible and, if so, in what jurisdiction the tax expense or tax
deduction would occur. All of the pre-tax items identified as
non-GAAP exclusions were identified as either primarily taxable or
tax deductible, with the tax effect taken at the applicable income
tax rate in the local jurisdiction, or as 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 per common share as follows:
Quarter Ended
Quarter Ended
7/31/22
8/1/21
GAAP
Non-GAAP
GAAP
Non-GAAP
Results
Adjustments (1)
Results
Results
Adjustments (2)
Results
Net income attributable to PVH Corp.
$
115.3
$
(24.3
)
$
139.6
$
181.9
$
(15.6
)
$
197.5
Weighted average common shares
66.6
66.6
71.4
71.4
Weighted average dilutive securities
0.4
0.4
1.1
1.1
Total shares
67.0
67.0
72.5
72.5
Diluted net income per common share
attributable to PVH Corp.
$
1.72
$
2.08
$
2.51
$
2.72
Six Months Ended
Six Months Ended
7/31/22
8/1/21
GAAP
Non-GAAP
GAAP
Non-GAAP
Results
Adjustments (1)
Results
Results
Adjustments (2)
Results
Net income attributable to PVH Corp.
$
248.4
$
(24.3
)
$
272.7
$
281.8
$
(54.5
)
$
336.3
Weighted average common shares
67.3
67.3
71.3
71.3
Weighted average dilutive securities
0.6
0.6
1.1
1.1
Total shares
67.9
67.9
72.4
72.4
Diluted net income per common share
attributable to PVH Corp.
$
3.66
$
4.02
$
3.89
$
4.64
(1)
Represents the impact on net income in the periods ended
July 31, 2022 from the elimination of (i) the costs related to the
Company’s decision to exit from its Russia business; (ii) the gain
recorded in connection with the Karl Lagerfeld transaction; and
(iii) the tax effects associated with the foregoing pre-tax items.
Please see Table 1 for the reconciliation of GAAP net income to net
income on a non-GAAP basis.
(2)
Represents the impact on net income in the periods ended
August 1, 2021 from the elimination of (i) the costs related to
actions to reduce the Company’s workforce, primarily in
international markets, and its real estate footprint; (ii) the
costs related to exiting the Heritage Brands Retail business; and
(iii) the tax effects associated with the foregoing pre-tax items.
Please see Table 1 for the reconciliation of GAAP net income to net
income on a non-GAAP basis.
PVH CORP.
Consolidated Balance Sheets
(In millions)
7/31/22
8/1/21
ASSETS
Current Assets:
Cash and Cash Equivalents
$
699.3
$
1,152.6
Receivables
837.5
847.2
Inventories
1,689.9
1,421.3
Other
357.7
233.8
Assets Held For Sale
99.4
Total Current Assets
3,584.4
3,754.3
Property, Plant and Equipment
842.0
889.4
Operating Lease Right-of-Use Assets
1,230.3
1,476.3
Goodwill and Other Intangible Assets
5,897.5
6,323.8
Other Assets
368.1
353.5
$
11,922.3
$
12,797.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts Payable and Accrued Expenses
$
2,257.9
$
2,073.0
Current Portion of Operating Lease
Liabilities
348.2
407.9
Short-Term Borrowings
12.2
19.2
Current Portion of Long-Term Debt
38.2
29.7
Current Liabilities Related to Assets Held
For Sale
1.6
Other Liabilities
789.7
1,111.7
Long-Term Portion of Operating Lease
Liabilities
1,114.2
1,338.9
Long-Term Debt
2,155.5
2,782.5
Stockholders’ Equity
5,206.4
5,032.8
$
11,922.3
$
12,797.3
Note: Year over year balances are impacted by changes in foreign
currency exchange rates.
PVH CORP.
