PVH Corp. Earnings Report Q2 2024

PVH Corp. (NYSE: PVH), owner of iconic fashion brands Calvin Klein and Tommy Hilfiger, recently reported its Q2 2024 earnings, which showed stable revenue and exceeded profitability expectations. CEO Stefan Larsson highlighted the company’s commitment to the PVH+ Plan to enhance brand desirability.

Despite a slight downturn in direct-to-consumer (D2C) and wholesale revenues, PVH reaffirmed its full-year financial guidance and raised its non-GAAP EPS outlook, citing a tax benefit. The company is preparing to announce a new CEO for PVH Europe and is implementing strategies to navigate the challenging consumer market, particularly in China.

Key Takeaways

• PVH achieved revenue in line with guidance, with stronger-than-expected profitability and EPS.
• Gross margin expanded significantly, and inventory productivity improved.
• D2C revenue decreased by 3% on a constant currency basis, with recovery expected.
• Wholesale revenue saw a slight decline due to proactive sales quality measures.
• Full-year revenue, non-GAAP EBIT margin, and EPS guidance remained steady, with an increased EPS forecast.
• The fall season began with strong inventory positions and new product introductions.
• Regional performances varied; North America showed strong execution while Asia Pacific faced challenges.
• The company is close to appointing a new permanent CEO for PVH Europe.

Company Outlook

• PVH reaffirmed its full-year revenue and non-GAAP EBIT margin guidance.
• Full-year revenue is expected to decrease by 6-7%, with an operating margin of about 10.1%.
• Gross margin is projected to increase by approximately 150 basis points for the year.
• SG&A expenses are planned to increase by about 150 basis points.
• Interest expense is estimated at $70 million, with a full-year tax rate of around 16%.
• Non-GAAP EPS guidance was raised to a range of $11.55 to $11.80 per share.

Bearish Highlights

• Revenue for Q2 was down 6% year over year, with international businesses down 3% constant currency.
• Europe and Asia Pacific saw declines in sales by 2% and 4%, respectively.
• Q3 is projected to experience a revenue and operating margin decline compared to the previous year.

Bullish Highlights

• North America experienced a 1% increase in revenue.
• Gross margins improved by 250 basis points.
• The forward wholesale order book shows significant improvement.
• Calvin Klein and Tommy Hilfiger brands are well-positioned in terms of pricing.

Misses

• D2C revenue declined by 3% on a constant currency basis.
• Wholesale revenue declined slightly due to a focus on sales quality.

Q&A Highlights

• PVH executives expressed confidence in their pricing strategy relative to competitors.
• The company is focused on building assortments in key growth categories and aligning inventory buys closer to demand.

InvestingPro Insights

PVH Corp. has shown resilience with a focus on profitability and brand desirability. Its gross profit margin is strong at 58.94% as of Q1 2023. The P/E Ratio is currently 7.77, suggesting potential undervaluation. Management’s share buybacks and consistent dividend payments enhance its attractiveness to income-focused investors.

Overall, PVH Corp. continues to strive for brand strength and operational efficiency amidst market challenges. Leadership remains optimistic, intent on improving product offerings and consumer engagement across its global footprint.

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