- Third quarter revenue decreased 2% to $2.281 billion compared
to the prior year period (increased 7% on a constant currency
basis) and exceeded guidance
- Third quarter EPS
- GAAP basis: $(2.88) compared to guidance of $2.10 to $2.15.
Results include a $417 million pre-tax noncash goodwill impairment
charge not known at time of guidance
- Non-GAAP basis: $2.60 and significantly exceeded guidance of
$2.10 to $2.15 (there were no non-GAAP exclusions in guidance)
- Full year revenue outlook: In line with the top end of previous
guidance range, projected to decrease approximately 3% (increase
approximately 4% on a constant currency basis)
- Full year EPS outlook
- GAAP basis: Approximately $1.37 compared to approximately $7.64
previously
- Non-GAAP basis: Approximately $8.25 compared to approximately
$8.00 previously
- Includes negative impact of approximately $1.15 per share
related to foreign currency translation compared to approximately
$1.25 previously
PVH Corp. [NYSE: PVH] today reported its 2022 third quarter
results and updated its full year outlook.
Stefan Larsson, Chief Executive Officer, commented, “We are
pleased with our third quarter results as we delivered high
single-digit constant currency top-line growth. This was ahead of
our expectations, despite having to navigate continuing
macroeconomic headwinds. Our strong performance reflects the power
of our two global iconic brands, Calvin Klein and TOMMY HILFIGER,
and the pricing power we are able to achieve by delivering strong
hero product, engaging closely with consumers, and elevating the
customer experience. Our international businesses continued to
execute well across both brands, even as macro conditions remain
challenging in Europe and COVID impacts continued in Asia. In North
America, we are encouraged by the positive performance indicators
we are seeing, especially how consumers are responding to and
engaging with our brands, although we recognize that we are in the
early stages of a multi-year journey to unlock this region’s full
opportunity.”
Mr. Larsson added, “Through the PVH+ Plan, we seek to tap into
our full potential by focusing on our core strengths and connecting
our iconic brands closer to where the consumer is going than any
time before. Our goal is to win with the consumer and achieve
long-term profitable growth.”
Zac Coughlin, Chief Financial Officer, said, “We continue to
manage our business in a prudent and disciplined manner, and
delivered on the commitments we made by relentlessly focusing on
improving execution and reducing costs. We are doubling down on the
PVH+ Plan growth drivers and focusing on what is within our control
to drive sustainable growth, generate strong cash flows, and
deliver shareholder returns.”
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. References to the
Company’s underlying revenue growth refers to the revenue change on
a constant currency basis, excluding the impacts of the war in
Ukraine, the Heritage Brands transaction and the exit from the
Heritage Brands retail business, as applicable.
Third Quarter Review:
- Revenue decreased 2% compared to the prior year period
(increased 7% on a constant currency basis), inclusive of a 2%
reduction resulting from the impact of 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 high
single-digit revenue growth compared to the prior year period was
driven by growth across all regions and in both its Tommy Hilfiger
and Calvin Klein brand businesses. The increase included solid
performance in the Company’s international businesses, as well as
improvements in North America, particularly in the
direct-to-consumer business, despite the challenging global
macroeconomic environment.
- Direct-to-Consumer revenue decreased 5% compared to the
prior year period (increased 5% on a constant currency basis).
- Wholesale revenue decreased 2% compared to the prior
year period (increased 9% on a constant currency basis).
- Total Digital revenue decreased 12% compared to the
prior year period (decreased 1% on a constant currency basis).
Total Digital 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
20%.
- Gross Margin was 55.9% as compared to 57.7% in the prior
year period, as the benefit from price increases was more than
offset by higher costs, increased promotional activity and the
negative impact of approximately 40 basis points of foreign
currency translation.
- Inventory increased 32% compared to the prior year
period 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 supply chain and logistics disruptions,
and (iii) elevated inventory levels in the North America wholesale
business due to lower than expected demand.
Third Quarter Consolidated Results:
- Revenue decreased 2% to $2.281 billion compared to the
prior year period (increased 7% on a constant currency basis),
inclusive of a 2% reduction resulting from the impact of the war in
Ukraine.
