PVH scales back full-year outlook as sales decline
PVH Corp. has today reported its 2022 second quarter results, revealing a 8% dip in revenue to £1.8 billion compared to the prior year period.
Earnings before interest and taxes (EBIT) on a GAAP basis was £152 million, compared to $279 million in the prior year period.
The owner of Tommy Hilfiger and Calvin Klein brands said the results included a £42.9 million ($50 million) pre-tax charge related to the company’s decision to exit from its Russia business.
PVH Corp. posted a 5% dip in Direct-to-Consumer revenue compared to the prior year period. Wholesale revenue decreased 11% compared to the prior year period while total digital revenue decreased 7% compared to the prior year period.
By brand, the company posted the following results:
- Tommy Hilfiger revenue decreased 5% compared to the prior year period
- Tommy Hilfiger International revenue decreased 9%
- Tommy Hilfiger North America revenue increased 6%
- Calvin Klein revenue decreased 1% compared to the prior year period
- Calvin Klein International revenue decreased 2%
- Calvin Klein North America revenue decreased 1%
- Heritage Brands revenue decreased 44% compared to the prior year period, and includes a 37% decrease resulting from the Heritage Brands transaction and the exit from the Heritage Brands Retail business.
The company also said it continued to experience supply chain and logistics disruptions globally and impacts from the COVID-19 pandemic in China, in addition to an increasingly challenging macroeconomic environment, particularly affecting its North America wholesale business.
Looking ahead, full year revenue outlook is projected to decrease 4% to 3% (increase 3% to 4% on a constant currency basis) compared to an increase of 1% to 2% (increase 6% to 7% on a constant current basis) previously.
PVH Corp. said its updated outlook reflects lower consumer demand as a result of inflationary pressures and a more promotional environment, particularly in the North America wholesale business, due to elevated inventory levels industry-wide compared to consumer demand in the region.
Stefan Larsson, Chief Executive Officer, commented: "In light of continued macroeconomic headwinds, we are intensifying our focus on driving growth through the disciplined execution of our brand-focused, direct-to-consumer and digitally-led PVH+ Plan, connecting Calvin Klein and Tommy Hilfiger closer to the consumer than ever before."
Zac Coughlin, Chief Financial Officer, added: "A critical element of our PVH+ Plan is to increase productivity and invest to grow. We are leaning into this work by streamlining our organisation, implementing new ways of working and leveraging our scale.
"These actions will enable us to reduce people costs in our global offices by approximately 10% by the end of 2023 and reinvest strategically in digital, supply chain and consumer engagement connected to the PVH+ Plan. Through our strengthened execution, we remain committed to delivering strong returns for our shareholders and achieving our previously announced 2025 targets."
