Earnings before interest and taxes (“EBIT”) was $205 million on a GAAP basis and $195 million on a non-GAAP basis, inclusive of a $2 million negative impact due to foreign currency translation, compared to $199 million in the prior year period.
EBIT on a GAAP basis for the first quarter of 2024 included a pre-tax gain of $10 million described under “Non-GAAP Exclusions”.
Revenue decreased 10% compared to the prior year period (decreased 9% on a constant currency basis), including a 3% decline due to the sale of the Heritage Brands women’s intimates business in November 2023.
Overall revenue in the Company’s international businesses decreased 9% over the prior year period as solid growth in the Asia Pacific region in local currency was more than offset by a revenue decline in Europe, including a planned strategic reduction to drive overall higher quality of sales in the region.
In North America, revenue in the Tommy Hilfiger and Calvin Klein businesses combined was up 3% compared to the prior year period, with modest growth in both the direct-to-consumer and wholesale businesses, including the favorable impact of a shift in the timing of wholesale shipments from the second quarter into the first quarter.
Direct-to-consumer revenue increased 1% compared to the prior year period (increased 3% on a constant currency basis).
Revenue in the Company’s owned and operated stores increased 3% compared to the prior year period (increased 5% on a constant currency basis), with growth in all regions, while revenue in the Company’s owned and operated digital commerce business declined 6% compared to the prior year period (5% decline on a constant currency basis), with growth in the North America and Asia Pacific regions more than offset by a planned reduction in Europe.
Wholesale revenue decreased 17% compared to the prior year period (decreased 17% on a constant currency basis), primarily due to a 6% reduction related to the sale of the Heritage Brands women's intimates business and the planned strategic reduction in revenue in Europe to drive overall higher quality of sales in the region. In addition, wholesalers continue to take a cautious approach, particularly in Europe.
Gross margin increased 350 basis points to 61.4% compared to 57.9% in the prior year period. The significant increase reflects benefits from a favorable shift in channel mix, a reduction in sales to lower margin wholesale accounts, and lower product costs.
Inventory decreased 22% compared to the prior year period, in line with expectations, as the Company continues to proactively manage its inventory levels.
Revenue of $1.952 billion decreased 10% compared to $2.158 billion in the prior year period (decreased 9% on a constant currency basis), including a 3% decline related to the sale of the Heritage Brands women’s intimates business. ■
A strong storm that originated over the Pacific has tracked through the Great Basin and is currently transitioning across the Rockies to redevelop across the central High Plains later today into early Saturday morning.