PVH revenue falls 6% as it rethinks sales strategy in Europe

Dive Brief:

• PVH Corp. reported revenue of $2.1 billion for its second quarter, a 6% year-over-year decrease, in-line with the company’s estimates, according to a press release Tuesday. 
• The Calvin Klein and Tommy Hilfiger parent company’s DTC revenue fell 5%, which marked the first year-over-year decline in the channel since the fourth quarter of 2020, according to investment firm Wedbush. PVH attributed the decline to a soft consumer backdrop. 
• The company’s Q2 revenue decrease included a 3% dip from the divestment of its heritage intimates business last year, part of its broader PVH+ plan to focus on its core brands, as well as lead the company to $12.5 billion in annual revenue by next year.

Dive Insight:

Following the press release, PVH shares were trading down 8% in the aftermarket. Tom Nikic of Wedbush said that was likely due to the negative DTC results, as well as PVH’s Q3 guidance of a revenue decrease of 6% to 7% “coming in below consensus.”

PVH still expects to close the fiscal year with a revenue decrease of between 6% and 7%. 

The company’s international business fell 4% year over year, which the company attributed to a challenging consumer environment in Asia Pacific, particularly in China and Australia. 

PVH is continuing its “strategic reduction” of sales in Europe, in an effort to “drive overall higher quality of sales in the region.” The region has been a pain point for PVH’s previous results. In the news release, CEO Stefan Larsson said the company was “on plan” with sales initiatives in the region.

The changed strategy in Europe also contributed to part of the wholesale segment’s 9% decline, per the release. The company said the drop was primarily due to a 7% reduction from the heritage brands business.

“Step by step, we continue to build strength in product, consumer engagement and marketplace execution, supported by the build out of our data and demand-driven supply chain,” Larsson said in the release. “…Looking ahead, as we navigate an increasingly challenging global macroeconomic backdrop, we remain relentlessly focused on delivering brand-accretive, long-term growth.”

Tommy Hilfiger revenue fell 4%. The brand’s international business decreased 6%. The change of sales strategy in Europe impacts the Tommy Hilfiger brand more, according to the release. The Tommy Hilfiger North America business increased 1%.

Meanwhile, Calvin Klein’s revenue decreased 1%, and the brand’s international business fell 2%. Calvin Klein North America grew 1%.

PVH has been launching various initiatives to support both of its core brands. Within the past year, it named a new global brand president for Tommy Hilfiger and a new president for the brand’s North America business. 

Meanwhile, Calvin Klein has seen recent marketing success due to its media campaigns with “The Bear” actor Jeremy Allen White. It released a second edition of the campaign with the actor on Tuesday.

It is also relaunching Calvin Klein Collection next year after a five-year hiatus, and hired Veronica Leoni as its creative director.