Overseas sales strengthen Tommy
By Don Hogsett -- Home Textiles Today, 6/14/2004
HONG KONG — Helped by stronger sales in Europe, which offset declines in the United States, and getting a further lift from currency conversion, first quarter earnings before one-time items at Tommy Hilfiger Corp. jumped 29.7 percent, to $36.7 million from $28.3 million.
Nicked by $14.6 million in pre-tax costs tied to store closings and other cost-cutting moves, net income totaled $26.9 million, recovering from a year-before loss of $113.8 million, including a non-cash charge of $150.6 million for goodwill impairment.
Included in the $14.6 million charge are the cost of shuttering four specialty retail stores and the accelerated depreciation of some in-store shops in U.S. department stores "as part of the company's strategy to reduce over-distribution."
Sales at the designer's nameplate company edged up 2.4 percent, to $510.1 million, due to a rapidly growing European business. Sales in Europe shot up 39.5 percent, to $163.6 million from $117.3 million last year, ballasting a slide in the core U.S. business. Sales in America slumped 12.3 percent, to $296.2 million from $337.8 million the preceding year.
Sales in the company's wholesale segment were virtually unchanged, inching up to $406.8 million from $406.5 million last year. Sales in the retail segment advanced 16.7 percent, to $85.3 million from $73.1 million, largely due to expansion in Europe and Canada. Same-store sales in U.S. stores declined in the low single digits, the company said. Licensing revenues, including those from the Tommy Hilfiger Home program, slipped 2.7 percent, to $17.9 million from year-ago levels.
David Dyer, president and CEO, commented, "Our performance for the quarter exceeded earlier expectations due to stronger-than-anticipated European operating results and favorable currency translations. Our focus during the quarter remained on implementing the necessary steps to improve the productivity of our business and position the company for a return to long-term growth."
| Qtr. 3/31 (x000) | 2004 | 2003 | % chg |
| Sales | $510,100 | $498,000 | 2.4 |
| Oper. income (EBIT) | 73,400 | 70,900 | 3.5 |
| Net income | 26,900a | (113,800)a | — |
| Per share (diluted) | 0.29 | (1.26) | — |
| Average gross margin | 46.6% | 42.6% | — |
| SG&A expenses | 32.2% | 28,4% | — |
| 12 months | 2004 | 2003 | % chg |
| Sales | 1,875,800 | 1,888,100 | -0.7 |
| Oper. income (EBIT) | 280,200 | 284,200 | -1.4 |
| Net income | 132,200b | (513,600)b | — |
| Per share (diluted) | 1.45 | (5.68) | — |
| Average gross margin | 46.0% | 43.9% | — |
| SG&A expenses | 31.1% | 28.9% | — |
| (loss) | |||
| a-Fourth-quarter results include $14.6 million in one-time charges stemming from the closing of four specialty retail stores; the repositioning of the young men's jeans business; the acceleration of depreciation of some in-store shops in U.S. department stores as part of a strategy to reduce over-distribution; and other cost-cutting moves. Results in the prior-year first quarter include a goodwill impairment charge of $150.6 million and miscellaneous income of $9.3 million. | |||
| b-Full-year results include $14.6 million in one-time repositioning costs, partially offset by a $9 million benefit stemming from a change in accounting for accrued price adjustments. 2003 results include a $150.6 million goodwill impairment charge; $75.6 million in miscellaneous costs; and a $430.0 million non-cash charge stemming from a change in accounting. | |||
| 2004 | 2003 | % change | |
| Wholesale | $406,800 | $406,500 | .01 |
| Retail | 85,300 | 73,100 | 16.7 |
| Licensing | 17,900 | 18,400 | -2.7 |