- Tommy Hilfiger revenue decreased 4% compared to the
prior year period (increased 7% on a constant currency basis)
- Tommy Hilfiger International revenue decreased 10%
(increased 5% on a constant currency basis)
- Tommy Hilfiger North America revenue increased 12%
- Calvin Klein revenue increased 1% compared to the prior
year period (increased 9% on a constant currency basis)
- Calvin Klein International revenue decreased 4%
(increased 9% on a constant currency basis)
- Calvin Klein North America revenue increased 9%
- Heritage Brands revenue decreased 4% compared to the
prior year period.
- Earnings (loss) before interest and taxes (“EBIT”) on a
GAAP basis was $(214) million, inclusive of a $30 million negative
impact due to foreign currency translation, compared to $377
million in the prior year period. Included in the third quarter was
a noncash goodwill impairment charge of $417 million, which was
non-operational and driven by a significant increase in discount
rates, and included in the prior year period was a net gain of $113
million recorded in connection with the Heritage Brands
transaction. EBIT on a GAAP basis for these periods also include
other amounts for the applicable period described under the heading
“Non-GAAP Exclusions” later in this release. EBIT on a non-GAAP
basis for these periods exclude these amounts. EBIT on a non-GAAP
basis was $220 million, inclusive of a $30 million negative impact
due to foreign currency translation, compared to $266 million in
the prior year period. The revenue growth on a constant currency
basis was more than offset by the gross margin decline discussed
above. The Company continues to take a disciplined approach to
managing expenses, driving cost efficiencies while making targeted
investments to drive its strategic initiatives.
- Earnings (loss) per share (“EPS”)
- GAAP basis: $(2.88) compared to $3.89 in the prior year
period.
- Non-GAAP basis: $2.60 compared to $2.67 in the prior
year period.
EPS on both a GAAP basis and non-GAAP basis
for the third quarter included the negative impacts of (i) $0.35
per share related to foreign currency translation and (ii) $0.18
per share related to the war in Ukraine.
EPS on a GAAP basis for these periods also
included the amounts for the applicable period described under the
heading “Non-GAAP Exclusions” later in this release, including the
$417 million pre-tax noncash goodwill impairment charge in the
third quarter and the $113 million pre-tax net gain recorded in
connection with the Heritage Brands transaction in the prior year
period. EPS on a non-GAAP basis for these periods exclude these
amounts.
- Interest expense decreased to $19 million from $25
million in the prior year period.
- Effective tax rate was 19.8% on a GAAP basis as compared
to 20.7% in the prior year period. The effective tax rate was 15.7%
on a non-GAAP basis compared to 20.5% in the prior year
period.
Stock Repurchase Program: Delivering on its commitment
under the PVH+ Plan to return excess cash to stockholders, the
Company repurchased 1.9 million shares of its common stock for $102
million during the third quarter of 2022.
2022 Outlook: Full Year 2022
Guidance
- Revenue is projected to be at the top end of previous
guidance range, a decrease of approximately 3% as compared to 2021
(increase approximately 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.
- EPS
- GAAP basis: projected to be approximately $1.37 compared
to $13.25 in 2021.
- Non-GAAP basis: projected to be approximately $8.25
compared to $10.15 in 2021.
The 2022 EPS projections on both a GAAP and
non-GAAP basis include the estimated negative impacts of (i)
approximately $1.15 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 recorded in the
second quarter in connection with the Company’s decision to exit
from its Russia business discussed under the heading “Non-GAAP
Exclusions” later in this release.
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 excludes the one-time noncash asset impairments
recorded in the second quarter discussed above and these other
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 64% on a GAAP basis and approximately
24% on a non-GAAP basis. The 2022 effective tax rate guidance on a
GAAP basis reflects the impact of the $417 million pre-tax noncash
goodwill impairment charge recorded during the third quarter of
2022, which is non-deductible for tax purposes. The 2022 effective
tax rate guidance on a non-GAAP basis excludes this impact.
Fourth Quarter 2022 Guidance
- Revenue is projected to decrease approximately 4% as
compared to the prior year period (increase approximately 4% on a
constant currency basis), including a 2% reduction resulting from
the impact of the war in Ukraine.
- EPS
- GAAP basis: projected to be approximately $0.45 compared
to $5.53 in the prior year period.
- Non-GAAP basis: projected to be approximately $1.65
compared to $2.84 in the prior year period.
The fourth quarter 2022 EPS projections on
both a GAAP and non-GAAP basis include the estimated negative
impacts of (i) approximately $0.27 per share related to foreign
currency translation and (ii) approximately $0.15 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.
