PVH Corp ((PVH)) has held its Q4 earnings call. Read on for the main highlights of the call.
PVH Corp’s recent earnings call reflected a sentiment of resilience and strategic progress amid a challenging environment. The company celebrated significant achievements in brand strength, profitability, and market growth, particularly in North America and Europe. However, these successes were tempered by challenges in product development, macroeconomic conditions, and specific market difficulties in China.
Strong Fourth Quarter and Full Year Performance
PVH Corp. exceeded expectations in both top and bottom lines, with revenue surpassing guidance on a constant currency basis and achieving a record high non-GAAP EPS of $11.74. The gross margin increased by 120 basis points, setting a new record.
Calvin Klein and Tommy Hilfiger Brand Strength
The company’s flagship brands, Calvin Klein and Tommy Hilfiger, demonstrated strong consumer engagement and relevance, driving record sell-through of the Fall ’24 product assortment. Notable achievements included the opening of a flagship Calvin Klein store on the Champs Elysees in Paris.
North America Profitability
North America’s profitability saw a significant boost, with EBIT dollars for Calvin and Tommy businesses up 40%, achieving an 11.9% EBIT margin for the year, marking an increase of over 350 basis points year-over-year.
European Market Growth
Europe experienced two consecutive quarters of growth in retail stores and improved wholesale order books. The Fall ’25 order books returned to growth with low single digits across both Tommy and Calvin brands.
Asia Pacific Growth
Despite macroeconomic challenges, the Asia Pacific region delivered low single-digit revenue growth in constant currency, with China increasing by 3%, benefiting from an earlier Lunar New Year.
Challenging Macro Environment
The year 2024 faced tough macroeconomic conditions, particularly affecting the North American and Chinese markets, leading to uncertain consumer demand.
Product Development Challenges
Centralizing Calvin Klein’s global product capabilities led to extended product development timelines, constrained sourcing and shipping options, and pressured production costs.
Gross Margin Decline in Q4
The fourth quarter saw a gross margin decrease by 210 basis points compared to the previous year due to a more promotional environment, increased freight costs, and wholesale mix in North America.
Headwinds in China
China faced incrementally tougher headwinds, including a post-New Year holiday slowdown, leading to a step down in revenue. Challenges were exacerbated by PVH Corp. being added to MFCOM’s unreliable entity list.
Forward-Looking Guidance
Looking ahead to 2025, PVH Corp. anticipates flat to slightly increased revenue and EBIT margins, with plans for significant cost efficiencies and an accelerated share repurchase program to boost EPS. The company remains committed to brand-building and strategic initiatives, such as the global product kitchen for Calvin Klein and enhanced marketing efforts.
In summary, PVH Corp’s earnings call highlighted a resilient performance with strategic advancements, despite facing macroeconomic and market-specific challenges. The company remains focused on leveraging its brand strength and strategic initiatives to navigate the evolving market landscape.