PVH(PVH) - 2025 Q3 - Quarterly Results

Performance Overview and Management Commentary Third Quarter 2024 Performance Highlights PVH Corp. surpassed Q3 2024 guidance with revenue down 5% to $2.255 billion, beating forecasts, and strong EPS performance Q3 2024 Performance vs. Guidance | Metric | Actual Result | Guidance | Status | | :--- | :--- | :--- | :--- | | Revenue Decrease (YoY) | 5% (6% constant currency) | 6% to 7% (7% to 8% constant currency) | Beat | | GAAP EPS | $2.34 | Approx. $2.30 | Beat | | Non-GAAP EPS | $3.03 | Approx. $2.50 | Beat | Updated Full Year 2024 Outlook | Metric | Updated Outlook | Previous Outlook | | :--- | :--- | :--- | | Revenue Decrease (YoY) | Reaffirmed at 6% to 7% | 6% to 7% | | GAAP Operating Margin | Approx. 9.2% | Approx. 9.8% | | Non-GAAP Operating Margin | Reaffirmed at approx. flat vs 10.1% in 2023 | Approx. flat vs 10.1% in 2023 | | GAAP EPS | $10.55 to $10.70 | $11.20 to $11.45 | | Non-GAAP EPS | $11.55 to $11.70 | $11.55 to $11.80 | Management Commentary Strong Q3 performance attributed to the PVH+ Plan, driving consumer engagement and improved sell-throughs for Calvin Klein and TOMMY HILFIGER - The company beat Q3 guidance due to the relentless execution of the PVH+ Plan, leading to powerful consumer engagement and significantly improved sell-throughs for the Fall 24 season across all regions for both Calvin Klein and TOMMY HILFIGER[3] - Strategic progress by region includes: strong profitability in North America, gaining traction with the 'quality of sales' initiative in Europe leading to sequentially improved wholesale orders, and delivering planned growth across all channels in Asia Pacific[3] - The company is focused on prudent management through agility, strong expense discipline, and generating cost efficiencies to drive long-term profitable growth and shareholder returns[3] Third Quarter 2024 Financial Results Consolidated Performance Review Consolidated Q3 2024 revenue decreased 5% to $2.255 billion, gross margin improved 170 basis points, EBIT declined, and inventory rose 9% Q3 2024 Revenue Performance by Channel | Channel | Revenue Change (YoY) | Revenue Change (Constant Currency) | Key Drivers | | :--- | :--- | :--- | :--- | | Total Revenue | -5% | -6% | Sale of Heritage Brands intimates (-2%), strategic sales reduction in Europe | | Direct-to-Consumer | 0% | -1% | Owned stores +1%, Digital commerce -1% | | Wholesale | -8% | -9% | Sale of Heritage Brands intimates (-4%), strategic sales reduction in Europe, timing of North America shipments | - Gross margin increased by 170 basis points to 58.4%, driven by a favorable shift in channel mix and a reduction in sales to lower-margin wholesale accounts[9] - Inventory increased by 9% year-over-year, primarily due to early receipts in the current quarter and comparison against lean inventory levels in the prior year[9] Q3 2024 Earnings Summary | Metric | Q3 2024 (in millions) | Q3 2023 (in millions) | | :--- | :--- | :--- | | GAAP EBIT | $183 | $230 | | Non-GAAP EBIT | $236 | $249 | | GAAP EPS (in dollars) | $2.34 | $2.66 | | Non-GAAP EPS (in dollars) | $3.03 | $2.90 | Segment Performance Tommy Hilfiger revenue decreased 1%, Calvin Klein fell 3% due to North America wholesale, and Heritage Brands declined 54% from intimates sale Tommy Hilfiger Tommy Hilfiger's total Q3 revenue decreased 1% (2% constant currency), with international flat and North America down 3% Tommy Hilfiger Q3 Revenue Performance (YoY) | Region | Revenue Change | Revenue Change (Constant Currency) | | :--- | :--- | :--- | | Total | -1% | -2% | | International | 0% | -2% | | North America | -3% | N/A | Calvin Klein Calvin Klein's total Q3 revenue decreased 