PVH(US:PVH)2023-09-06 16:00Revenue Performance - The company's revenue for 2022 was $9.0 billion, with over 65% generated outside the United States, and TOMMY HILFIGER and Calvin Klein brands together accounted for over 90% of total revenue [138]. - Total revenue for the second quarter of 2023 was $2.207 billion, a 4% increase from $2.132 billion in the prior year, with a 2% positive impact from foreign currency translation [158]. - For the twenty-six weeks ended July 30, 2023, total revenue was $4.365 billion, a 3% increase from $4.255 billion in the prior year, with a 1% negative impact from foreign currency translation [168]. - The company expects full-year 2023 revenue to increase by approximately 3% to 4% compared to 2022, including a positive impact of about 1% from foreign currency translation [169]. Cost and Expenses - The company recorded net pre-tax costs of $43 million in 2022 related to exiting the Russia business, including $44 million in noncash asset impairments [141]. - The company plans to reduce people costs in global offices by approximately 10% by the end of 2023, aiming for annual cost savings of over $100 million [152]. - SG&A expenses in Q2 2023 were $1.138 billion, or 51.6% of total revenue, compared to 50.2% in the prior year, reflecting increased investments in strategic initiatives [162]. - SG&A expenses for the twenty-six weeks ended July 30, 2023, were $2.202 billion, or 50.5% of total revenue, with an expected increase of approximately 70 basis points for the full year 2023 [173][174]. Profitability and Margins - Gross profit for Q2 2023 was $1.272 billion, representing 57.6% of total revenue, up from 57.2% in the prior year, driven by price increases and lower freight costs [161]. - Gross profit for the twenty-six weeks ended July 30, 2023, was $2.523 billion, maintaining a gross margin of 57.8% [170]. - The company anticipates a decrease in net income of approximately $75 million in 2023 due to the transactional impact of foreign currency, with an expected negative impact on gross margin of about 100 basis points [153]. Foreign Currency Impact - The company expects its 2023 revenue and net income to increase by approximately $70 million and $10 million, respectively, due to the impact of foreign currency translation [151]. - The company has been impacted by macroeconomic uncertainties due to inflation, the war in Ukraine, and foreign currency volatility, affecting its 2023 outlook [148]. - A 10% change in foreign currency exchange rates against the U.S. dollar would result in a change in the fair value of foreign currency forward exchange contracts of approximately $115 million [219]. - The company has designated €1.125 billion of senior notes as net investment hedges, with a 10% change in the euro against the U.S. dollar resulting in a change in fair value of approximately $125 million [220]. - Over 65% of the company's $9.0 billion revenue in 2022 was generated outside the United States, exposing it to significant foreign exchange risk [213]. Debt and Cash Flow - As of July 30, 2023, the company had $15 million in short-term borrowings and $1.620 billion in long-term debt, with a total stockholders' equity of $5.038 billion [197]. - The company expects long-term debt repayments of approximately $112 million during 2023 [198]. - Cash and cash equivalents decreased to $373 million as of July 30, 2023, down from $551 million at January 29, 2023, impacted by $198 million in completed stock repurchases [184]. - Cash provided by operating activities was $196 million for the twenty-six weeks ended July 30, 2023, compared to cash used of $163 million in the prior year, driven by changes in working capital [188]. Pension and Interest Expenses - Non-service related pension and postretirement income for Q2 2023 was approximately $300,000, down from $3 million in the prior year [163]. - Interest expense increased to $24 million in Q2 2023 from $20 million in the prior year, primarily due to rising interest rates [166]. - Interest expense, net increased to $46 million for the twenty-six weeks ended July 30, 2023, up from $42 million in the prior year, with a full year expectation of approximately $100 million compared to $83 million in 2022 [180]. - The effective income tax rate for the twenty-six weeks ended July 30, 2023 was 22.4%, a decrease from 28.0% in the prior year, with an expected rate of approximately 22% for the full year 2023 [181][182]. Macroeconomic Factors - Inflationary pressures negatively impacted revenue and earnings in 2022, with increased labor and product costs leading to a slowdown in consumer demand, particularly in North America [143]. - The cumulative inflation rate in Turkey surpassed 100% over a three-year period, leading the company to account for its Turkish operations as highly inflationary [221].