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3 days ago
- Business
- Yahoo
PVH Q1 Earnings Call: Management Details Margin Pressure and Promotional Challenges Amid Weak Consumer Environment
Fashion conglomerate PVH (NYSE:PVH) beat Wall Street's revenue expectations in Q1 CY2025 as sales only rose 1.6% year on year to $1.98 billion. Its non-GAAP EPS of $2.30 per share was 2.2% above analysts' consensus estimates. Is now the time to buy PVH? Find out in our full research report (it's free). Revenue: $1.98 billion (1.6% year-on-year growth) Adjusted EPS: $2.30 vs analyst estimates of $2.25 (2.2% beat) Management lowered its full-year Adjusted EPS guidance to $10.88 at the midpoint, a 13.5% decrease Operating Margin: -16.7%, down from 10.5% in the same quarter last year Constant Currency Revenue rose 1.9% year on year (-8.7% in the same quarter last year) Market Capitalization: $3.88 billion PVH's first quarter results reflected the company's efforts to drive growth at Calvin Klein and Tommy Hilfiger through product innovation and targeted marketing despite an increasingly challenging retail environment. CEO Stefan Larsson highlighted the successful launch of Calvin Klein's Icon Cotton Stretch Underwear for Men, which drove a 25% increase in sales for that franchise, and noted a 14% gain in Calvin Klein's fashion denim assortment due to expanded fits and designs. Direct-to-consumer e-commerce saw growth, while store traffic remained pressured. Larsson acknowledged that weaker consumer sentiment led to higher promotional activity, particularly in North America and China, which weighed on margins. Looking forward, PVH's management signaled a cautious outlook amid ongoing macroeconomic headwinds, including new tariffs and persistent softness in consumer demand. Larsson stated, 'We are not yet in a place to fully compensate for the effects of these strong macro forces,' while CFO Zac Coughlin emphasized that the company's updated guidance accounts for a more promotional environment and the impact of tariffs, especially in the U.S. Management aims to mitigate these challenges by expanding key product launches, increasing marketing investment, and executing cost-saving initiatives. The addition of new leadership at Calvin Klein and the scaling of PVH's operational improvements are intended to position the company for margin recovery in the second half of the year and into 2026. Management attributed the quarter's revenue growth to product innovation and expanded wholesale activities, but highlighted that consumer softness and increased promotion led to margin compression and a downward revision of full-year profit guidance. Product innovation drove select growth: The launch of Calvin Klein's Icon Cotton Stretch Underwear franchise, supported by a high-profile marketing campaign, resulted in 25% higher combined sales for that category. Fashion denim also saw a 14% lift due to updated fits and designs, showing where targeted innovation can still deliver growth. Wholesale outperformed direct retail: PVH benefited from earlier wholesale shipments in The Americas, as well as the relaunch and in-housing of Calvin Klein women's sportswear and jeans. However, direct-to-consumer revenue—especially in brick-and-mortar stores—declined amid lower traffic, only partially offset by e-commerce gains. Europe stabilized, Asia lagged: Europe saw mid-single-digit revenue growth in both wholesale and direct-to-consumer, with improved conversion during key shopping periods. In contrast, Asia Pacific, particularly China, faced continued weakness in consumer sentiment, contributing to a double-digit sales decline in the region. Promotional activity pressured margins: Management cited a more promotional retail environment globally—especially in the U.S. and China—as a key factor behind the decline in gross margin. This trend is expected to persist throughout the year, as PVH absorbs both macroeconomic pressure and new tariff impacts. Operational challenges at Calvin Klein: The transition to a centralized global product creation model for Calvin Klein led to operational hurdles, constraining product development timelines and sourcing. Management addressed these by bringing in new leadership and expects sequential improvements by next spring, but acknowledged that these issues contributed to first-half margin weakness. PVH expects macro headwinds, ongoing promotional intensity, and cost-saving initiatives to determine its revenue and margin trajectory through the rest of the year. Tariff and macro pressure: Management anticipates that recently enacted U.S. tariffs will reduce earnings by about $65 million this year, with most headwinds in the second half. The company is leveraging its global sourcing network and considering selective price adjustments, but expects only partial mitigation in the near term. Cost savings and operational fixes: PVH aims to realize 200 basis points of operating margin benefit from cost-saving actions—such as technology consolidation and logistics optimization—by year-end. Management believes these efforts, combined with the resolution of Calvin Klein's product development challenges, will support margin improvement exiting the year. Marketing and product launches: The company is increasing marketing investments for both Calvin Klein and Tommy Hilfiger, focusing on high-impact campaigns and new product introductions in key categories like underwear, denim, and outerwear. Management expects these initiatives to drive consumer engagement and offset some of the pressure from promotional environments. In upcoming quarters, the StockStory team will monitor (1) the pace of inventory normalization as PVH adjusts its supply to match demand, (2) tangible improvements in Calvin Klein's product development and on-time deliveries following operational changes, and (3) the effectiveness of increased marketing spend in generating higher traffic and conversion rates. Additional focus will be on how successfully PVH manages the ongoing promotional intensity and tariff headwinds in its core markets. PVH currently trades at a forward P/E ratio of 6.1×. Should you double down or take your chips? Find out in our full research report (it's free). Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today. 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Yahoo
