PVH Corp’s total revenue for FY23 was $9.22bn, up 2% compared to 2022.
The company believes any benefit from the 53rd week in 2023 was largely offset by the revenue reduction related to the sale of its Heritage Brands women’s intimates business, which closed in Q4 2023.
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Earnings before interest and taxes (EBIT) increased from $471m to $929m. Net Income also increased to $664m, up from the previous year’s $200.4m.
PVH’s CEO Stefan Larsson claimed the company delivered strong results in both FY 2023 and Q4, generating high single-digit direct-to-consumer growth.
Larsson noted that growth was observed across both Calvin Klein and Tommy Hilfiger brands, spanning all regions.
Larsson commented: “We significantly expanded our gross margins, drove strong pricing power, and are beginning to realise the benefits from the early buildout of our demand-driven supply chain, which allowed us to decrease inventory 21% to last year with much better stock freshness to start the new spring season.”
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By GlobalDataGlobalData’s senior apparel analyst Pippa Stephens said PVH’s performance in FY 23 was “likely due to poor consumer confidence in its key markets driving the desirability of its core brands to wane once more”.
PVH Corp Q4 2023 in brief
- Total revenue declined 1% on constant currency to $2.49bn, flat compared to the previous year period, although this exceeded the guidance of a decreased revenue of 3% to 4%.
- EBIT was $357m, inclusive of a $5m positive impact due to foreign currency translation, compared to $297m in Q4 2023.
- Net income increased from $139m in Q4 2023 to $272m in Q4 2024.
- PVH’s overall revenue in its international business increased 4% compared to Q4 2023.
- Strong growth in PVH’s Asia Pacific business more than offset the challenging macroeconomic environment in Europe, which particularly impacted the company’s wholesale business.
In North America, PVH reported a 2% decline in revenue at its Tommy Hilfiger and Calvin Klein businesses compared to Q4 2023, as strong growth in its direct-to-consumer business was more than offset by a decline in wholesale revenue.
PVH says its wholesale customers “continue to take a cautious approach”.
Stephens said: “While this can partly be blamed on the poor economic conditions in the US, it also highlights how its offering is struggling to resonate with these local shoppers.”
Outlook and growth plans for 2024
Looking ahead to the rest of 2024, PVH expects its overall revenue to decrease between 6% and 7%, inclusive of a 2% reduction resulting from the sale of its Heritage Brands women’s intimates business and a 1% reduction from the 53rd week in 2023.
Stephens commented that PVH’s outlook is “likely due to poor consumer confidence in its key markets driving the desirability of its core brands to wane once more”.
CEO Larsson shared that in 2024, the company plans to continue with its PVH+ Plan, driving brand desirability for both its Calvin Klein and Tommy Hilfiger brands.
Larsson commented: “This will directly translate into growth in Asia and North America, while in Europe where the macro has become more challenged, our focus is on quality of sales to further strengthen our market-leading position.
“We see big, value-creating upside through the compounded effect of our consistency in PVH+ Plan execution and strong brand-building focus as we drive long-term, profitable, brand-accretive growth.”
Zac Coughlin, chief financial officer at PVH Corp, added: “Our disciplined execution of the PVH+ Plan drove strong gross margin expansion and EPS growth for 2023. In a tougher macroeconomic backdrop in 2024, we are leaning into the next level of PVH+ Plan execution across the company to create value by increasing quality of sales, driving gross margin improvements and cost efficiencies to deliver significant cash flow and attractive returns for our shareholders.”
PVH also announced that the board has approved a $2.0bn increase to the company’s stock repurchase programme and extended it through July 2028, reflecting confidence in its long-term growth potential.
GlobalData’s Stephens added: “With brand ambassadors like Kendall Jenner and Idris Elba, PVH should maximise these partnerships over the coming year, through online marketing and social media advertisements, to help it continue growing online spend and retain appeal in the harsh economic climate.”
