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February 13, 2020

PVH closes majority of China stores on coronavirus

Apparel giant PVH Corp has temporarily closed the majority of its Calvin Klein and Tommy Hilfiger stores in China amid the coronavirus outbreak. 

By Beth Wright

Apparel giant PVH Corp has temporarily closed the majority of its Calvin Klein and Tommy Hilfiger stores in China amid the coronavirus outbreak. 

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In a statement, the company says the stores that remain open are operating for limited hours and are experiencing significantly lower than planned traffic and sales trends.

CEO Emanuel Chirico said the group is “closely monitoring” the situation in China, which has seen a number of retailers close doors across the country.

Greater China is expected to account for about 7% of PVH’s 2019 revenue, while the Asia Pacific region is anticipated to account for about 16%. In addition, approximately 20% of the group’s global sourcing is derived from China, including about 10% of sourcing inbound to the US.

Despite the situation, PVH has reaffirmed its guidance with respect to earnings per share on a non-GAAP basis, which is expected to be at least US$1.79 for the fourth quarter 2019 and at least $9.45 for the full year 2019.

“The company believes that it would have exceeded its non-GAAP earnings guidance had the coronavirus outbreak not occurred during the last two weeks of its fiscal year,” it says.

Chirico adds: “While the coronavirus will impact our businesses in the near-term, our long term growth opportunities across the Asia Pacific region are significant. Given our diversified, global business model and the strength of our iconic brands, we are well-positioned to manage this period of uncertainty. We will provide an operational and financial update on our upcoming fourth quarter and full-year 2019 earnings call.”

Meanwhile, PVH says it currently expects its earnings per share on a GAAP basis for the fourth quarter and full-year 2019 will be lower than its guidance previously announced on 9 January, due to an actuarial loss expected to be recognised on its retirement plans.

The group has forecast earnings per share on a GAAP basis to be down by approximately $0.20 for the fourth quarter of 2019 and about $6.32 for the full year 2019.

In its most recent trading update, PVH booked a mixed third-quarter as sales grew but earnings dropped as the company warned of headwinds going forward. Earnings were down 13.9% to US$209.2m, while revenues increased 3% to $2.6bn. 

Click here for additional insight on the coronavirus outbreak: Is coronavirus a threat to the clothing industry?

Related Companies

Free Whitepaper
img

What is the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry?

While wanting to protect the country from being overwhelmed by Omicron, China’s adherence to a Zero-COVID policy is resulting in a significant economic downturn. COVID outbreaks in Shanghai, Beijing and many other Chinese cities will impact 2022’s economic growth as consumers and businesses experience rolling lockdowns, leading to a slowdown in domestic and international supply chains. China’s Zero-COVID policy is having a demonstrable impact on consumer-facing industries. Access GlobalData’s new whitepaper, China in 2022: the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry, to examine the current situation in Shanghai and other cities in China, to better understand the worst-affected industry sectors, foodservice in particular, and to explore potential growth opportunities as China recovers. The white paper covers:
  • Which multinational companies have been affected?
  • What is the effect of lockdowns on foodservice?
  • What is the effect of lockdowns on Chinese ports?
  • Spotlight on Shanghai: what is the situation there?
  • How have Chinese consumers reacted?
  • How might the Chinese government react?
  • What are the potential growth opportunities?
by GlobalData
Enter your details here to receive your free Whitepaper.

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