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PVH, the owner of Tommy Hilfiger and Calvin Klein, said revenues declined 6 per cent to $2.07 billion in the second quarter of 2024, in line with expectations. A weak performance in international markets such as APAC and Europe dragged on sales.
Inventory decreased 12 per cent compared to the prior year period, which impacted performance throughout the summer clearance sales in July: with less inventory to clear, the company focused on new products to drive gross margins up. While revenues declined, the company said gross margins “more than offset the impact of the revenue decline in the quarter”. EBIT was $174 million this quarter on a GAAP (generally accepted accounting principles) basis, compared to $143 million in Q2 2023.
PVH expects full-year revenue to decrease between 6 to 7 per cent. In the third quarter, revenue is also projected to decrease by 6 to 7 per cent. Shares were down 7.8 per cent on Wednesday.
“We delivered on our top and bottom-line commitments and beat our earnings guidance for the second quarter, led by our disciplined execution of the ‘PVH+ Plan’,” says CEO Stefan Larsson. The PVH+ Plan, which launched in 2022, outlines the company’s strategy for growth via five pillars: win with product, win with consumer engagement, win in the digitally led marketplace, develop a demand and data-driven operating model, and drive efficiencies and invest in growth. “For both Calvin Klein and Tommy Hilfiger, we drove strong consumer engagement and continued to increase product strength and improve newness in our assortment, leading to more full-priced selling and less end-of-season clearance sales, which fuelled significant gross margin expansion.”
PVH’s performance is in line with a struggling market, which companies have been blaming on weak demand for luxury goods. This month, Tapestry reported that its Q4 2024 revenues dipped 2 per cent while Ralph Lauren’s Q1 2025 sales inched up 1 per cent. In May, Capri reported that its Q4 2024 revenues were down 8.4 per cent.
In North America, PVH’s revenue increased 1 per cent and delivered an 11.7 per cent non-GAAP EBIT margin. “Despite a tougher macro, the region continues to be a great example of our PVH+ Plan execution,” said Larsson.
International business declined 4 per cent year-on-year in Q2, due to dampened consumer demand in APAC (particularly China and Australia) and a planned reduction in sales in Europe (with the aim of increasing the quality of sales).
“In Europe, we continue to successfully execute on our previously communicated quality of sales initiative. While our overall revenue was down 2 per cen year-on-year, it included a 3 per cent impact from our quality of sales actions, and we delivered significantly higher gross margins,” said Larsson. “[In APAC], just like we have heard from many others in the sector, mid-quarter we saw a decline in the consumer backdrop that resulted in a trajectory change, especially in China, which was down 1 per cent in constant currency. We also saw a slowdown in Australia, while other markets including Korea and Japan continue to see growth in the quarter.”
Direct-to-consumer revenue declined 5 per cent year-on-year, with store revenue down 4 per cent and digital revenue down 6 per cent. Wholesale revenue dropped 9 per cent, primarily due to the sale of the Heritage Brands women’s intimates business, which resulted in a 7 per cent reduction, as well as a planned reduction in Europe.
By brand, Tommy Hilfiger’s revenue decreased 4 per cent in Q2 with international revenue down 6 per cent and North American revenue up 1 per cent. Calvin Klein revenues decreased 1 per cent overall, with international revenues down 2 per cent and North American revenues down 1 per cent. Tommy Hilfiger’s events this summer in Mykonos, Sicily and Mexico were a big success, CEO Larsson told investors, as was its engagement at the Paris Olympics. Larsson highlighted the success of Calvin Klein’s recent campaigns, featuring Jeremy Allen White, Kendall Jenner and Greta Lee.
“Looking ahead, as we navigate an increasingly challenging global macroeconomic backdrop, we remain relentlessly focused on delivering brand-accretive, long-term growth,” said Larsson.
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