Tommy Hilfiger Corporation today reported its results for the third quarter ended December 31, 2001 of fiscal year 2002. For the third quarter of fiscal 2002, diluted earnings per share were $0.41 versus $0.47 for the comparable period last year. Net revenue was $474.8 million compared to $475.8 million in the third quarter of fiscal 2001. Net income was $37.0 million versus $42.7 million in the same period a year ago. There were 90.1 million average shares and share equivalents outstanding during the quarter compared to 90.7 million last year. The current year quarterly results include the operations of Tommy Europe, which the Company acquired on July 5, 2001. Earnings per share exceeded the consensus estimate of $0.38, as reported by First Call, principally due to a lower than anticipated effective tax rate for the quarter. Chief Executive Officer Joel Horowitz commented, "We are very pleased to have achieved our financial objectives for the quarter, particularly given the impact of the economic slowdown on consumer apparel spending. The continued global appeal of the Tommy Hilfiger brand and our design and merchandising strategies -- focused on traditional American 'classics with a twist' -- contributed strongly to the results. Both our women's sportswear and juniors' lines continued to be among the best performers at retail this holiday season and were complemented by strong sales of our women's licensed products. In addition, our recently acquired European business performed well in all segments." In the Company's wholesale segment, revenues in the women's component were up slightly from a year ago, while the children's and men's components reported declines of 11.8% and 6.1%, respectively. In the aggregate, wholesale segment revenues declined 4.4% compared to the prior year. In the Company's retail segment, revenues for the quarter increased 16.5%, driven principally by sales in newly opened stores. Comparable store sales registered a mid-single digit decline for the quarter, but equaled the comparable store sales results of a year ago for the month of December. As of December 31, 2001, the Company's total store count, including 13 stores in Europe, was 160, consisting of 111 outlet stores and 49 specialty stores, compared to 93 outlet stores and 6 specialty stores a year ago. Licensing segment revenues were, as expected, down 23.0% versus the prior year quarter, due principally to the exclusion of royalties and buying agency commissions from Tommy Europe in the fiscal 2002 quarter. For the nine months ended December 31, 2001, diluted earnings per share were $1.04 versus $1.06 for the comparable period last year. Net revenue was $1,376.9 million compared to $1,408.9 million for the same period of fiscal 2001. Net income was $93.8 million versus $97.4 million in the comparable period a year ago. There were 89.8 million average shares and share equivalents outstanding for the nine months ended December 31, 2001 compared to 92.0 million a year ago. The current year results include the operations of Tommy Europe, which the Company acquired on July 5, 2001. Mr. Horowitz continued, "Within the current environment, we are focused on continuing to refine our product lines, balancing supply and demand, supporting our brand with focused marketing and maintaining strict inventory and cost controls. We believe it is too early to predict if and when U.S. consumers will return to previous levels of apparel spending. As a result, we are planning both our wholesale and retail businesses accordingly." The Company said that it is currently comfortable with a fourth quarter fiscal 2002 earnings per share estimate of $0.40, which is the current First Call consensus estimate of $0.38 adjusted upward to reflect the Company's lower tax rate. Net revenue for the quarter is expected to increase in the mid single digits from the fourth quarter last year. The Company reported cash and cash equivalents of $451.1 million and long-term debt of $661.1 million at December 31, 2001. During the third quarter, the Company issued $150 million of 9% Senior Bonds due 2031, paid down the outstanding $20 million revolving debt balance under its principal bank facility and prepaid $12.5 million of bank term debt. Earlier this month, the Company prepaid the remaining $60 million of its outstanding bank term debt.
FY 2003 Forecast For fiscal 2003, the Company currently expects net revenue to be essentially unchanged from fiscal 2002, with a low single digit decline in first half revenues offset by second half increases. Operating income for fiscal 2003 is expected to improve over fiscal 2002 due to the adoption of a new accounting standard that suspends the amortization of goodwill and certain intangibles effective April 1, 2002. As reported in the Company's most recent 10-Q filing, adoption of the standard is expected to increase operating income for fiscal 2003 by approximately $32.0 million and increase income tax expense by approximately $6.0 million. Excluding the impact of the accounting change, the Company expects operating income for fiscal 2003 to be approximately the same as in fiscal 2002. Addressing projected earnings, Mr. Horowitz added, "The range of our projected earnings for fiscal 2003 reflects the prevailing economic uncertainty as well as the assumption of certain operating improvements compared to fiscal 2002. Taking into account these assumptions, as well as the increase in interest expense due to the issuance of the Senior Bonds due 2031 and the effects of the accounting changes referred to above, at this point we expect earnings per share for fiscal 2003 to be in the range of $1.55 to $1.75, comprising a range of $0.59 to $0.66 per share in the first half of fiscal 2003 and $0.96 to $1.09 per share in the second half. Our projections for fiscal 2003 also assume continued tight control over working capital, as well as a reduction in capital expenditures to the $75 to $80 million range from approximately $95 to $100 million in the current fiscal year." The Company plans to provide quarterly projections for fiscal 2003 when it reports full year results for fiscal 2002. The Company did note that first quarter fiscal 2003 results are expected to be affected by the acquisition of Tommy Europe, which was completed in July. As previously reported, Tommy Europe's seasonal shipping patterns result in a low percentage of revenue being recognized in the first fiscal quarter. As a result, the Company expects consolidated earnings for that quarter to be approximately break-even. As disclosed in the Company's most recent 10-Q filing, the new accounting standard referred to above provides new criteria for performing impairment tests on goodwill and intangible assets and requires that such tests be performed within six months and three months of adoption, respectively. As of December 31, 2001, the Company's balance sheet included unamortized goodwill and other intangible assets of approximately $781.0 million and $626.9 million, respectively, and related deferred tax liabilities of $244.9 million, most of which were recorded in connection with the Company's acquisition of its jeanswear, womenswear and Canadian licensees in 1998. The Company has not yet determined the amount of any transitional impairment loss required to be recognized upon adoption of this accounting standard. Such a loss, however, could materially decrease the Company's reported results of net income and earnings per share or result in a net loss for fiscal 2003. Any transitional impairment loss would be recorded as the cumulative effect of a change in accounting principle in the Company's fiscal 2003 income statements and would be a non-cash and non-operating charge.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995. This press release contains forward-looking statements within the meaning for Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are indicated by words or phrases such as "anticipate," "estimate," "project," "expect," "believe" and similar words or phrases. Such statements are based on current expectations and are subject to certain risks and uncertainties that could cause actual results to materially differ from those in the forward-looking statements include, but are not limited to, the overall level of consumer spending on apparel, the financial strength of the retail industry generally and the Company's customers, distributors and franchisees in particular, changes in trends in the market segments and geographic areas in which the Company competes, the level of demand for the Company's products, actions by our major customers or existing or new competitors, changes in currency and interest rates and changes in economic or political conditions or trade regulations in the markets where the Company sells or sources its products, as well as other risks and uncertainties set forth in the Company's publicly-filed documents, including its Annual Report on Form 10-K for the fiscal year ended March 31, 2001. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
ASAP Fashion News Fast - Fashion news for the apparel industry
and consumers to learn more about the clothing business. Apparel Search
ASAP Fashion News Fast - Fashion news for the apparel industry and consumers to learn more about the clothing business.
Apparel Search ASAP News[borders/disc4aftr.htm]