Segment Data
(In millions)
REVENUE BY
SEGMENT
Quarter Ended
Quarter Ended
7/31/22
8/1/21
Tommy Hilfiger North
America
Net sales
$
288.2
$
273.9
Royalty revenue
17.1
15.4
Advertising and other revenue
4.2
3.6
Total
309.5
292.9
Tommy Hilfiger
International
Net sales
749.5
826.3
Royalty revenue
14.9
13.1
Advertising and other revenue
4.6
3.2
Total
769.0
842.6
Total Tommy
Hilfiger
Net sales
1,037.7
1,100.2
Royalty revenue
32.0
28.5
Advertising and other revenue
8.8
6.8
Total
1,078.5
1,135.5
Calvin Klein North
America
Net sales
301.0
311.0
Royalty revenue
34.2
28.6
Advertising and other revenue
11.5
9.5
Total
346.7
349.1
Calvin Klein
International
Net sales
549.2
560.6
Royalty revenue
11.9
11.0
Advertising and other revenue
2.2
1.7
Total
563.3
573.3
Total Calvin
Klein
Net sales
850.2
871.6
Royalty revenue
46.1
39.6
Advertising and other revenue
13.7
11.2
Total
910.0
922.4
Heritage Brands
Wholesale
Net sales
143.2
217.7
Royalty revenue
0.2
4.8
Advertising and other revenue
0.1
0.8
Total
143.5
223.3
Heritage Brands
Retail
Net sales
32.0
Royalty revenue
Advertising and other revenue
Total
32.0
Total Heritage
Brands
Net sales
143.2
249.7
Royalty revenue
0.2
4.8
Advertising and other revenue
0.1
0.8
Total
143.5
255.3
Total
Revenue
Net sales
2,031.1
2,221.5
Royalty revenue
78.3
72.9
Advertising and other revenue
22.6
18.8
Total
$
2,132.0
$
2,313.2
PVH CORP.
Segment Data (continued)
(In millions)
EARNINGS BEFORE
INTEREST AND TAXES BY SEGMENT
Quarter Ended
Quarter Ended
7/31/22
8/1/21
Results
Results
Under
Non-GAAP
Under
Non-GAAP
GAAP
Adjustments (1)
Results
GAAP
Adjustments (2)
Results
Tommy Hilfiger North America
$
(1.9
)
$
(1.9
)
$
24.7
$
24.7
Tommy Hilfiger International
88.5
$
(36.7
)
125.2
164.8
$
(1.4
)
166.2
Total Tommy Hilfiger
86.6
(36.7
)
123.3
189.5
(1.4
)
190.9
Calvin Klein North America
21.9
21.9
39.7
39.7
Calvin Klein International
78.4
(13.8
)
92.2
98.9
(0.4
)
99.3
Total Calvin Klein
100.3
(13.8
)
114.1
138.6
(0.4
)
139.0
Heritage Brands Wholesale
13.4
13.4
22.2
22.2
Heritage Brands Retail
(20.6
)
(13.1
)
(7.5
)
Total Heritage Brands
13.4
13.4
1.6
(13.1
)
14.7
Corporate
(23.3
)
16.1
(39.4
)
(50.7
)
(50.7
)
Total earnings before interest and
taxes
$
177.0
$
(34.4
)
$
211.4
$
279.0
$
(14.9
)
$
293.9
(1)
The adjustments for the quarter ended July 31, 2022
represent the elimination of (i) the costs related to the Company’s
decision to exit from its Russia business; and (ii) the gain
recorded in connection with the Karl Lagerfeld transaction.
(2)
The adjustments for the quarter ended August 1, 2021
represent the elimination of (i) the costs related to actions to
reduce the Company’s workforce, primarily in international markets,
and its real estate footprint; and (ii) the costs related to
exiting the Heritage Brands Retail business.
PVH CORP.
