PVH reports 43% drop in Q1 sales, predicts worse to come in Q2

By

Robin Driver

Published
Jun 12, 2020

PVH Corp, the owner of brands including Tommy Hilfiger and Calvin Klein, announced a 43% decline in first-quarter sales on Thursday but warned that the negative impact of the coronavirus is likely to be felt more keenly in its Q2 results.
 

For the first quarter ended May 3, 2020, the New York-based company reported revenue of $1.34 billion, down from $2.36 billion in the prior-year period.
 
The Tommy Hilfiger brand posted a 39% decline in revenue, reflecting decreases of 51% in North America and 32% internationally. At Calvin Klein revenues fell 46%, the result of declines of 54% in North America and 40% internationally.

PVH’s heritage brand segment also reported a 47% decrease in revenue.  
 
As has been the case with many companies during the pandemic, PVH’s e-commerce channel saw strong revenue growth of 47%, which partially offset the declines seen in the group’s brick-and-mortar channels, where stores were closed for an average of six weeks during the quarter.
 
PVH’s quarterly net loss was $1.10 billion, or $15.37 per diluted share, compared to net income of $81.6 million, or $1.08 per diluted share, in the prior year period.
 
“While our first quarter results were impacted significantly by the pandemic, we have been able to reopen the majority of our stores in all regions over the last month,” said PVH chairman and CEO Emanuel Chirico in a release. “Throughout our nearly 140-year history, we have navigated successfully many economic and geopolitical challenges, and I am confident that we can manage through this crisis successfully, as well.”
 
The company expects 85% of its stores to have reopened by mid-June and highlighted that, although second quarter-to-date sales are currently running down approximately 25% globally, traffic and sales trends are “improving each week.”
 
Despite this optimism, PVH conceded that “the pandemic will continue to have a significant impact on the second quarter and full year 2020 results,” adding that “its revenue decline in the second quarter will be more pronounced than in the first quarter.”
 
The group did not, however, provide any more specific details concerning its financial outlook for the second quarter or full fiscal year 2020.

As it attempts to navigate the challenges posed by the coronavirus crisis, PVH has introduced a number of cost-cutting measures over the past few weeks. These have included furloughs, hiring freezes, salary reductions and decreased working hours, as well as the elimination or reduction of a range of discretionary and variable operating expenses, including marketing, travel, consulting services, and creative and design costs.