Dive Brief:
- PVH Corp. saw its revenue increase 4% to $2.36 billion for its third quarter, yet in its earnings report Wednesday, the apparel company predicted its Q4 revenue would fall between 3% and 4%.
- PVH’s core brands Tommy Hilfiger and Calvin Klein each saw Q3 revenue gains, with 4% and 6%, respectively.
- The company decreased its full-year revenue outlook. It now projects 1% revenue growth, versus a previously expected 3% to 4% growth. PVH attributed the revision to the sale of its Heritage Brands intimate apparel business, announced earlier this month.
Dive Insight:
PVH’s sale of the Heritage Brands intimate apparel business to Basic Resources impacted the decreased revenue outlook for Q4 as well as the fiscal year broadly. The deal, valued at $160 million, included Warners, Olga and True & Co.
The company’s DTC revenue grew 8% from the previous year, which the company attributed to PVH-owned and operated stores as well as e-commerce in all regions. However, wholesale grew only 1%.
Tommy Hilfiger’s North America revenue grew 6%, and the brand’s international revenue grew 3%. Tom Nikic, an analyst for WedBush Securities, said in emailed comments that this marks the third consecutive quarter of deceleration for the brand.
Calvin Klein’s revenue increased 10% internationally, but fell 1% in North America, which the company attributed to a decline in the wholesale business.
Calvin Klein and Tommy Hilfiger are the subject of PVH’s previously announced plan to increase consumer loyalty and desirability of the brands in an effort to further drive the company to $12.5 billion in revenue by 2025. PVH said its exit from the Heritage Brands intimate apparel business further boosted this strategy, as did naming a new global brand president of Tommy Hilfiger, Lea Rytz Goldman, after Avery Baker’s departure in July.
Alice Price, an apparel analyst at GlobalData, said in emailed comments that this turnaround strategy seems to be working, due to improvements in its product offering and marketing campaigns. But the softened outlook for 2023 shows PVH has “an even longer way to go before it regains its former status in the market, with revenue still tracking 8.7% below pre-pandemic levels,” she said.
PVH also said its inventory decreased 19% compared to the same period last year, in line with its expectations.
“With leaner inventory levels, we believe PVH can improve full-price sales and take gross margins higher, assuming the macro environment doesn't become too challenging,” Nikic, of WedBush, said.
