PVH Q3 revenue drops 3%
PVH Corp.’s total revenue dropped about 3% to $2,164.5 million, reflecting the adverse impact of foreign currency translations. On a constant currency basis, however, the company’s total revenue grew 3%, meeting management’s expectations. This was mainly driven by strong revenue growth at its Tommy Hilfiger and Calvin Klein brands, on a currency neutral basis.
Total adjusted gross profit fell 5.4% year over year to $1,106 million, while as a percentage of sales it contracted 130 basis points (bps), to 51.1%. PVH Corp.’s adjusted operating profit declined 6.7% to $288.4 million, with the adjusted operating margin contracting 50 bps to 13.3% in the quarter.
PVH Corp. reports its financial results under three business segments: Calvin Klein, Tommy Hilfiger and Heritage Brands.
Calvin Klein’s revenue remained flat year over year at $814.1 million, while on a currency neutral basis, it advanced 7%, driven by a 7% jump each, in the brand’s North American and International business, on a currency neutral basis.
North American operations gained strength from store expansions, along with Izod’s conversion into Calvin Klein Accessory and Calvin Klein Underwear stores. However, comparable-store sales (comps) in the region dipped 3% year over year owing to weak traffic and decreased spending trends across the company’s U.S. stores in international tourist locations together with warm weather.
The brand’s international business witnessed a 3% improvement in comps, backed by continued strength in European and Chinese operations. International comps climbed 2%, benefitting from this strength, partly offset by weakness noted in Hong Kong and Korea.
Revenue at the company’s Tommy Hilfiger segment fell 5% to $887.6 million, though it rose 4% on a constant currency basis, backed by sales growth of 2% and 6% in the brand’s North American and International businesses, respectively.
At Tommy Hilfiger North America, wholesale operations growth was largely offset by softness witnessed in retail operations. Consequently, comps in the brand’s North American business tumbled 7%, attributable to persistent slow traffic and a decline in spending trends among customers at stores in international tourist locations, along with unexpected warm weather.
International revenues improved on the back of solid European results, with comps increasing 10% year over year.
The Heritage Brands segment’s revenues dropped 5% year over year to $462.8 million, as a result of the ongoing rationalization of this business by exiting various lines of business, closing the Izod retail division and realigning focus on more profitable areas. However, this decline was somewhat offset by an 11% jump in its Van Heusen comps.