The fourth quarter 2022 EPS projection on a
GAAP basis also includes an unfavorable tax impact related to the
$417 million pre-tax noncash goodwill impairment charge, as the
impairment is non-deductible and has been factored into the
Company’s annualized effective tax rate. EPS on a GAAP basis for
the prior year period included the amounts 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 be flat compared to $24
million in the prior year period.
- Effective tax rate is projected to be approximately 80%
on a GAAP basis and 25% on a non-GAAP basis. The fourth quarter
2022 tax rate guidance on a GAAP basis includes the impact
resulting from the $417 million pre-tax noncash goodwill impairment
charge as discussed above. The fourth quarter 2022 effective tax
rate guidance on a non-GAAP basis excludes this impact.
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 noncash goodwill impairment charge of $417 million
recorded in the third quarter of 2022, which was non-operational
and driven by a significant increase in discount rates.
- Pre-tax costs of $17 million incurred in the third quarter of
2022, consisting of severance related to initial actions under the
plans announced in August 2022 to reduce people costs in the
Company’s global offices by approximately 10% by the end of
2023.
- Pre-tax charges 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 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.
- 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 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.
- 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
was (i) taxable or tax deductible, in which case the tax effect was
taken at the applicable income tax rate in the local jurisdiction,
or (ii) 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 impact
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 7 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 third quarter earnings release on
Thursday, December 1, 2022 at 9:00 a.m. EST. 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. Please log on to www.PVH.com as described
above to listen to the replay. 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 headcount cost reduction initiative announced in
August 2022, and the 2021 sale of assets of, and exit 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 Protection; (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
Nine Months Ended
10/30/22
10/31/21
10/30/22
10/31/21
Net sales
$
2,144.7
$
2,208.0
$
6,182.4
$
6,410.0
Royalty revenue
105.4
97.4
273.7
248.0
Advertising and other revenue
30.7
27.1
79.4
67.0
Total revenue
$
2,280.8
$
2,332.5
$
6,535.5
$
6,725.0
Gross profit on net sales
$
1,138.1
$
1,220.6
$
3,379.3
$
3,592.8
Gross profit on royalty, advertising and
other revenue
136.1
124.5
353.1
315.0
Total gross profit
1,274.2
1,345.1
3,732.4
3,907.8
Selling, general and administrative
expenses
1,085.0
1,097.3
3,194.8
3,198.7
Goodwill impairment
417.1
417.1
Non-service related pension and
postretirement income
(3.4
)
(4.2
)
(10.2
)
(11.5
)
Other gain
(118.9
)
(118.9
)
Equity in net income of unconsolidated
affiliates
10.5
6.3
42.6
14.1
(Loss) earnings before interest and
taxes
(214.0
)
377.2
173.3
853.6
Interest expense, net
18.8
24.6
60.9
80.3
Pre-tax (loss) income
(232.8
)
352.6
112.4
773.3
Income tax (benefit) expense
(46.1
)
72.9
50.7
212.1
Net (loss) income
(186.7
)
279.7
61.7
561.2
Less: Net loss attributable to redeemable
non-controlling interest (1)
(0.3
)
Net (loss) income attributable to PVH
Corp.
$
(186.7
)
$
279.7
$
61.7
$
561.5
Diluted net (loss) income per common share
attributable to PVH Corp. (2)
$
(2.88
)
$
3.89
$
0.92
$
7.77
Quarter Ended
Nine Months Ended
10/30/22
10/31/21
10/30/22
10/31/21
Depreciation and amortization expense
$
73.1
$
77.3
$
225.3
$
233.2
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 (loss) 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 October 30, 2022 and October 31, 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 noncash goodwill
impairment charge recorded in the third quarter of 2022, which was
non-operational and driven by a significant increase in discount
rates; (iv) the costs incurred in the third quarter of 2022 related
to initial actions taken under the plans announced in August 2022
to reduce people costs in the Company’s global offices by
approximately 10% by the end of 2023, (the “2022 cost savings
initiative”), consisting of severance; (v) the costs incurred in
the first, second and third 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; (vi) 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; (vii) the gain 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, and a net gain on the Company’s
retirement plans associated with the transaction; (viii) the costs
incurred in the third quarter of 2021 in connection with the
Heritage Brands transaction, consisting of severance; and (ix) 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.