3% (4% constant currency), driven by a 9% drop in North America wholesale Calvin Klein Q3 Revenue Performance (YoY) | Region | Revenue Change | Revenue Change (Constant Currency) | | :--- | :--- | :--- | | Total | -3% | -4% | | International | +1% | -1% | | North America | -9% | N/A | Heritage Brands Heritage Brands revenue declined 54% year-over-year in Q3, primarily due to the sale of its women's intimates business - Heritage Brands revenue decreased 54% YoY, with 44% of this decline resulting from the sale of the women's intimates business[12] Other Financial Items PVH repurchased $29 million of common stock in Q3, with year-to-date total of $254 million, and interest expense decreased - The company repurchased 300,000 shares for $29 million in Q3 2024. Total repurchases for the first nine months of 2024 amount to 2.4 million shares for $254 million[19] - The full-year 2024 stock repurchase target is approximately $400 million[19] - Interest expense decreased to $16 million in Q3 2024 from $22 million in Q3 2023[18] Full Year and Fourth Quarter 2024 Outlook Full Year 2024 Guidance PVH Corp. reaffirmed full-year 2024 revenue guidance (6-7% decrease) but lowered GAAP operating margin to 9.2% and GAAP EPS Full Year 2024 Guidance Details | Metric | FY 2024 Guidance | Previous Guidance | Notes | | :--- | :--- | :--- | :--- | | Revenue Decrease (YoY) | 6% to 7% | 6% to 7% | Reaffirmed. Includes 2% reduction from intimates sale and 1% from 53rd week in 2023 | | GAAP Operating Margin | Approx. 9.2% | Approx. 9.8% | Lowered | | Non-GAAP Operating Margin | Approx. flat vs 10.1% in 2023 | Approx. flat vs 10.1% in 2023 | Reaffirmed | | GAAP EPS (in dollars) | $10.55 to $10.70 | $11.20 to $11.45 | Lowered | | Non-GAAP EPS (in dollars) | $11.55 to $11.70 | $11.55 to $11.80 | Range narrowed | | Interest Expense (in millions) | Approx. $68 | Approx. $70 | Improved outlook | | Effective Tax Rate (Non-GAAP) | Approx. 16% | N/A | - | - The updated EPS guidance includes an estimated negative impact of approximately $0.15 per share from foreign currency translation, an increase from the previously guided $0.05 per share[23] Fourth Quarter 2024 Guidance Q4 2024 revenue is projected to decrease 6-7% (4-5% constant currency), with GAAP EPS forecasted between $2.83 and $2.98 Fourth Quarter 2024 Guidance | Metric | Q4 2024 Guidance | Q4 2023 Actual | | :--- | :--- | :--- | | Revenue Decrease (YoY) | 6% to 7% | N/A | | Revenue Decrease (Constant Currency) | 4% to 5% | N/A | | GAAP EPS (in dollars) | $2.83 to $2.98 | $4.55 | | Non-GAAP EPS (in dollars) | $3.05 to $3.20 | $3.72 | | Interest Expense (in millions) | Approx. $15 | $20 | | Effective Tax Rate | Approx. 20% | N/A | - The Q4 revenue projection includes a 1% reduction from the sale of the Heritage Brands women's intimates business and a 3% reduction from the 53rd week in 2023[28] Financial Statements and Reconciliations Consolidated Financial Statements PVH's consolidated financial statements show decreased Q3 revenue and net income, with increased inventories and total assets Statements of Operations Q3 2024 total revenue was $2.255 billion, with net income of $131.9 million or $2.34 per diluted share, down from prior year Q3 Consolidated GAAP Statement of Operations (in millions, except EPS) | Metric | Quarter Ended 11/3/24 | Quarter Ended 10/29/23 | | :--- | :--- | :--- | | Total Revenue | $2,255.1 | $2,362.9 | | Gross Profit | $1,316.6 | $1,339.4 | | EBIT | $183.1 | $229.8 | | Net Income | $131.9 | $161.6 | | Diluted EPS (in dollars) | $2.34 | $2.66 | Balance Sheets As of November 3, 2024, PVH reported total assets of $11.24 billion, with cash at $559.6 million and inventories at $1.61 billion