Dive Brief:
- PVH Corp. on Tuesday reported that Q4 net sales rose 16% year over year to $2.3 billion, despite continued pandemic-related headwinds in North America related to supply chain and tourism, and a 5% hit from last year’s sale of some of its Heritage Brands.
- The company saw growth of 10% in e-commerce, 18% at Tommy Hilfiger and 27% at Calvin Klein, per a company press release. Wholesale revenue in the period rose 20% year over year, partly due to logistics disruption that pushed shipments into Q4, and included double-digit growth in sales to digital businesses.
- Earnings ballooned 749% year over year to $223.3 million.
Dive Insight:
PVH finished off the year with strength even as the COVID-19 omicron variant interrupted its recovery. While tourist visits to the U.S. remain down and there’s still some unreliability in the supply chain, there are already “green shoots” again, thanks to pricing power and the global strength of its top brands, CEO Stefan Larsson told analysts Wednesday morning.
“Our focus is on the domestic consumer, winning more with that consumer, and it comes back to product execution, it comes back to pricing power, it comes back to a balanced, high quality channel distribution,” he said during a conference call.
The company isn’t relying solely on the existing strength of its brands, but is also taking steps to refresh them, in an effort to win over younger consumers. Calvin Klein is working to boost apparel beyond underwear, focusing also on denim and activewear, according to analysts at Jane Hali & Associates.
“The assortment is much stronger and is more gender inclusive,” Hali analysts said, noting the option of a “gender inclusive” tab when shopping online. “The curation includes apparel with updated and boxier silhouettes.”
Calvin Klein makes up 39% of PVH’s business, and Tommy Hilfiger makes up 51%, per a Hali research note.
In short, outside challenges, which also include the inflation that is pressuring household spending, aren’t overpowering PVH, which displayed “stronger-than-expected underlying momentum despite big macro exposure,” Credit Suisse analysts Michael Binetti and Daniel Silverstein said in a Wednesday research note.
Notably, the company kept its outlook for 2022 fairly steady “despite the significant uncertainty due to the war in Ukraine and its broader macroeconomic implications, inflationary pressures globally, as well as the continued uncertainty due to the COVID-19 pandemic.”
PVH expects revenue this year to rise 2% to 3% compared to 2021, reflecting a 2% reduction resulting from its Heritage Brands deal and its exit from that retail business, and a 2% hit due to the temporary closure of its stores and pause of commercial activities in Russia and Belarus, and its reduction in wholesale shipments to Ukraine. The company also expects 2022 operating margin to reach about 10%, per the release.