PVH CORP. Non-GAAP Measures (continued) (In
millions, except per share data)
The following table presents the non-GAAP measures that are
discussed in this release. Please see Tables 1 through 7 for the
reconciliations of the GAAP amounts to amounts on a non-GAAP
basis.
Quarter Ended
Nine Months Ended
10/30/22
10/31/21
10/30/22
10/31/21
Non-GAAP Measures
Selling, general and administrative
expenses (1)
$
1,068.3
$
1,089.3
$
3,127.6
$
3,124.5
Goodwill impairment (2)
—
—
Other gain (3)
—
—
Equity in net income of unconsolidated
affiliates (4)
26.5
Earnings before interest and taxes (5)
219.8
266.3
641.5
808.9
Income tax expense (6)
31.5
49.6
138.4
200.5
Net income attributable to PVH Corp.
(7)
169.5
192.1
442.2
528.4
Diluted net income per common share
attributable to PVH Corp. (8)
$
2.60
$
2.67
$
6.60
$
7.31
(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 goodwill impairment to goodwill impairment on a non-GAAP
basis.
(3)
Please see Table 5 for the reconciliations
of GAAP other gain to other gain on a non-GAAP basis.
(4)
Please see Table 6 for the reconciliation
of GAAP equity in net income of unconsolidated affiliates to equity
in net income of unconsolidated affiliates on a non-GAAP basis.
(5)
Please see Table 2 for the reconciliations
of GAAP (loss) earnings before interest and taxes to earnings
before interest and taxes on a non-GAAP basis.
(6)
Please see Table 7 for the reconciliations
of GAAP income tax (benefit) 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.
(7)
Please see Table 1 for the reconciliations
of GAAP net (loss) income to net income on a non-GAAP basis.
(8)
Please see Note A in Notes to Consolidated
GAAP Statements of Operations for the reconciliations of GAAP
diluted net (loss) 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 (loss) income to net income on a
non-GAAP basis
Quarter Ended
Nine Months Ended
10/30/22
10/31/21
10/30/22
10/31/21
Net (loss) income attributable to PVH
Corp.
$
(186.7
)
$
279.7
$
61.7
$
561.5
Diluted net (loss) income per common share
attributable to PVH Corp. (1)
$
(2.88
)
$
3.89
$
0.92
$
7.77
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
2.5
47.6
SG&A expenses associated with exiting
the Heritage Brands Retail business
21.1
SG&A expenses associated with the
Heritage Brands transaction
5.5
5.5
SG&A expenses associated with the
Company’s decision to exit from its Russia business
50.5
SG&A expenses associated with the 2022
cost savings initiative
16.7
16.7
Goodwill impairment
417.1
417.1
Gain in connection with the Karl Lagerfeld
transaction (recorded in equity in net income of unconsolidated
affiliates)
(16.1
)
Gain in connection with the Heritage
Brands transaction (recorded in other gain)
(118.9
)
(118.9
)
Tax effects of the pre-tax items above
(2)
(77.6
)
23.3
(87.7
)
11.6
Net income on a non-GAAP basis
attributable to PVH Corp.
$
169.5
$
192.1
$
442.2
$
528.4
Diluted net income per common share on a
non-GAAP basis attributable to PVH Corp. (1)
$
2.60
$
2.67
$
6.60
$
7.31
(1)
Please see Note A in Notes to the
Consolidated GAAP Statements of Operations for the reconciliation
of GAAP diluted net (loss) income per common share to diluted net
income per common share on a non-GAAP basis.
(2)
Please see Table 7 for an explanation of
the calculation of the tax effects of the above items.
PVH CORP.
