The US clothing group PVH Corporation closed the first quarter of the 2022/23 financial year with surprisingly good results. In terms of sales and earnings, the parent company of the Calvin Klein and Tommy Hilfiger brands exceeded expectations with the figures published on Wednesday evening.
For the first quarter ended May 1, Group sales were $2.12 billion (EUR 1.98 billion), up two percent year-on-year. Adjusted for exchange rate fluctuations, revenues increased by seven percent.
The company emphasized that, like the entire industry, it had to struggle with adverse conditions in recent months. These included in particular “disruptions in the supply chain and logistics” and the effects of the Covid 19 pandemic in China. In addition, according to the group, the separation from the Heritage Brands segment completed last year and the consequences of the war in Ukraine slowed down sales development.
Tommy Hilfiger and Calvin Klein achieve strong growth in North America
The Calvin Klein label grew at an above-average rate, with sales increasing by 13 percent (+17 percent after currency adjustments) to USD 886.2 million thanks to the strong North American business (+26 percent). Tommy Hilfiger sales were $1.07 billion, up 2% (+7% at constant currency) from the prior-year quarter. The brand also benefited from a strong increase in North America (+15 percent).
The group was able to increase its earnings before interest and taxes (EBIT) by 6.5 percent to 210.3 million US dollars. However, adjusted for special effects, EBIT fell by 15.4 percent because high restructuring costs had to be booked in the same quarter of the previous year. Reported net income increased 33.2 percent to $133.1 million (EUR 124.4 million). Earnings per share grew to $1.94 from $1.38, ahead of guidance.
In view of the strong US dollar exchange rate, management revised its sales forecast for the full fiscal year. It now anticipates sales growth of one to two percent after previously expecting an increase of two to three percent. Adjusted for currency effects, however, an increase of six to seven percent is still expected. Earnings per share are expected to be around $9.20. Adjusted for special items, the target remains at $9.00. Last year, PVH reported earnings per share of $13.25.
CEO Larsson remains optimistic despite “macroeconomic headwinds”.
Despite the ongoing challenging environment, CEO Stefan Larsson was confident after the surprisingly solid first quarter: “We are aware of the macroeconomic headwinds and will continue to manage them, while at the same time proactively steering our business to achieve our goals of driving growth and long-term Creating value,” he said in a statement.
The company is also relying on the effects of its “PVH+” growth strategy, which it presented in April. Among other things, this provides for targeted investments in further digitization and the expansion of the company’s own retail business, but also measures to “increase efficiency”.