Clavin Klein underwear enters crisis due to falling sales of PVH

The trading day was especially tough for PVH Corp., parent company of well-known brands such as Tommy Hilfiger y Calvin Klein. PVH shares experienced a drastic drop, reaching an intraday decline of 24.5%, to finally close with a depreciation of 22.22%. This decline occurred following the presentation of its annual report, where the company projected a reduction in its income for the current year of between 6% and 7%. The sale of its Heritage Brands underwear division, carried out in November of the previous year for an amount of 216 million dollars, together with a challenging macroeconomic environment, especially in Europe, were factors to which PVH attributed this negative forecast.

According to the data presented to the Securities and Exchange Commission (SEC), the regulatory authority for financial markets in the United States, the multinational PVH closed the last fiscal year with a net profit of 663.6 million dollars (approximately 616 million euros), which represents a notable increase, tripling the profits obtained in the year. last year. Its revenues reached 9,218 million dollars (regarding 8,560 million euros), experiencing a growth of 2.1%. In 2023, the group’s net sales amounted to 8,752 million dollars (approximately 8,127 million euros), which represents an increase of 2.4%, including a 4% increase in Tommy Hilfiger sales and a 3% increase in those of Calvin Klein. On the other hand, royalty income experienced a slight decrease of 1%, standing at 368 million dollars (342 million euros).

However, with a view to fiscal year 2024, in a context marked by a macroeconomic environment that is expected to be “more difficult,” PVH anticipates a reduction in its income of between 6% and 7% compared to 2023. This decrease includes a 2% negative impact due to the sale of its women’s intimate apparel business. from Heritage Brands in November 2023. Despite this scenario, the company expects to maintain its operating margin stable compared to the 10.1% recorded in the last fiscal year.

The recent negative forecasts in terms of revenue have had a significant impact on PVH shares, which experienced a drop of up to 24.5% following the Wall Street open. This decline represents the largest decline since October 19, 1987, when the company suffered a loss of 33.33%. At the end of the trading day in the United States, the decrease moderated around 22%, even so, this decline exceeds the 21.86% drop recorded on March 12, 2020 due to the pandemic. In this single Tuesday session, PVH has seen nearly $2 billion evaporate from its market value.

Given this scenario, PVH has been implementing a strategic plan with the objective of revitalizing Tommy Hilfiger and Calvin Klein, its main brands. According to Bloomberg, both have lost presence among consumers in recent years. Although PVH’s fourth-quarter earnings exceeded analyst expectations thanks to effective inventory management, sales performance was not consistent across regions. In North America, for example, PVH’s revenue decreased 8% compared to the same quarter a year ago.

Stefan Larsson, CEO of the company, has highlighted the importance of PVH’s strategic plan to expand in Asia and North America. Meanwhile, in Europe, a market facing a more difficult macroeconomic environment, the company will focus on improving the quality of sales to consolidate its leadership.