Reconciliations of GAAP to Non-GAAP
Amounts (continued)
(In millions, except per share
data)
Table 2 -
Reconciliations of GAAP (loss) earnings before interest and taxes
to earnings before interest and taxes on a non-GAAP
basis
Quarter Ended
Nine Months Ended
10/30/22
10/31/21
10/30/22
10/31/21
(Loss) earnings before interest and
taxes
$
(214.0
)
$
377.2
$
173.3
$
853.6
Items excluded:
SG&A expenses associated with actions
to reduce the Company’s workforce, primarily in international
markets, and its real estate footprint
2.5
47.6
SG&A expenses associated with exiting
the Heritage Brands Retail business
21.1
SG&A expenses associated with the
Heritage Brands transaction
5.5
5.5
SG&A expenses associated with the
Company’s decision to exit from its Russia business
50.5
SG&A expenses associated with the 2022
cost savings initiative
16.7
16.7
Goodwill impairment
417.1
417.1
Gain in connection with the Karl Lagerfeld
transaction (recorded in equity in net income of unconsolidated
affiliates)
(16.1
)
Gain in connection with the Heritage
Brands transaction (recorded in other gain)
(118.9
)
(118.9
)
Earnings before interest and taxes on a
non-GAAP basis
$
219.8
$
266.3
$
641.5
$
808.9
Table 3 -
Reconciliations of GAAP SG&A expenses to SG&A expenses on a
non-GAAP basis
Quarter Ended
Nine Months Ended
10/30/22
10/31/21
10/30/22
10/31/21
SG&A expenses
$
1,085.0
$
1,097.3
$
3,194.8
$
3,198.7
Items excluded:
Expenses associated with actions to reduce
the Company’s workforce, primarily in international markets, and
its real estate footprint
(2.5
)
(47.6
)
Expenses associated with exiting the
Heritage Brands Retail business
(21.1
)
Expenses associated with the Heritage
Brands transaction
(5.5
)
(5.5
)
Expenses associated with the Company’s
decision to exit from its Russia business
(50.5
)
Expenses associated with the 2022 cost
savings initiative
(16.7
)
(16.7
)
SG&A expenses on a non-GAAP basis
$
1,068.3
$
1,089.3
$
3,127.6
$
3,124.5
PVH CORP.
Reconciliations of GAAP to Non-GAAP
Amounts (continued)
(In millions, except per share
data)
Table 4 -
Reconciliations of GAAP goodwill impairment to goodwill impairment
on a non-GAAP basis
Quarter Ended
Nine Months Ended
10/30/22
10/30/22
Goodwill impairment
$
417.1
$
417.1
Item excluded:
Goodwill impairment
(417.1
)
(417.1
)
Goodwill impairment on a non-GAAP
basis
$
—
$
—
Table 5 -
Reconciliations of GAAP other gain to other gain on a non-GAAP
basis
Quarter Ended
Nine Months Ended
10/31/21
10/31/21
Other gain
$
(118.9
)
$
(118.9
)
Item excluded:
Gain in connection with the Heritage
Brands transaction
118.9
118.9
Other gain on a non-GAAP basis
$
—
$
—
Table 6 -
Reconciliation of GAAP equity in net income of unconsolidated
affiliates to equity in net income of unconsolidated affiliates on
a non-GAAP basis
Nine Months Ended
10/30/22
Equity in net income of unconsolidated
affiliates
$
42.6
Item excluded:
Gain in connection with the Karl Lagerfeld
transaction
(16.1
)
Equity in net income of unconsolidated
affiliates on a non-GAAP basis
$
26.5
PVH CORP.
Reconciliations of GAAP to Non-GAAP
Amounts (continued)
(In millions, except per share
data)
Table 7 -
Reconciliations of GAAP income tax (benefit) expense to income tax
expense on a non-GAAP basis
Quarter Ended
Nine Months Ended
10/30/22
10/31/21
10/30/22
10/31/21
Income tax (benefit) expense
$
(46.1
)
$
72.9
$
50.7
$
212.1
Item excluded:
Tax effects of pre-tax items identified as
non-GAAP exclusions (1)
77.6
(23.3
)
87.7
(11.6
)
Income tax expense on a non-GAAP basis
$
31.5
$
49.6
$
138.4
$
200.5
(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 was (i)
taxable or tax deductible, in which case the tax effect was taken
at the applicable income tax rate in the local jurisdiction, or
(ii) 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 (loss) income per common
share as follows:
Quarter Ended
Quarter Ended
10/30/22
10/31/21
GAAP
Non-GAAP
GAAP
Non-GAAP
Results
Adjustments (1)
Results
Results
Adjustments (2)
Results
Net (loss) income attributable to PVH
Corp.
$
(186.7
)
$
(356.2
)
$
169.5
$
279.7
$
87.6
$
192.1
Weighted average common shares
64.8
64.8
70.9
70.9
Weighted average dilutive securities
—
0.3
0.3
1.1
1.1
Total shares
64.8
65.1
72.0
72.0
Diluted net (loss) income per common share
attributable to PVH Corp.
$
(2.88
)
$
2.60
$
3.89
$
2.67
Nine Months Ended
Nine Months Ended
10/30/22
10/31/21
GAAP
Non-GAAP
GAAP
Non-GAAP
Results
Adjustments (1)
Results
Results
Adjustments (2)
Results
Net income attributable to PVH Corp.
