PVH Corp. might have just rung a warning bell for the rest of the year.
While a host of fashion companies have charged into spring, reporting solid or very solid growth last quarter and raising their outlooks, the ripple effects of the war with Iran have PVH signaling some caution.
The company, parent to Calvin Klein and Tommy Hilfiger, beat estimates with first-quarter adjusted earnings per share of $2.01 topping the $1.82 analysts forecast, according to Yahoo Finance. PVH is also holding to its profit outlook for the year.
But revenues for the full year are now expected to be slightly down on a constant currency basis, instead of flat to slightly up, as previously forecast.
PVH is in the midst of a reinvention and has been lagging some of its competitors lately, but it also operates on a different fiscal year with the quarter ending May 3. Most of the recent earnings reports from other companies detail quarters that ended in late April.
That has the war in Iran — and the impact of higher fuel prices from the Strait of Hormuz — hitting PVH’s numbers a little earlier.
Investors reacted quickly and pushed shares of the company down 19.1 percent to $79.31 in after-hours trading on Wall Street.
Stefan Larsson, chief executive officer of PVH, said the company is adjusting to the moment.
“What we were starting to see at the end of the quarter was the impact of the prolonged conflict in the Middle East,” Larsson told WWD in an interview.
While the war has driven gas prices up everywhere, Larsson said the company was feeling the pinch most in its Europe, the Middle East and Africa division.
“We see the consumer reacting to the higher fuel costs,” he said.
Half of the hit PVH is seeing comes from its business directly in the Middle East, where wholesale partners have been impacted, as well as in Turkey, which is feeling a knock-on effect.
European consumers are more feeling the pressure of rising fuel prices.
That touch of gray was offset with a little bit of a silver lining.
“Even though we have to adjust our outlook based on the prolonged war, we have seen May become a little better than April in Europe,” Larsson said.
In the U.S., the consumer continues to be “resilient,” he said, and the Asia-Pacific region is perking back up.
That’s one of the “two opposing forces” Larsson sees shaping the PVH business.
The other is “the increasing brand and business momentum that we are driving for both Calvin and Tommy,” the CEO said, adding both brands are being pushed toward their “full potential.”
Net earnings for the first quarter came in at $88 million, up from losses of $44.8 million a year earlier. Adjusted operating margins tallied 6.5 percent and inventory fell 5 percent.
Revenues increased 2 percent to $2 billion, a dip of 2 percent in constant currencies, which was in line with guidance of a slight decrease.
In constant currencies:
- Tommy Hilfiger revenues fell 2 percent to $1.1 billion.
- Calvin Klein’s dropped 3 percent to $895.2 million.
- Revenues in the Europe, Middle East and Africa region fell 5 percent to $946.1 million.
- The Americas saw a 2 percent drop to $602.9 million, driven by declines due to the timing of wholesale shipments, offset by an increase in the U.S. women’s wholesale business that was taken in-house.
- Asia-Pacific revenues increased 6 percent to $387 million.
- Direct-to-consumer revenues rose 3 percent to $869 million.
“We delivered on all the key metrics and all our commitments across the P&L,” Larsson said. “We did that because we continue to increase the brand momentum for Calvin Klein and Tommy Hilfiger globally.”
The CEO said both brands had “really important” growth in key categories.
In Calvin Klein, it was underwear and denim — the heart of the brand — and for Tommy Hilfiger it was sweaters and outerwear.
The company also remodeled or opened 140 stores in the quarter and has been ramping up its marketing, looking to bring Gen Z and Millenials across the line.
Among the many marketing initiatives, Calvin Klein linked up with BTS’ Jung Kook and Tommy Hilfiger doubled down on the designer’s lifelong obsession with Formula 1 and also signed up Travis Kelce, the football star engaged to Taylor Swift.
And Larsson said he has more control over the brands, now that key categories of the women’s wholesale business in the Americas have been brought back in-house or are on their way soon from G-III Apparel Group, an outgoing partner that’s rapidly turning into more of a competitor.
“This is going to plan,” Larsson said. “This year we will be through the vast majority of the take-back and we just introduced this season Tommy Hilfiger women’s in the North American market and did it together with Macy’s. We’ve had a very strong sell-through and a very strong response.
“We need to be in control of the brand execution and the product execution across the board,” said the CEO, adding that PVH is handling the core brand building pieces while complimentary categories are made under other licenses.
For the full year, PVH reaffirmed its adjusted earnings forecast, calling for EPS of $11.80 to $12.10.
Offsetting the weakness in Europe and the Middle East is roughly $100 million in refunds under President Donald Trump’s IEEPA tariffs, which the Supreme Court struck down in February.
PVH said it continues to assume “a full-year blended rate of approximately 15 percent tariffs on goods coming into the U.S., including an approximately $195 million gross impact to full-year 2026 EBIT, or approximately $3.30 per share, and a partially offsetting impact of planned mitigation actions, which is unchanged.”
