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PVH profits hit by Hilfiger acquisition

Phillips-Van Heusen saw first quarter profits dive following its acquisition of luxury label Tommy Hilfiger earlier this year.

Fashion group Phillips-Van Heusen (PVH), which also owns the Calvin Klein brand, reported a pre-tax loss of $22.6m (£15.8m) in the three months to February 5, compared to a profit of $49.2m (£34.4m) in the comparable period the previous year.

The losses primarily arose from to payments related to its purchase of Tommy Hilfiger from private equity firm Apax Partners, in a deal that was completed earlier this month.

PVH said in a statement that its profits were hit by: “pre-tax costs of $104m (£72.8m) related to the company’s acquisition of Tommy Hilfiger, including the impact of a weakening euro on hedges entered into to cover a portion of the euro denominated purchase price of the transaction.”

PVH said the weaker euro also resulted in a reduction in the dollar value of the cash portion of the purchase price.

PVH reported revenue up 11% to $619m (£433m) for the quarter, which exceeded the company’s guidance. The increase was driven by continued global sales growth for Calvin Klein, particularly in the accessories, footwear and women’s sportswear categories.

PVH has projected revenue for the full year 2010 to come in between $4.35bn (£3.04bn) and $4.4bn (£3.08bn), which will include $1.8bn (£1.26bn) from the Tommy Hilfiger business.

PVH chief executive Emanuel Chirico said of the acquisition of Tommy Hilfiger: “We are acting quickly to align the two organisations and are focused on realising the opportunities we envisioned when we embarked on this transaction. We are comfortable that the combined company will generate substantial cash flow, allowing us to deliver our balance sheet while continuing to invest in our brands and businesses.”

He added: “This extended brand portfolio and operating platform creates unique growth opportunities across additional geographies and product categories, which we are positioned to capitalise upon to drive future revenue and earnings growth as well as strong returns to our stockholders.”

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