Segment Data (continued)
(In millions)
REVENUE BY
SEGMENT
Six Months Ended
Six Months Ended
7/31/22
8/1/21
Tommy Hilfiger North
America
Net sales
$
523.7
$
478.6
Royalty revenue
37.9
33.0
Advertising and other revenue
9.4
8.1
Total
571.0
519.7
Tommy Hilfiger
International
Net sales
1,539.8
1,636.3
Royalty revenue
29.4
26.0
Advertising and other revenue
9.2
7.2
Total
1,578.4
1,669.5
Total Tommy
Hilfiger
Net sales
2,063.5
2,114.9
Royalty revenue
67.3
59.0
Advertising and other revenue
18.6
15.3
Total
2,149.4
2,189.2
Calvin Klein North
America
Net sales
557.9
517.0
Royalty revenue
76.4
60.3
Advertising and other revenue
25.5
20.0
Total
659.8
597.3
Calvin Klein
International
Net sales
1,107.8
1,085.6
Royalty revenue
24.2
21.5
Advertising and other revenue
4.4
3.2
Total
1,136.4
1,110.3
Total Calvin
Klein
Net sales
1,665.7
1,602.6
Royalty revenue
100.6
81.8
Advertising and other revenue
29.9
23.2
Total
1,796.2
1,707.6
Heritage Brands
Wholesale
Net sales
308.5
408.9
Royalty revenue
0.4
9.8
Advertising and other revenue
0.2
1.4
Total
309.1
420.1
Heritage Brands
Retail
Net sales
75.6
Royalty revenue
Advertising and other revenue
Total
75.6
Total Heritage
Brands
Net sales
308.5
484.5
Royalty revenue
0.4
9.8
Advertising and other revenue
0.2
1.4
Total
309.1
495.7
Total
Revenue
Net sales
4,037.7
4,202.0
Royalty revenue
168.3
150.6
Advertising and other revenue
48.7
39.9
Total
$
4,254.7
$
4,392.5
PVH CORP.
Segment Data (continued)
(In millions)
EARNINGS BEFORE
INTEREST AND TAXES BY SEGMENT
Six Months Ended
Six Months Ended
7/31/22
8/1/21
Results
Results
Under
Non-GAAP
Under
Non-GAAP
GAAP
Adjustments (1)
Results
GAAP
Adjustments (2)
Results
Tommy Hilfiger North America
$
(14.9
)
$
(14.9
)
$
19.6
$
(1.7
)
$
21.3
Tommy Hilfiger International
227.9
$
(36.7
)
264.6
332.1
(7.1
)
339.2
Total Tommy Hilfiger
213.0
(36.7
)
249.7
351.7
(8.8
)
360.5
Calvin Klein North America
33.6
33.6
38.9
(2.1
)
41.0
Calvin Klein International
175.5
(13.8
)
189.3
195.3
(5.7
)
201.0
Total Calvin Klein
209.1
(13.8
)
222.9
234.2
(7.8
)
242.0
Heritage Brands Wholesale
30.2
30.2
43.4
43.4
Heritage Brands Retail
(33.9
)
(21.1
)
(12.8
)
Total Heritage Brands
30.2
30.2
9.5
(21.1
)
30.6
Corporate
(65.0
)
16.1
(81.1
)
(119.0
)
(28.5
)
(90.5
)
Total earnings before interest and
taxes
$
387.3
$
(34.4
)
$
421.7
$
476.4
$
(66.2
)
$
542.6
(1)
The adjustments for the six months ended July 31, 2022
represent the elimination of (i) the costs related to the Company’s
decision to exit from its Russia business; and (ii) the gain
recorded in connection with the Karl Lagerfeld transaction.
(2)
The adjustments for the six months ended August 1, 2021
represent the elimination of (i) the costs related to actions to
reduce the Company’s workforce, primarily in international markets,
and its real estate footprint; and (ii) the costs related to
exiting the Heritage Brands Retail business.