31-03-2025
- Business
- Yahoo
PVH Tops Q4 Estimates, Looks to Bad Bunny for a Boost
Stefan Larsson exceeded his mark for the fourth quarter at PVH Corp. — with sales and profits that topped expectations and were warmly greeted on Wall Street. Shares of the company shot up 16.6 percent to $75.38 in after-hours trading on Monday. More from WWD EXCLUSIVE: 10 Men USA to Launch, With Stylist, Creative Director Dan May as Editor How the NewJeans Ambassadorships With Calvin Klein and More Brands Will Be Affected After Court Battle Calvin Klein's Penthouse Office and Studio in Chelsea to Hit the Market Now the chief executive officer is looking for Bad Bunny to help take the company higher as it navigates an especially tricky regulatory and consumer environment. Larsson has been on a multiyear journey to remake the Calvin Klein and Tommy Hilfiger parent with his PVH+ strategic plan. That plan touches every part of the company, but can be seen clearly in Calvin Klein's latest tie-up with rapper, singer and record producer Bad Bunny. 'What you see now from us in Calvin Klein with the Bad Bunny campaign is really exciting,' Larsson said in an interview. 'We lean into the strongest category in Calvin Klein — Calvin Klein men's underwear. We put an enormous amount of innovation into the existing hero product.' That includes the introduction of the company's new Icon Cotton Stretch, updates to the fit and the 'infinity waistband' that has no stitching. 'We continued that in a cut-through campaign with Bad Bunny, one of the most-streamed artists on Spotify,' Larsson said. 'That creates cultural connection. You have us leaning into the category strongly, reinventing a hero product, connecting it to a breakthrough campaign.' The CEO called the collective impact of that 'massive.' When the campaign launched on Calvin Klein's Instagram this month, it reached more than 29 million users in the first 48 hours and added nearly 100,000 followers in the first week. That echoed Jeremy Allen White's attention-grabbing turn in his Calvins last year. Tommy Hilfiger has also been busy, recently launching The Hilfiger Resort, a summer event on the Caribbean island of Canouan with Patrick Schwarzenegger, Madelyn Cline and Abby Champion. The launch garnered 160 million impressions in just 72 hours. 'We really tapped both brands into the zeitgeist,' Larsson said. PVH is living in the moment, but that doesn't mean the moment is necessarily easy. 'We had a strong [fourth quarter], strong holiday, in February we saw it slow down, especially in North America,' the CEO said. 'And then it stabilized in March and came back a little bit.' Easter will be telling. For PVH, fourth-quarter net income fell 42.2 percent to $157.2 million, or $2.83 a diluted share, from $241.8 million, or $4.55, a year earlier. But analysts were looking at adjusted earnings per share, which came in at $3.27 — 6 cents ahead of the $3.21 analysts forecast. Revenues for the quarter ended Feb. 2 fell 5 percent to $2.4 billion — a 2 percent drop in constant currencies. The result included a 3 percent decline attributed to an extra week in the year-ago quarter. That put the top line above the $2.3 billion analysts were expecting. The global Calvin Klein business rose 1 percent in constant currencies while Tommy Hilfiger decreased by 3 percent in the quarter. 'It's definitely a tough moment for retail in general,' Larsson said. 'I believe it's a really good moment for us, having two of the most iconic and beloved brands and step-by-step, month-by-month, quarter-by-quarter building more relevance into those brands. It puts us on a trajectory to where we set out to go. 'We are focusing on what's within our control,' he said. Larsson said the tariffs that U.S. President Donald Trump has imposed so far would not have a big impact of PVH's business and are planned for in the company's guidance. For this year, PVH projected that adjusted profits per share would rise to $12.40 to $12.75, from $11.74 last year. That's well ahead of the $11.56 analysts projected. Revenues are projected to be flat to slightly up for 2025. The company also plans to give something back to shareholders through an additional $500 million in share repurchases this year. One big question mark is the company's back and forth with the Chinese government, a topic the CEO plans to address on a conference call with analysts on Tuesday. China's Ministry of Commerce made a preliminary determination in January that PVH engaged in improper practices related to the Xinjiang region, although the impact of that ruling is still not clear. In 2021, PVH stopped working with factories that used cotton from Xinjiang, where more than a million Uyghurs and other Turkic Muslims are alleged to be under internment, with some forced to work. Best of WWD Harvey Nichols Sees Sales Dip, Losses Widen in Year Marred by Closures Nike Logs $1.3 Billion Profit, But Supply Chain Issues Persist Zegna Shares Start Trading on New York Stock Exchange
