Shares of Tommy Hilfiger maker PVH drop as execs warn of 'tougher macroeconomic backdrop'

By Bill Peters

Company says European economy has become 'more challenged'

Shares of PVH Corp. tumbled after hours on Monday after the maker of the Tommy Hilfiger and Calvin Klein clothing brands forecast falling sales this year, citing a "tougher macroeconomic backdrop" for clothing shoppers and more acute struggles in Europe.

PVH (PVH) forecast a full-year sales drop of 6% to 7% when compared to the prior year. That was more than the 1.9% decrease forecast by FactSet.

Shares fell 18.2% after hours, after a 57% gain over the past 12 months.

Executives, in the company's earnings release, said that the economy in Europe, where the impact of inflation has been sharper, had become "more challenged."

PVH in 2022 got roughly two-thirds of its sales from outside the U.S. Demand for clothing, meanwhile, has suffered over the past two years, due to higher-priced essentials. Retailers have been more reserved about what clothing assortments they sell in their stores.

PVH has sold off other clothing brands in recent years in an effort to focus on Tommy Hilfiger and Calvin Klein and use the money for stock buybacks. The company is also trying to strengthen digital sales, as well as its positions in North America, Europe and Asia.

That focus, Chief Executive Stefan Larsson said Monday in PVH's earnings release, "will directly translate into growth in Asia and North America, while in Europe where the macro has become more challenged, our focus is on quality of sales to further strengthen our market-leading position."

PVH's board also authorized a $2 billion increase to its buyback program, the company said.

For its fourth quarter, the company reported net income of $271.8 million, or $4.55 a share, compared with $138.7 million, or $2.18 a share, in the same quarter last year. Adjusted earnings per share came in at $3.72.

Revenue was largely flat, at $2.49 billion.

Analysts polled by FactSet expected PVH to report adjusted earnings per share of $3.53, on revenue of $2.42 billion during the quarter.

Like other clothing makers and store chains trying to stay relevant against an uncertain economic backdrop for clothing demand, the company over the past several months has shaken up leadership, appointing new executives to top spots at Tommy Hilfiger.

-Bill Peters

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04-01-24 1651ET

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