On August 27, 2024, PVH Corp (PVH, Financial) released its 8-K filing for the second quarter of 2024, reporting earnings that exceeded analyst expectations. PVH Corp designs and markets branded apparel in over 40 countries, with key fashion categories including men's dress shirts, ties, sportswear, underwear, and jeans. The company’s primary revenue drivers are its Calvin Klein and Tommy Hilfiger brands.
Performance Overview
PVH Corp reported a 6% decline in revenue to $2.074 billion, aligning with its guidance of a 6% to 7% decrease. On a constant currency basis, revenue decreased by 5%. Despite the revenue drop, the company’s earnings per share (EPS) on a GAAP basis were $2.80, significantly surpassing the guidance of approximately $2.25. On a non-GAAP basis, EPS was $3.01, also exceeding the guidance of $2.75.
Key Financial Achievements
PVH Corp’s gross margin improved by 250 basis points to 60.1%, up from 57.6% in the prior year period. This increase was driven by a favorable shift in channel mix, reduced sales to lower-margin wholesale accounts, and lower product costs. The company also reported a 12% decrease in inventory compared to the prior year period.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Total Revenue | $2.074 billion | $2.207 billion |
| Gross Profit | $1.245 billion | $1.272 billion |
| Net Income | $158 million | $94.2 million |
| GAAP EPS | $2.80 | $1.50 |
| Non-GAAP EPS | $3.01 | $1.98 |
Commentary and Analysis
Stefan Larsson, Chief Executive Officer, commented, “We delivered on our top- and bottom-line commitments and beat our earnings guidance for the second quarter, led by our disciplined execution of the PVH+ Plan. For both Calvin Klein and Tommy Hilfiger, we drove strong consumer engagement and continued to increase product strength and improve newness in our assortment, leading to more full-priced selling and less end-of-season clearance sales, which fueled significant gross margin expansion.”
Zac Coughlin, Chief Financial Officer, said, “We drove strong gross margin and operating margin expansion in the second quarter and are reaffirming our revenue and non-GAAP operating margin guidance, reflecting our disciplined execution of the PVH+ Plan. We remain relentlessly focused on driving efficiencies, maintaining cost discipline and simplifying how we work globally.”
Challenges and Outlook
Despite the positive earnings, PVH Corp faces challenges, particularly in its international markets. Revenue in the company’s international businesses decreased by 4%, primarily due to a challenging consumer environment in Asia Pacific and strategic reductions in sales in Europe. However, North America showed resilience with a 1% increase in combined revenue for Tommy Hilfiger and Calvin Klein.
For the full year 2024, PVH Corp reaffirmed its projected revenue decrease of 6% to 7% and updated its GAAP EPS guidance to a range of $11.20 to $11.45, up from the previous range of $11.15 to $11.40. On a non-GAAP basis, the EPS guidance was raised to a range of $11.55 to $11.80, up from $11.00 to $11.25.
PVH Corp’s disciplined approach to managing expenses and driving cost efficiencies, along with its focus on strategic investments, positions the company for sustainable, profitable growth. Investors and stakeholders will be keenly watching how the company navigates the increasingly challenging global macroeconomic backdrop.
Explore the complete 8-K earnings release (here) from PVH Corp for further details.
