PVH Corp.’s third-quarter profits slipped, but topped expectations as Stefan Larsson continued on the next leg of his journey, resetting Calvin Klein and Tommy Hilfiger while transforming the company from a key fashion consolidator into a more nimble brand builder.
“It’s a multiyear journey that we are in the middle of,” Larsson, who’s been chief executive officer since 2021, said in an interview Wednesday. “It’s all about leaning into the core strengths of these beloved iconic brands.
“There are only a handful of those globally and we have two,” he said, referring, of course, to Tommy Hilfiger and Calvin Klein. “It is a long game where we, quarter after quarter and season after season, drive relevance in product, in marketing and in the shopping experience. The macro [economic landscape] will play out the way the macro plays out. But what’s most important is, we focus on what’s within our control and tapping into that consumer love and making our brands more and more relevant.”
PVH’s adjusted earnings per share came in at $2.83, down from $3.03 a year ago, but 29 cents ahead of the $2.54 analysts had penciled in, according to Yahoo Finance.
While that excludes restructuring costs and tax-related items, adjusted EPS also included a 37 cent hit from tariffs that was only partially offset by the company’s mitigation efforts.
Net earnings fell to $4.2 million from $131.9 million due to a $121 million increase in tax expenses tied to goodwill and asset impairment charges taken in the first quarter.
Accounting rules and tariff costs are largely out of Larsson’s hands, but where he does have full control, he said the brands really hum.
At Tommy Hilfiger, that shows up in the rush to the quarter zip sweater, which has been trending on TikTok, and at Calvin Klein, it’s a 20 percent increase in the brand’s Icon Cotton Stretch underwear with its “infinity waistband” that has no stitching.
Where product innovation has taken hold, the company has sought to amplify the impact with big names like Bad Bunny and Rosalía.
But so far, the brands are seeing wins like this only in parts of the business.
Revenues for the three months ended Nov. 2 increased 2 percent to $2.3 billion, which translated into a less than 1 percent drop on a constant currency basis.
Tommy Hilfiger’s revenues rose 1 percent to $1.2 billion, a 2 decrease in constant currencies. Calvin Klein’s take increased 2 percent to $1 billion, or flat in constant currencies.
By channel, direct-to-consumer revenues were down 1 percent while stores were down 2 percent, owned and operated e-commerce was flat and wholesale increased 1 percent, all in constant currencies.
Stefan Larsson
Courtesy
Larsson said the company had a successful launch into the fourth quarter and was ready for growth.
“The macro has changed significantly since we started off [the company’s reinvention] and the macro continues to change, but what hasn’t changed is the consumer love, the underlying consumer love for both Calvin and Tommy,” the CEO said.
“I just came back from visiting seven of our biggest markets in the world across Europe, U.S. and Mexico,” Larsson said, describing a whirlwind 14-day trip. “Everywhere we have already leaned into something iconic, in product that we put innovation and newness in, we already now drive increasingly more profitable sales growth. Our job is to season by season, quarter by quarter, day after day, just stay consistent in direction and continuously improve.”
PVH reaffirmed its revenue outlook for the year, calling for a flat to slightly positive performance in constant currencies. And the company shifted its EPS outlook to the upper side of its previous forecast and is now looking for adjusted earnings of $10.85 to $11 a share.
Investors were largely primed for the results as PVH reaffirmed its profit and revenue guidance last month, when it revealed chief financial officer Zac Coughlin’s plans to leave for SiriusXM. Still, shares of PVH slipped 2.9 percent to $85 in after-hours trading on Wednesday.
Larsson said Black Friday was on plan for the company in both North America and Europe.
“We’re fully geared up to deliver the rest of the holiday season and the full year,” he said.
And increasingly, shoppers are getting a new look, not just in the product and marketing, but in the shopping experience.
Calvin Klein, for instance, just opened up its Harajuku flagship in Tokyo and Larsson said it was seeing “very strong traffic conversion.”
“We are opening our first flagship in New York City in SoHo next week,” he said. “It’s a New York homecoming for the brand.”
Tommy Hifliger recently launched a new look shop at Galleries Lafayette in Paris, which Larsson described as “the first test store for our new global shop-in-shop concept.”
“We already see the positive effect both from an elevation of the shopping experience and we are excited to see that regionally,” he said.
Underneath, the company has also been working to operate more efficiently.
“We have freed up over 200 basis points in [selling, general and administrative expense] efficiencies over the past 18 months,” the CEO said. “It also reflects very good inventory levels coming into the fourth quarter. So we are up 3 percent in inventory versus last year, including the impact of tariffs in the quarter.”
