PVH Corporation's (PVH – Analyst Report) third-quarter adjusted earnings of $2.56 per share not only came ahead of its own guidance range of $2.45–$2.50 but also the Zacks Consensus Estimate of $2.48 per share. Moreover, the company's adjusted earnings were nearly 11% higher than the year-ago comparable period figure of $2.30 per share.

Pvh Corp – Earnings Surprise | FindTheBest

Despite a difficult global retail environment and intense promotional scenario, the company's bottom-line results improved year over year on strong performance at its Tommy Hilfiger and Calvin Klein brands.

Including one-time items, PVH Corp. reported earnings per share of $2.71, surging 14% from $2.37 earned in the comparable year-ago period.

Though the company posted better-than-expected bottom line results in the third quarter, its sales results failed to meet expectations. Moreover, the company provided a cautious guidance for the fourth quarter and at the same time lowered its forecast for 2014 as it expects continued impact from foreign currency translation in the year ahead. Consequently, the shares of this premium specialty apparel retailer fell 1.9% during yesterdays' after hours trading session.

Quarter in Detail

PVH Corp.'s total revenue fell 1.2% to $2,233.1 million from $2,259.1 million in the prior-year quarter. The prior-year figure includes revenue of $67 million from the divestment of Bass business on the first day of fourth-quarter 2013. Excluding the same, the company's total revenue registered year-over-year growth of nearly 2%. The year-over-year increase in revenue was attributed to decent sales contributions from all three business segments. However, quarterly revenue fell short of the Zacks Consensus Estimate of $2,260 million.

Total adjusted gross profit improved year over year by a marginal 0.2% to $1,170.4 million while as a percentage of sales it expanded 70 basis points (bps) to 52.4%.

PVH Corp.'s adjusted operating profit rose 1.1% to $309 million from $305.5 million in the year-ago comparable quarter. Moreover, the company's operating margin expanded 30 bps to 13.8% from the year-ago period. The improvement in operating margin is primarily due to the ongoing strength in its Tommy Hilfiger business, partially offset by investment in the recently acquired Warnaco businesses and gross margin erosion in the Heritage Brands business.

Segment Analysis

PVH Corp. reports its financial results under three business segments: a) Calvin Klein, b) Tommy Hilfiger and c) Heritage Brands.

Calvin Klein's revenue jumped 2% to $816 million in the quarter from $800 million in the year-ago quarter, including a 1% negative impact from foreign currency translation. The growth was driven by a 5% increase in the North American business and a 2% increase in total Calvin Klein royalty revenue, offset by 1% decline in the brand's international business.