PVH CORP. Reconciliations of 2022 Constant Currency
Revenue (In millions)
As a supplement to the Company’s reported operating results, the
Company presents constant currency revenue information, which is a
non-GAAP financial measure. The Company presents results in this
manner because it is a global company that transacts business in
multiple currencies and reports financial information in U.S.
dollars. Foreign currency exchange rate fluctuations affect the
amounts reported by the Company in U.S. dollars with respect to its
foreign revenues. Exchange rate fluctuations can have a significant
effect on reported revenues. The Company believes presenting
constant currency revenue information provides useful information
to investors, as it provides information to assess how its
businesses performed excluding the effects of changes in foreign
currency exchange rates and assists investors in evaluating the
effectiveness of the Company’s operations and underlying business
trends in a manner that is consistent with management’s evaluation
of business performance.
The Company calculates constant currency revenue information by
translating its foreign revenues for the relevant period into U.S.
dollars at the average exchange rates in effect during the
comparable prior year period (rather than at the actual exchange
rates in effect during the relevant period).
Constant currency performance should be viewed in addition to,
and not in lieu of or as superior to, the Company’s operating
performance calculated in accordance with GAAP. The constant
currency revenue information presented may not be comparable to
similarly described measures reported by other companies.
GAAP Revenue
% Change
Quarter Ended
GAAP
Negative Impact of
Foreign Exchange
Constant
Currency
7/31/22
8/1/21
Tommy Hilfiger International
$
769.0
$
842.6
(8.7
)%
(12.5
)%
3.8
%
Total Tommy Hilfiger
1,078.5
1,135.5
(5.0
)%
(9.4
)%
4.4
%
Calvin Klein International
563.3
573.3
(1.7
)%
(11.5
)%
9.8
%
Total Calvin Klein
910.0
922.4
(1.3
)%
(7.3
)%
6.0
%
Total Revenue
$
2,132.0
$
2,313.2
(7.8
)%
(7.7
)%
(0.1
)%
Total Direct-to-Consumer
$
957.3
$
1,010.2
(5.2
)%
(8.0
)%
2.8
%
Wholesale
$
1,073.8
$
1,211.3
(11.4
)%
(8.0
)%
(3.4
)%
Total Digital
$
506.5
$
543.4
(6.8
)%
(10.5
)%
3.7
%
PVH CORP. Full Year and Quarterly Reconciliations of
GAAP to Non-GAAP Amounts
The Company is presenting its 2022 estimated results on a
non-GAAP basis by excluding (i) the costs incurred in connection
with the Company’s decision to exit from its Russia business,
consisting of noncash asset impairments, contract termination and
other costs, and severance; (ii) the gain recorded in connection
with the Karl Lagerfeld transaction and; (iii) the estimated tax
effects associated with the foregoing pre-tax items. The Company
has provided the reconciliations set forth below to present its
estimates on a GAAP basis and excluding the foregoing amounts.
The 2022 estimated results are presented on both a GAAP and
non-GAAP basis. The Company believes presenting these results on a
non-GAAP basis provides useful additional information to investors.
The Company excludes such amounts that it deems to be non-recurring
or non-operational and believes that excluding them (i) facilitates
comparing the results being reported against past and future
results by eliminating amounts that it believes are not comparable
between periods, thereby permitting management to evaluate
performance and investors to make decisions based on the ongoing
operations of the Company, and (ii) assists investors in evaluating
the effectiveness of the Company’s operations and underlying
business trends in a manner that is consistent with management’s
evaluation of business performance. The Company uses its results
excluding these amounts to evaluate its operating performance and
to discuss its business with investment institutions, the Company’s
Board of Directors and others. The Company’s results excluding the
items described above are also the basis for certain incentive
compensation calculations. The non-GAAP measures should be viewed
in addition to, and not in lieu of or superior to, the Company’s
operating performance measures calculated in accordance with GAAP.
The information presented on a non-GAAP basis may not be comparable
to similarly titled measures reported by other companies.
The estimated tax effects associated with the above pre-tax
items are based on the Company’s assessment of deductibility. In
making this assessment, the Company evaluated each pre-tax item
identified above as a non-GAAP exclusion to determine if such item
is taxable or tax deductible, and, if so, in what jurisdiction the
tax expense or tax deduction would occur. All of the pre-tax items
identified as non-GAAP exclusions were identified as either
primarily taxable or tax deductible, with the tax effect taken at
the applicable income tax rate in the local jurisdiction, or as
non-taxable or non-deductible, in which case the Company assumed no
tax effect.
