Tommy Hilfiger Holds Steady While Calvin Klein Sales Decline, As Stronger Margins And Tariff Refunds Help PVH Beat Its Earnings Guidance
PVH Corp. reported second-quarter revenue of $2.1 billion, down 3.2 percent from a year earlier, as weakness at Calvin Klein and in Europe offset stronger performance in Asia-Pacific and continued momentum in direct-to-consumer and e-commerce.
Revenue for the quarter ended Aug. 2 totaled $2.097 billion, compared with $2.167 billion a year earlier. On a constant-currency basis, revenue declined 3.4 percent, better than the company’s guidance for a decrease of between 4 percent and 5 percent.
Profitability also came in ahead of PVH’s expectations. Non-GAAP operating margin reached 11.1 percent, above guidance of approximately 9.5 percent, while adjusted earnings per share of $3.70 exceeded the company’s forecast of $3.00 to $3.10.
The results included a significant benefit from tariff refunds. PVH received $107 million in refunds during the quarter, adding approximately 510 basis points to both GAAP and non-GAAP operating margin and approximately $1.80 per share to earnings.
On a GAAP basis, however, PVH recorded an operating margin of negative 9.1 percent and a loss of $2.23 per share, reflecting a $439 million pre-tax noncash goodwill impairment charge and other items excluded from its adjusted results.
“In the second quarter, we delivered revenue in line with our guidance and profitability exceeding expectations, reflecting our disciplined execution of the PVH+ Plan across our two iconic brands, Calvin Klein and Tommy Hilfiger. We continued to build momentum in DTC, with growth in both Americas and APAC and improved performance in EMEA compared to last quarter. E-commerce grew across both brands, including strong increases in online traffic. In both brands we are seeing early momentum for the new fall season in product and marketing, with a very positive consumer response to our recently-launched campaigns featuring Tate McRae for Calvin Klein and Travis Kelce for Tommy Hilfiger,” Chief Executive Officer Stefan Larsson said.
The two brands delivered notably different top-line performances. Tommy Hilfiger revenue was essentially flat at $1.132 billion compared with $1.136 billion a year earlier. Calvin Klein revenue declined 6.8 percent to $913.3 million from $980 million and fell 7.1 percent on a constant-currency basis. Heritage Brands revenue increased slightly to $51.9 million.
PVH said the Calvin Klein comparison included the impact of wholesale shipment timing, while Tommy Hilfiger’s results reflected the transition of previously licensed product categories to an in-house model.
Direct-to-consumer revenue was essentially flat at $1.056 billion, but the composition showed improvement in digital. Revenue from owned and operated stores declined 0.7 percent to $862 million, while owned digital commerce increased 4 percent to $194.1 million, or 3.2 percent on a constant-currency basis. Wholesale revenue declined 5.7 percent to $954 million.
Geographically, Asia-Pacific was the strongest region, with second-quarter revenue increasing 2.5 percent to $343.7 million and 1 percent on a constant-currency basis. Americas revenue declined 0.6 percent to $680.1 million.
EMEA remained the principal drag on group sales, declining 5.9 percent to $986.3 million. Still, management said performance in the region improved sequentially from the first quarter, while DTC momentum strengthened across the Americas and Asia-Pacific.
PVH also highlighted its increased investment in marketing as it seeks to strengthen demand around its two largest brands. Recent Calvin Klein campaigns have featured Tate McRae and Jung Kook, while Tommy Hilfiger has worked with Travis Kelce and expanded high-profile partnerships including Liverpool Football Club and the Cadillac Formula 1 Team.
Larsson said PVH plans to increase marketing investment further during the third quarter.
“Looking forward, we are reaffirming our top and bottom line outlook for the full year. We remain intensely focused on executing the PVH+ Plan, further strengthening product, consumer engagement and the marketplace experience. At the same time, we are stepping up our cost actions, and we continue to invest behind strategic priorities and brands, with more exciting campaigns amplified by global mega talent coming later this fall. We are also very pleased to welcome Alexis Rollier as our new Chief Financial Officer. Alexis joins us with deep financial and operational experience, including over 8 years as the global CFO and COO at Sephora, where he had a strong track record of driving disciplined growth with significant profit expansion. I look forward to partnering with him as we continue to build Calvin Klein and Tommy Hilfiger into their full potential and drive long-term shareholder value.”
PVH reaffirmed its full-year outlook, forecasting revenue to be approximately flat on a reported basis and slightly lower on a constant-currency basis. The company continues to expect a non-GAAP operating margin of approximately 8.8 percent and adjusted earnings per share of $11.80 to $12.10.
Interim chief financial officer Melissa Stone said the quarter’s underlying margin performance also benefited from gross-margin improvement and cost controls.
“For the second quarter, we delivered or exceeded our guidance across all key financial metrics. Revenue across all three regions and licensing was in-line with our expectations and we expanded gross margin year-over-year, excluding tariff refunds. For the full year, we are reaffirming our outlook across revenue, gross margin, operating margin and EPS on a non-GAAP basis. As part of our ongoing PVH+ Plan execution, we remain focused on cost discipline and continue to strengthen our data- and demand-driven operating model, driving efficiency and productivity, while continuing high-value, brand-accretive investments, including stepped-up year-over-year marketing in the third quarter, to support the long-term growth of Calvin Klein and Tommy Hilfiger.”
For the first six months, PVH generated $4.122 billion in revenue, compared with $4.151 billion a year earlier. Tommy Hilfiger increased to $2.209 billion from $2.184 billion, while Calvin Klein declined to $1.809 billion from $1.866 billion.
The second-quarter numbers leave PVH with a mixed picture heading into the second half. Adjusted profitability is running ahead of expectations and digital sales are growing, but the $107 million tariff refund provided a substantial boost to quarterly earnings. Investors will be watching whether improving DTC trends and heavier marketing investment can translate into stronger underlying sales growth — particularly at Calvin Klein and in EMEA — once that benefit is stripped away.