Dive Brief:
- PVH Corp. reported a flat Q4 year-over-year revenue of $2.49 billion on Monday, beating the company’s previous expectations of a 3% to 4% revenue slide.
- The company’s full-year fiscal 2023 revenue similarly beat its previous expectations, with a 2% increase to $9.22 billion. It previously expected a 1% increase.
- Despite these higher-than-expected results, the Calvin Klein and Tommy Hilfiger parent company projected a revenue decrease of 6% to 7% for the 2024 fiscal year, which led its stock to slip 22% in premarket trading.
Dive Insight:
Zac Coughlin, CFO of PVH, said in the release that the company was expecting “a tougher macroeconomic backdrop in 2024,” as it leans into another stage of its PVH+ plan, a strategy to boost brand desirability and consumer loyalty for the Calvin Klein and Tommy Hilfiger brands and lead the company to total revenue of $12.5 billion in 2025.
The PVH+ Plan will directly translate to growth in Asia and North America, “while in Europe where the macro has become more challenged, our focus is on quality sales to further strengthen our market-leading position,” CEO Stefan Larsson said in the release.
Part of the PVH+ Plan was divesting the company’s Heritage Brands women’s intimates business in November 2023. The company attributed the decreased 2024 outlook in part to a 2% reduction resulting from the sale of this line, as well as a 1% reduction from the 53rd week in 2023.
Wedbush analysts led by Tom Nikic and Matt Quigley called the company’s outlook “highly disappointing.”
“The stock had nearly doubled over the last 6 months… due to investor excitement over PVH's margin improvement story; however, they only guided to flat margins for FY24, which is problematic because investors believed they had so much margin tailwind that they could expand margins in FY24 regardless of the macro/revenue environment (freight, cotton, lean inventories, cost efficiencies),” the analysts wrote on Monday.
For the fourth quarter, both the Tommy Hilfiger and Calvin Klein brands saw an increase in revenue of 1% and 4%, respectively.
Tommy Hilfiger International revenue decreased 1%, while Tommy Hilfiger North America rose 4%. Meanwhile, Calvin Klein International revenue increased 12%, and Calvin Klein North America fell 8%, which the company attributed to a decrease in its wholesale business.
The Calvin Klein North America business has had wholesale challenges throughout the fiscal year, reporting wholesale declines in Q2 and Q3.
PVH’s entire wholesale business decreased 10% in the fourth quarter, including the 3% reduction related to the women’s intimates sale, as well as its wholesale customers continuing “to take a cautious approach,” the company said.
DTC revenue, however, increased 9% with growth in all regions, both through the company’s owned and operated stores and through e-commerce.
The company’s inventory decreased 21%, in line with expectations, as it “continues to proactively manage its inventory levels.”
“[We] are beginning to realize the benefits from the early buildout of our demand-driven supply chain, which allowed us to decrease inventory 21% to last year with much better stock freshness to start the new spring season,” Larsson said.
