PVH’s stock closed down 6 percent Wednesday as the market digested the group’s latest set of earnings, but analysts are betting on long-term results.
The company revealed net revenues fell 6 percent to $2.07 billion in its second quarter as demand weakened across the globe, particularly in China. Within that, Tommy Hilfiger revenue decreased 4 percent, while Calvin Klein dipped 1 percent.
That sent the stock price down 6.42 percent, or $6.71, to close at $97.75.
Nevertheless, analysts stressed that in the long term, chief executive officer Stefan Larsson’s PVH Plus plan to turn around the business should drive real results.
Larsson has been remaking PVH, shifting the company from a dealmaker ready to bring in new businesses to a brand builder focused on expanding Tommy Hilfiger and Calvin Klein. This means building on their success through consumer engagement (think Jeremy Allen White’s latest Calvin Klein underwear and denim campaigns), cutting back on inventory, building a “demand-driven supply chain,” and driving “hero” products with high-wattage marketing.
Jay Sole, an analyst at UBS, said: “We think PVH has the brand strength and balance sheet to drive earnings growth over the long term. CEO Stefan Larsson is only in the middle innings of executing his plan to improve PVH’s profitability and we think there are major margin unlocks that should play out over the next few years.”
Ashley Helgans, an analyst at Jefferies, added: “PVH has made meaningful progress in transitioning to a more focused, efficient, and strategic company. With a compelling roadmap and high-caliber management in place, it should see improved long-term results. However, we see 2024 as an investment year with the company making quality of sales decisions that are delaying growth and margin expansion.”
During a call with analysts Wednesday, Larsson stressed that it is on a multiyear journey.
“We’re in the business of building Calvin and Tommy into their full potential,” he said. “It’s a multiyear journey where, independently of macro that’s now getting tougher, we stay laser-focused on executing to deliver here and now and making sure that everything we do now connects to the longer-term vision. And that’s where the real value creation would come from.”