2022 Net Income
Per Common Share Reconciliations
2022 Net Income
Per Common Share Reconciliations
Current Guidance
Previous Guidance
Full Year
2022
(Estimated)
Full Year
2022
(Estimated)
Second Quarter
2022
(Estimated)
GAAP net income per common share
attributable to PVH Corp.
Approximately $7.64
Approximately $9.20
Approximately $2.20
Estimated per common share impact of items
identified as non-GAAP exclusions
$(0.36)
$0.20
$0.20
Net income per common share attributable
to PVH Corp. on a non-GAAP basis
Approximately $8.00
Approximately $9.00
Approximately $2.00
The GAAP net income per common share attributable to PVH Corp.
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 cost efficiency action discussed in this
release, 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 the pandemic and related supply chain and logistics
disruptions, including vessel, container and other transportation
shortages, labor shortages and port congestion globally, as well as
unexpected production delays in any of the Company’s key sourcing
countries, (v) 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 (vi) 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 2022 Constant Currency Revenue
Full Year
2022
(Estimated)
Third Quarter
2022
(Estimated)
GAAP revenue decrease
(4)% to (3)%
(5)% to (4)%
Negative impact of foreign exchange
(7)%
(9)%
Non-GAAP revenue increase on a constant
currency basis
3% to 4%
4% to 5%
Please refer to the section entitled “Reconciliations of 2022
Constant Currency Revenue” on page 18 of this release for a
description of the presentation of constant currency amounts.
Reconciliation of
GAAP Diluted Net Income Per Common Share to Diluted Net Income Per
Common Share on a Non-GAAP Basis
Full Year 2021
Third Quarter 2021
(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 attributable to PVH Corp.
$
952.3
$
223.2
$
729.1
$
279.7
$
87.6
$
192.1
Total weighted average shares
71.9
71.9
72.0
72.0
Diluted net income per common share
attributable to PVH Corp.
$
13.25
$
10.15
$
3.89
$
2.67
(1)
Represents the impact on net income in the year ended
January 30, 2022 from the elimination of (i) a $48.7 million
recognized actuarial gain on retirement plans; (ii) $47.6 million
of costs related to actions to reduce the Company’s workforce,
primarily in international markets, and its real estate footprint,
consisting of noncash asset impairments, severance, and contract
termination and other costs; (iii) $21.1 million of costs related
to exiting the Heritage Brands Retail business, consisting of
severance and other termination benefits, accelerated amortization
of lease assets and contract termination and other costs; (iv) a
$118.9 million gain recorded in connection with the Heritage Brands
transaction, which includes a gain on the sale, less costs to sell,
and a net gain on the Company’s retirement plans associated with
the transaction; (v) $5.5 million of costs related to the Heritage
Brands transaction, consisting of severance; (vi) $22.3 million net
tax expense associated with the foregoing pre-tax items; and (vii)
a $152.1 million one-time discrete tax benefit principally
resulting from a tax accounting method change made in conjunction
with the Company’s 2020 U.S. federal income tax return.
(2)
Represents the impact on net income in the quarter ended
October 31, 2021 from the elimination of (i) a $118.9 million gain
recorded in connection with the Heritage Brands transaction, which
includes a gain on the sale, less costs to sell, and a net gain on
the Company’s retirement plans associated with the transaction;
(ii) $5.5 million of costs related to the Heritage Brands
transaction, consisting of severance; (iii) $2.5 million of costs
related to actions to streamline the Company’s organization through
reductions in its workforce, primarily in certain international
markets, and to reduce its real estate footprint, including
reductions in office space and select store closures, consisting of
severance; and (iv) $23.3 million net tax expense associated with
the foregoing pre-tax items.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220830005948/en/
Sheryl Freeman (212) 381-3980
investorrelations@pvh.com
PVH (NYSE:PVH)
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