PVH reported revenue growth across its core brands, including Tommy Hilfiger which saw a 6% revenue increase, or 3% on a constant currency basis. Tommy Hilfiger’s international revenue increased 6%, or 3% on a constant currency basis, while North American revenue for the brand increased 4%.
Calvin Klein saw a 3% rise in revenue, or a 2% rise on a constant currency basis. Internationally, Calvin Klein’s revenue increased by 11%, or 9% on a constant currency basis. North American revenue at the brand decreased by 9% mainly due to a decrease its the wholesale sector.
However, the group’s Heritage Brands’ revenue decreased 11% compared to the prior year period.
Commenting on the trading update and outlook, Stefan Larsson, chief executive officer of PVH says: “We delivered another strong quarter across both Calvin Klein and Tommy Hilfiger driven by the disciplined execution of our long-term, brand-building growth plan, the PVH+ Plan.”
GlobalData apparel analyst Alice Price says the results will come as “somewhat of a relief to the business” as PVH continues to improve, with revenue up 3.5% to $2.2bn.
However, Price adds: “PVH is not out of the woods yet, with revenue remaining 6.6% down on Q2 FY2019/20, trailing behind competitors such as Hugo Boss, which reported sales up 52.0% versus 2019 for its Q2, showing that PVH still has some way to go to regain its former fashion credentials.”
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Key highlights from PVH Q2 results:
- Revenue increased 4% to $2.2bn compared to the prior year period, or 2% on a constant currency basis
- EBIT saw a decline at $143.4bn from $177bn last year
- Net income dropped to $94.2m from $115.3m
In the Asia Pacific area, PVH observed a growth of more than 20% in the local currency in China, indicating the ongoing recovery that followed the easing of the pandemic restrictions in the fourth quarter of 2022. Additionally, PVH sustained growth in Europe in euros, as well as in its North American direct-to-consumer operations.
Price says that North America continues to be a “a thorn in PVH’s side”, as Calvin Klein “fails to capture consumer attention”. She adds: “Although Tommy Hilfiger performed marginally better in North America than internationally, with revenue up 3.5% owing to its renewed focus on heritage styles to better resonate with the American consumer, its sales remain 22.4% behind FY2019/20 levels, with Calvin Klein down 23.0%, showing more work must be done to regain the brands’ influence in their home market.”
In the upcoming period, PVH anticipates the revenue for the entirety of 2023 will grow by 3% to 4% in comparison to the figures from 2022. The estimated earnings per share for 2023 are expected to be around $9.60, compared to $3.03 reported in the previous year.
PVH’s Larsson adds: “We are increasing our EPS outlook for the year, excluding restructuring charges, based on the confidence we have in our ability to execute in the back half of the year while continuing to successfully navigate the macroeconomic environment.”
In the upcoming period, PVH anticipates that revenue for the entirety of 2023 will grow by approximately 3% to 4% in comparison to the figures from 2022. Estimated earnings per share for 2023 are expected to be around $9.60, contrasting with the $3.03 reported in the previous year.
Larsson continues: “As we lean into the five key growth drivers of the PVH+ Plan, we’re continuing to gain traction by connecting our consumer-facing execution with an increasingly demand-driven operating engine to fuel long-term profitable growth.”
GlobalData’s Price says that PVH will also have to to focus on improving “brand relevance and engagement” in order to lay the groundwork for recovery.
Price adds: “Tommy Hilfiger’s shift back to its trademark styles and preppy aesthetic is a step in the right direction, with its Fall 2023 campaign again honing in on its American heritage by incorporating the brand’s patriotic colour scheme, and also helping to widen its appeal across demographics through its family focus. Calvin Klein’s star studded Fall campaign featuring the likes of Kendall Jenner and Euphoria’s Alexa Demie should help boost its brand image among Gen Z’s, and it has also begun capitalizing on the power of TikTok to better connect with this target market.”
However, she adds that “marketing alone” will not be enough to turn PVH’s brands around, instead, she says: “It should instead focus on improving its product offering, as standing out with a desirable and aspirational offer is integral to capturing consumer spend in the current economic climate.”