PVH heads into the red despite better-than-expected Q3 sales
PVH Corp. announced on Wednesday that revenues for the third quarter exceeded expectations, with the company clocking strong gains in North America for both Calvin Klein and Tommy Hilfiger, offsetting declines overseas.
The New York City-based company said revenue for the third quarter decreased 2% to $2.281 billion compared to the prior year period (up 7% on a constant currency basis), inclusive of a 2% reduction resulting from the impact of the war in Ukraine.
By brand, Tommy Hilfiger revenue decreased 4% compared to the prior year period (up 7% on a constant currency basis) with international revenue for the brand plunging 10% (up 5% on a constant currency basis), whille Tommy Hilfiger North America revenue increased 12%.
Calvin Klein revenue increased 1% compared to the prior year period (up 9% on a constant currency basis). Calvin Klein International revenue decreased 4% (up 9% on a constant currency basis), while North America revenue increased 9%.
Heritage Brands revenue decreased 4% compared to the prior year period, the company added.
Coinciding with the international headwinds faced during the quarter, PVH Corp. earnings went into the red, clocking a profit loss of $186.7 million, which included a $30 million negative impact due to foreign currency translation, compared to a $279.7 million net income in the prior year period.
Also included in the third quarter was a non-cash goodwill impairment charge of $417 million, which was non-operational and driven by a significant increase in discount rates.
Earnings per share were a loss of $2.88, compared to a $3.89 profit in the prior year period.
“We are pleased with our third quarter results as we delivered high single-digit constant currency top-line growth. This was ahead of our expectations, despite having to navigate continuing macroeconomic headwinds," said Stefan Larsson, chief executive officer.
"Our strong performance reflects the power of our two global iconic brands, Calvin Klein and Tommy Hilfiger, and the pricing power we are able to achieve by delivering strong hero product, engaging closely with consumers, and elevating the customer experience.
"Our international businesses continued to execute well across both brands, even as macro conditions remain challenging in Europe and Covid impacts continued in Asia. In North America, we are encouraged by the positive performance indicators we are seeing, especially how consumers are responding to and engaging with our brands, although we recognize that we are in the early stages of a multi-year journey to unlock this region’s full opportunity," added Larsson.
Looking ahead, PVH reaffirmed its full-year 2022 guidance, adding revenue is projected to be at the top end of previous guidance range, a decrease of approximately 3% as compared to 2021.
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