Consolidated Balance Sheet Highlights (in millions) | Account | As of 11/3/24 | As of 10/29/23 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $559.6 | $357.6 | | Inventories | $1,608.2 | $1,476.9 | | Total Assets | $11,241.3 | $11,167.1 | | Long-Term Debt | $1,654.2 | $1,571.3 | | Stockholders' Equity | $5,288.2 | $5,054.3 | Segment Data Details Segment data details Q3 2024 revenue and EBIT for Tommy Hilfiger, Calvin Klein, and Heritage Brands, by region and GAAP/Non-GAAP Q3 2024 Revenue by Segment (in millions) | Segment | Q3 2024 Revenue | Q3 2023 Revenue | | :--- | :--- | :--- | | Total Tommy Hilfiger | $1,200.9 | $1,209.9 | | Total Calvin Klein | $993.9 | $1,022.2 | | Heritage Brands Wholesale | $60.3 | $130.8 | | Total Revenue | $2,255.1 | $2,362.9 | Q3 2024 EBIT by Segment (in millions) | Segment | GAAP EBIT | Non-GAAP EBIT | | :--- | :--- | :--- | | Total Tommy Hilfiger | $90.6 | $146.8 | | Total Calvin Klein | $124.6 | $126.5 | | Heritage Brands Wholesale | $10.3 | $10.3 | | Corporate | $(42.4) | $(47.1) | | Total EBIT | $183.1 | $236.5 | Non-GAAP and Constant Currency Reconciliations This section details adjustments from GAAP to non-GAAP metrics, including restructuring costs, employment agreement amendments, and constant currency revenue reconciliations Explanation of Non-GAAP Measures Non-GAAP measures exclude non-recurring or non-operational items like restructuring costs to provide clearer period-over-period comparisons and evaluate business trends - Non-GAAP amounts exclude items such as restructuring costs, costs from Mr. Tommy Hilfiger's employment agreement amendment, gains from the Heritage Brands intimates sale, and associated tax effects[32] - The company presents non-GAAP measures to help investors assess performance by excluding non-recurring items and the effects of foreign currency changes, consistent with how management evaluates the business[35] GAAP to Non-GAAP Reconciliations Detailed tables reconcile GAAP to non-GAAP figures, showing Q3 2024 GAAP Net Income of $131.9 million adjusted to Non-GAAP Net Income of $170.5 million Q3 2024 GAAP to Non-GAAP Net Income Reconciliation (in millions) | Description | Amount | | :--- | :--- | | GAAP Net Income | $131.9 | | SG&A expenses (Growth Driver 5 Actions) | $12.2 | | SG&A expenses (Mr. Hilfiger amendment) | $50.7 | | Gain (Growth Driver 5 Actions) | $(9.5) | | Tax effect of pre-tax items | $(14.8) | | Non-GAAP Net Income | $170.5 | Constant Currency Revenue Reconciliations Q3 2024 reported total revenue declined 4.6% (GAAP), translating to a 5.9% decline on a constant currency basis, indicating a 1.3% positive FX impact Q3 2024 Constant Currency Revenue Reconciliation | Segment | GAAP % Change | Positive Impact of Foreign Exchange | Constant Currency % Change | | :--- | :--- | :--- | :--- | | Total Tommy Hilfiger | -0.7% | 1.7% | -2.4% | | Total Calvin Klein | -2.8% | 1.1% | -3.9% | | Total Revenue | -4.6% | 1.3% | -5.9% | Guidance Reconciliations The company provides full-year and Q4 guidance reconciliations, adjusting GAAP EPS and operating margin for non-GAAP exclusions to reflect underlying performance Full Year 2024 EPS Guidance Reconciliation (in dollars) | Description | Per Share Amount | | :--- | :--- | | GAAP net income per common share | $10.55 to $10.70 | | Estimated impact of non-GAAP exclusions | $(1.00) | | Net income per common share on a non-GAAP basis | $11.55 to $11.70 | Full Year 2024 Operating Margin Guidance Reconciliation (in percentage) | Description | Percentage | | :--- | :--- | | GAAP operating margin | Approx. 9.2% | | Estimated impact of non-GAAP exclusions | (0.9)% | | Operating margin on a Non-GAAP basis | Approx. 10.1% |