$
61.7
$
(380.5
)
$
442.2
$
561.5
$
33.1
$
528.4
Weighted average common shares
66.5
66.5
71.2
71.2
Weighted average dilutive securities
0.5
0.5
1.1
1.1
Total shares
67.0
67.0
72.3
72.3
Diluted net income per common share
attributable to PVH Corp.
$
0.92
$
6.60
$
7.77
$
7.31
(1)
Represents the impact on net (loss) income
in the periods ended October 30, 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; (iii) the noncash goodwill impairment
charge, which was driven by a significant increase in discount
rates; (iv) the costs related to the 2022 cost savings initiative;
and (v) the tax effects associated with the foregoing pre-tax
items. Please see Table 1 for the reconciliation of GAAP net (loss)
income to net income on a non-GAAP basis. Adjustments to weighted
average dilutive securities for the quarter ended October 30, 2022
represent the dilutive impact of securities included in the
non-GAAP diluted net income per share calculations. The GAAP
diluted net loss per share calculation for the quarter ended
October 30, 2022 excluded these potentially dilutive securities
because there was a GAAP net loss attributable to PVH Corp. for the
period, and, as such, the inclusion of these securities would have
been anti-dilutive.
(2)
Represents the impact on net income in the
periods ended October 31, 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; (iii) the gain recorded in connection with the Heritage
Brands transaction; (iv) the costs related to the Heritage Brands
transaction; and (v) 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)
10/30/22
10/31/21
ASSETS
Current Assets:
Cash and Cash Equivalents
$
457.0
$
1,298.7
Receivables
1,002.3
936.6
Inventories
1,821.2
1,379.6
Other
374.2
244.0
Total Current Assets
3,654.7
3,858.9
Property, Plant and Equipment
844.6
897.1
Operating Lease Right-of-Use Assets
1,177.1
1,432.1
Goodwill and Other Intangible Assets
5,358.4
6,270.3
Other Assets
371.1
357.6
$
11,405.9
$
12,816.0
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts Payable and Accrued Expenses
$
2,240.8
$
2,203.7
Current Portion of Operating Lease
Liabilities
329.4
395.0
Short-Term Borrowings
98.0
27.8
Current Portion of Long-Term Debt
37.3
32.8
Other Liabilities
702.4
1,094.1
Long-Term Portion of Operating Lease
Liabilities
1,066.1
1,285.7
Long-Term Debt
2,109.1
2,605.2
Stockholders’ Equity
4,822.8
5,171.7
$
11,405.9
$
12,816.0
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
10/30/22
10/31/21
Tommy Hilfiger North
America
Net sales
$
307.2
$
269.2
Royalty revenue
24.3
25.2
Advertising and other revenue
6.7
6.8
Total
338.2
301.2
Tommy Hilfiger
International
Net sales
805.9
895.8
Royalty revenue
16.9
16.5
Advertising and other revenue
5.9
4.2
Total
828.7
916.5
Total Tommy
Hilfiger
Net sales
1,113.1
1,165.0
Royalty revenue
41.2
41.7
Advertising and other revenue
12.6
11.0
Total
1,166.9
1,217.7
Calvin Klein North
America
Net sales
314.7
292.1
Royalty revenue
49.8
42.7
Advertising and other revenue
15.8
14.6
Total
380.3
349.4
Calvin Klein
International
Net sales
570.0
597.9
Royalty revenue
14.1
12.5
Advertising and other revenue
2.1
1.3
Total
586.2
611.7
Total Calvin
Klein
Net sales
884.7
890.0
Royalty revenue
63.9
55.2
Advertising and other revenue
17.9
15.9
Total
966.5
961.1
Heritage Brands
Wholesale
Net sales
146.9
153.0
Royalty revenue
0.3
0.5
Advertising and other revenue
0.2
0.2
Total
147.4
153.7
Total
Revenue
Net sales
2,144.7
2,208.0
Royalty revenue
105.4
97.4
Advertising and other revenue
30.7
27.1
Total
$
2,280.8
$
2,332.5
PVH CORP.
