Calvin Klein owner PVH posted earnings Monday evening. Though the company beat expectations for both earnings ($663 million for the year) and revenue ($9.2 billion for the year), investors did not like what they saw. Shares were down nearly 25% in early Tuesday trading, giving back all the progress they had made for 2024.
“We delivered a strong fourth quarter and fiscal 2023, generating high single-digit direct-to-consumer growth, with growth in both Calvin Klein and Tommy Hilfiger and all regions,” CEO Stefan Larsson said in a statement accompanying the numbers. “We significantly expanded our gross margins, drove strong pricing power, and are beginning to realize the benefits from the early buildout of our demand-driven supply chain, which allowed us to decrease inventory 21% to last year with much better stock freshness to start the new spring season.”
That’s all well and good, but there’s only one sentence in the release that Wall Street is focusing on: “Overall revenue in the Company’s international businesses increased 4% over the prior year period as strong growth in the Asia Pacific region across all markets more than offset a continued challenging macroeconomic environment in Europe, particularly impacting the wholesale business.” [Emphasis added.]
PVH, which also owns Tommy Hilfiger, has been trying to maintain its cool factor in recent years, an imperative for any fashion company. In the years since its much-publicized falling out with star Calvin Klein designer Raf Simons, it has partnered with the likes of next-generation talent Heron Preston on Calvin Klein and released a Tommy Hilfiger line with world-famous Formula 1 racer Lewis Hamilton. Its recent Calvin Klein underwear campaign with The Bear lead Jeremy Allen White was the talk of the town.
But that hasn’t been enough to outweigh the gloomy European economy, which is still digging itself out from the pandemic and the the fallout from Russia’s invasion of Ukraine.