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Tommy Hilfiger and Calvin Klein parent PVH said Q2 2023 sales rose 4 per cent year-on-year to $2.207 billion, beating analyst expectations and prior guidance of low single-digit growth. Shares rose 3.1 per cent on Tuesday in response.
Sales at Calvin Klein were up 3 per cent for the quarter, while Tommy Hilfiger sales increased 6 per cent. The group’s heritage brands (a smaller portfolio of intimates brands Warners, Olga and True Co following the sale of other brands to Authentic Brands Group in 2021) were down 11 per cent year-on-year, the eighth consecutive quarter of declines.
“For the second quarter we delivered another strong performance,” CEO Stefan Larsson told investors on Wednesday, crediting the success of the company’s PVH+ plan, a growth initiative announced in 2022 with the goal of reaching $12.5 billion in sales by 2025. “It’s a really pivotal moment where you now see the proof points we have been working on for the past year,” Larsson said.
PVH’s direct-to-consumer sales — a key area of focus in the PVH+ plan — were up 11 per cent year-on-year. “Our DTC business will create a halo for us that will benefit the entire marketplace. We are excited about the accelerated momentum we are building there.” Wholesale fared worse, falling 3 per cent year-on-year — but this was “more than” offset by the DTC growth, Dana Telsey, analyst and CEO and chief research officer of Telsey Advisory Group, said in the group’s earnings review. Chief financial officer Zac Coughlin cited wholesalers’ ongoing cautious approach — particularly in the US — as a reason for the dip.
A continued rebound in China, up 20 per cent year-on-year in local currency, contributed to Asia Pacific’s strong performance. Larsson credited this to the further easing of Covid restrictions in the region. This follows last quarter’s bounceback, when China sales rose 44 per cent. The CEO also highlighted strong double-digit growth in Japan and Korea, and flagged room for further growth in the region by “tapping into the under-penetrated brand awareness in China and across the region”.
Larsson said that the company is seeing increased strength in North America thanks to the PVH+ plan led by PVH’s DTC business — this resulted in a mid-single-digit increase across Tommy Hilfiger and Calvin Klein. It’s a positive result compared to its US counterparts. Tapestry, which owns Coach and is set to acquire Capri, was down 2 per cent year-on-year in North America. Ralph Lauren saw a 10 per cent decline in the region.
“Looking ahead in North America, we continue to focus our efforts around the domestic consumer to drive the business forward and see significant opportunity to unlock our full potential in the region,” the CEO told investors. That said, the company revised its North American guidance to revenue down low-single digits (from up low-single digits) to reflect more tempered expectations about the influx of international tourist traffic in the US.
PVH is increasing its full-year guidance, with revenue projected to increase 3 to 4 per cent versus 2022. The goal is to lower inventory by 25 per cent. “By focusing on what we can control, we remain well positioned to deliver solid top-line growth in addition to double-digit growth,” Larsson said. “We have strong conviction in the long-term potential of our brands and business.”
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