Segment Data (continued)
(In millions)
(LOSS) EARNINGS
BEFORE INTEREST AND TAXES BY SEGMENT
Quarter Ended
Quarter Ended
10/30/22
10/31/21
Results
Results
Under
Non-GAAP
Under
Non-GAAP
GAAP
Adjustments (1)
Results
GAAP
Adjustments (2)
Results
Tommy Hilfiger North America
$
(169.9
)
$
(181.4
)
$
11.5
$
(1.2
)
$
(1.2
)
Tommy Hilfiger International
121.7
(2.1
)
123.8
178.6
$
(1.8
)
180.4
Total Tommy Hilfiger
(48.2
)
(183.5
)
135.3
177.4
(1.8
)
179.2
Calvin Klein North America
(140.0
)
(166.6
)
26.6
20.5
20.5
Calvin Klein International
12.1
(80.0
)
92.1
110.9
(0.7
)
111.6
Total Calvin Klein
(127.9
)
(246.6
)
118.7
131.4
(0.7
)
132.1
Heritage Brands Wholesale
7.3
(2.2
)
9.5
116.7
113.4
3.3
Corporate
(45.2
)
(1.5
)
(43.7
)
(48.3
)
(48.3
)
Total (loss) earnings before interest
and taxes
$
(214.0
)
$
(433.8
)
$
219.8
$
377.2
$
110.9
$
266.3
(1)
The adjustments for the quarter ended
October 30, 2022 represent the elimination of (i) the noncash
goodwill impairment charge, which was driven by a significant
increase in discount rates; and (ii) the costs related to the 2022
cost savings initiative.
(2)
The adjustments for the quarter ended
October 31, 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; (ii) the gain
recorded in connection with the Heritage Brands transaction; and
(iii) the costs related to the Heritage Brands transaction.
PVH CORP.
Segment Data (continued)
(In millions)
REVENUE BY
SEGMENT
Nine Months Ended
Nine Months Ended
10/30/22
10/31/21
Tommy Hilfiger North
America
Net sales
$
830.9
$
747.8
Royalty revenue
62.2
58.2
Advertising and other revenue
16.1
14.9
Total
909.2
820.9
Tommy Hilfiger
International
Net sales
2,345.7
2,532.1
Royalty revenue
46.3
42.5
Advertising and other revenue
15.1
11.4
Total
2,407.1
2,586.0
Total Tommy
Hilfiger
Net sales
3,176.6
3,279.9
Royalty revenue
108.5
100.7
Advertising and other revenue
31.2
26.3
Total
3,316.3
3,406.9
Calvin Klein North
America
Net sales
872.6
809.1
Royalty revenue
126.2
103.0
Advertising and other revenue
41.3
34.6
Total
1,040.1
946.7
Calvin Klein
International
Net sales
1,677.8
1,683.5
Royalty revenue
38.3
34.0
Advertising and other revenue
6.5
4.5
Total
1,722.6
1,722.0
Total Calvin
Klein
Net sales
2,550.4
2,492.6
Royalty revenue
164.5
137.0
Advertising and other revenue
47.8
39.1
Total
2,762.7
2,668.7
Heritage Brands
Wholesale
Net sales
455.4
561.9
Royalty revenue
0.7
10.3
Advertising and other revenue
0.4
1.6
Total
456.5
573.8
Heritage Brands
Retail
Net sales
75.6
Royalty revenue
Advertising and other revenue
Total
75.6
Total Heritage
Brands
Net sales
455.4
637.5
Royalty revenue
0.7
10.3
Advertising and other revenue
0.4
1.6
Total
456.5
649.4
Total
Revenue
Net sales
6,182.4
6,410.0
Royalty revenue
273.7
248.0
Advertising and other revenue
79.4
67.0
Total
$
6,535.5
$
6,725.0
PVH CORP.
