Release Date: June 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PVH Corp (PVH, Financial) reported a 2% revenue growth, exceeding their guidance, driven by disciplined execution of the PVH+ Plan.
- The company delivered stronger than expected non-GAAP EPS, also above their guidance.
- Calvin Klein's innovative product franchise, Icon Cotton Stretch underwear, drove a 25% increase in sales globally.
- Tommy Hilfiger's strategic product innovations and seasonal collections have led to stronger performance, particularly in Europe.
- PVH Corp (PVH) returned over $550 million to shareholders through share repurchases during the quarter.
Negative Points
- The company is facing a challenging macroeconomic environment, with decreased consumer sentiment and traffic trends, particularly in North America and China.
- PVH Corp (PVH) experienced operational challenges with Calvin Klein's global product creation, impacting margins.
- The company is dealing with a more promotional environment, leading to increased discounting and impacting gross margins.
- Tariffs are expected to have a $65 million unmitigated impact on EBIT for the full year.
- Inventory levels increased by 19% due to lower than expected demand for basics and essentials.
Q & A Highlights
Q: Stefan, you mentioned decreased traffic and increased promotional levels. What gives you confidence that Calvin Klein and Tommy Hilfiger still have good momentum with consumers?
A: Stefan Larsson, CEO: Despite the challenging macro environment, where we lean into consumer love for Calvin Klein and Tommy Hilfiger, we see strong results. For example, our new product innovation in Calvin Klein men's underwear drove 25% growth in a major franchise. Similarly, fashion denim grew by 14%. We plan to expand these successful strategies across more of our business.
Q: Can you provide an update on the cost-out efforts and whether they are affecting operational stability, particularly for Calvin Klein?
A: Stefan Larsson, CEO: The operational challenges at Calvin Klein were due to the integration of global product capabilities, which is crucial for future growth. We are seeing improvements, with significant progress expected by Spring 2026. Zachary Coughlin, CFO, added that cost-saving measures are on track, with 200 basis points of SG&A leverage expected by Q4 2025.
Q: How are you addressing the impact of tariffs, and what are your strategies for mitigating these effects?
A: Zachary Coughlin, CFO: We have identified $65 million in unmitigated tariff effects. Our mitigation strategies include optimizing sourcing and production costs, strategic discount reductions, and targeted pricing actions where we have pricing power. Our globally diversified revenue base and strong supply chain relationships are key advantages.
Q: With the expected promotional environment, how do you plan to make the brand more resilient from a pricing perspective?
A: Stefan Larsson, CEO: We are focusing on scaling the impact of PVH+ execution by enhancing product innovation in key categories and increasing marketing investments to drive traffic. For example, Tommy Hilfiger's partnership with Formula One is a strategic move to connect the brand with a growing sport and enhance its lifestyle appeal.
Q: Can you elaborate on the gross margin outlook for the second quarter and the back half of the year?
A: Zachary Coughlin, CFO: For the full year, gross margins are expected to decrease by approximately 250 basis points, with 50 basis points due to tariffs and 100 basis points from increased promotional activity. We anticipate sequential improvement in Calvin Klein's operational issues and expect to mitigate the tariff impact over time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
