PVH Raises EPS View on Q2 Earnings Beat Despite Soft Revenues

Core Insights - PVH Corp. reported strong adjusted earnings of $3.01 per share for Q2 fiscal 2024, a 52% increase from $1.98 in the same quarter last year, surpassing both the Zacks Consensus Estimate of $2.27 and the company's guidance of $2.25 [2][11] - Revenues decreased by 6% year over year to $2,074 million, but still exceeded the consensus estimate of $2,068 million [2][3] Financial Performance - The company's gross profit was $1.2 billion, down 2.1% year over year, while gross margin expanded by 250 basis points to 60.1% due to lower product costs and a favorable shift in channel mix [6] - Selling, general and administrative expenses decreased by 4.8% year over year to $1.08 billion [6] - Adjusted earnings before interest and taxes rose by 21.4% to $173.9 million compared to the prior-year quarter [6] Segment Analysis - Revenues for the Calvin Klein segment fell by 1% year over year, while Tommy Hilfiger brand revenues dropped by 4% [7] - The Heritage Brands segment experienced a significant decline, with revenues plummeting by 60% year over year, including a 56% drop in women's intimates [8] Revenue Breakdown - International revenues decreased by 4%, primarily due to challenges in the Asia Pacific region, particularly in China and Australia [3] - Direct-to-consumer revenues declined by 5%, with physical store revenues down 4% and digital commerce down 6% year over year [4] - Wholesale revenues fell by 9%, largely due to a 7% reduction in the Heritage Brands women's intimates business [5] Guidance - For Q3, revenues are projected to decline by 6-7%, with adjusted EPS expected to be $2.50 compared to $2.90 in the prior year [11] - For fiscal 2024, the company anticipates a revenue decline of 6-7%, including a 2% reduction due to the divestiture of the Heritage Brands women's intimates business [12] - Management expects non-GAAP EPS in the range of $11.55-$11.80, up from the previous guidance of $11-$11.25 [13] Shareholder Returns - The company repurchased 2 million shares for $25 million and plans to repurchase a total of $400 million in shares for fiscal 2024 [10]