Segment Data (continued)
(In millions)
EARNINGS BEFORE
INTEREST AND TAXES BY SEGMENT
Nine Months Ended
Nine Months Ended
10/30/22
10/31/21
Results
Results
Under
Non-GAAP
Under
Non-GAAP
GAAP
Adjustments (1)
Results
GAAP
Adjustments (2)
Results
Tommy Hilfiger North America
$
(184.8
)
$
(181.4
)
$
(3.4
)
$
18.4
$
(1.7
)
$
20.1
Tommy Hilfiger International
349.6
(38.8
)
388.4
510.7
(8.9
)
519.6
Total Tommy Hilfiger
164.8
(220.2
)
385.0
529.1
(10.6
)
539.7
Calvin Klein North America
(106.4
)
(166.6
)
60.2
59.4
(2.1
)
61.5
Calvin Klein International
187.6
(93.8
)
281.4
306.2
(6.4
)
312.6
Total Calvin Klein
81.2
(260.4
)
341.6
365.6
(8.5
)
374.1
Heritage Brands Wholesale
37.5
(2.2
)
39.7
160.1
113.4
46.7
Heritage Brands Retail
(33.9
)
(21.1
)
(12.8
)
Total Heritage Brands
37.5
(2.2
)
39.7
126.2
92.3
33.9
Corporate
(110.2
)
14.6
(124.8
)
(167.3
)
(28.5
)
(138.8
)
Total earnings before interest and
taxes
$
173.3
$
(468.2
)
$
641.5
$
853.6
$
44.7
$
808.9
(1)
The adjustments for the nine
months ended October 30, 2022 represent 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; (iii) the noncash goodwill impairment
charge, which was driven by a significant increase in discount
rates; and (iv) the costs related to the 2022 cost savings
initiative.
(2)
The adjustments for the nine
months ended October 31, 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;
(ii) the costs related to exiting the Heritage Brands Retail
business; (iii) the gain recorded in connection with the Heritage
Brands transaction; and (iv) the costs related to the Heritage
Brands transaction.
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
impact 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
10/30/22
10/31/21
Tommy Hilfiger International
$
828.7
$
916.5
(9.6
)%
(14.5
)%
4.9
%
Total Tommy Hilfiger
1,166.9
1,217.7
(4.2
)%
(11.1
)%
6.9
%
Calvin Klein International
586.2
611.7
(4.2
)%
(13.2
)%
9.0
%
Total Calvin Klein
966.5
961.1
0.6
%
(8.5
)%
9.1
%
Total Revenue
$
2,280.8
$
2,332.5
(2.2
)%
(9.5
)%
7.3
%
Total Direct-to-Consumer
$
857.6
$
899.6
(4.7
)%
(9.7
)%
5.0
%
Wholesale
$
1,287.1
$
1,308.4
(1.6
)%
(10.1
)%
8.5
%
Total Digital
$
432.7
$
492.5
(12.1
)%
(11.2
)%
(0.9
)%
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; (iii) the noncash goodwill
impairment charge, which was driven by a significant increase in
discount rates; (iv) the costs incurred related to the 2022 cost
savings initiative and; (v) 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
Current Guidance
Previous Guidance
Full Year 2022 (Estimated)
Fourth Quarter 2022
(Estimated)
Full Year 2022 (Estimated)
GAAP net income per common share
attributable to PVH Corp.
Approximately $1.37
Approximately $0.45
Approximately $7.64
Estimated per common share impact of items
identified as non-GAAP exclusions
$(6.88)
$(1.20)
$(0.36)
Net income per common share attributable
to PVH Corp. on a non-GAAP basis
Approximately $8.25
Approximately $1.65
Approximately $8.00
2022 Tax Rate
Reconciliation
Full Year 2022 (Estimated)
Fourth Quarter 2022
(Estimated)
GAAP tax rate
Approximately 64%
Approximately 80%
Estimated tax rate impacts from items
identified as non-GAAP exclusions
40%
55%
Tax rate on a non-GAAP basis
Approximately 24%
Approximately 25%
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 2022 cost savings initiative, 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.
Reconciliations
of 2022 Constant Currency Revenue
Full Year 2022 (Estimated)
Fourth Quarter 2022
(Estimated)
GAAP revenue decrease
Approximately (3)%
Approximately (4)%
Negative impact of foreign exchange
(7)%
(8)%
Non-GAAP revenue increase on a constant
currency basis
Approximately 4%
Approximately 4%
Please refer to the section entitled “Reconciliations of 2022
Constant Currency Revenue” on page 21 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
Fourth 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
$
390.8
$
190.1
$
200.7
Total weighted average shares
71.9
71.9
70.6
70.6
Diluted net income per common share
attributable to PVH Corp.
$
13.25
$
10.15
$
5.53
$
2.84
(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 January 30, 2022 from the elimination
of (i) a $48.7 million recognized actuarial gain on retirement
plans; (ii) $10.7 million tax expense associated with the foregoing
pre-tax item; and (iii) 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221130005954/en/
Sheryl Freeman (212) 381-3980
investorrelations@pvh.com
PVH (NYSE:PVH)
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