PVH's Q2 2026: Contradictions Emerge on Marketing Investments, Calvin Klein Operations, and Tariff Mitigation Strategies

The above is the analysis of the conflicting points in this earnings call

Date of Call: August 26, 2025

Financials Results

• Revenue: Up 4% reported and up 1% constant currency YOY
• EPS: $2.52, down vs $3.01 prior year (which included ~$0.55 one-time tax benefit; ex-benefit $2.46)
• Gross Margin: 57.7%, down 240 bps YOY; ~20 bps early tariff impact and ~50 bps NA license transitions; remainder from higher promotions, wholesale mix, and CK shipment delays
• Operating Margin: 8.2%; no prior-year comparison provided

Guidance:

• Q3 revenue: flat to slight increase reported; down slightly constant currency
• Q3 Americas up low single digits; DTC ~flat; EMEA DTC growth/wholesale ~flat; APAC down low single digits
• Q3 gross margin down ~175 bps YOY (incl. ~80 bps unmitigated tariffs, partially offset)
• Q3 SG&A rate up ~75 bps; operating margin ~8% (down ~250 bps); EPS $2.35–$2.50; tax ~25%; interest ~$22M
• FY25 cc revenue flat to slight up; reported slight to low single-digit up (FX tailwind)
• FY25 operating margin ~8.5%; EPS $10.75–$11; gross margin down ~250 bps YOY; SG&A rate down ~100 bps; interest ~$80M; tax ~22%
• 2025 tariffs: ~-$70M EBIT/~$1.15 EPS headwind; mitigation ongoing; fully mitigate over time
• FY regional: Europe to return to growth; Americas up mid-single digits (incl. CK women’s transition); APAC down mid-single digits cc

Business Commentary:

* Revenue Growth and Financial Performance: - PVH Corp reported revenue growth of 4% on a reported basis and 1% on a constant currency basis for the second quarter of 2025. - The growth was driven by strong performance in key product categories such as underwear and denim, and strategic investments in marketing and brand building.

• Direct-to-Consumer and Wholesale Sales:
• Direct-to-consumer revenue was flat in constant currency, with sequential improvements throughout the quarter, and wholesale revenue grew by low single digits in constant currency.

• The improvement was attributed to the relaunch of the Calvin Klein women's business and increased consumer engagement through innovative products and marketing campaigns.

• Regional Performance and Market Expansion:

• In Europe, PVH delivered another quarter of positive direct-to-consumer growth and finalized order books for Spring 2026 with a low single-digit increase.

• The growth was driven by product strength and improved sales execution in key categories like underwear and denim, as well as investments in brand visibility.

• Marketing Investments and Strategic Initiatives:

• PVH increased strategic investments in marketing to generate higher visibility and customer impact, with plans to expand marketing efforts in the third quarter.
• These investments are aimed at amplifying the brand's global presence and driving consumer engagement through powerful product innovation and marketing campaigns.

Sentiment Analysis:

• “We beat our guidance on both the top and bottom line… grew revenue 4% on a reported basis… better than expected gross margin performance.” “We are reaffirming our earnings guidance for the full year and raising our reported revenue guidance despite tariff rates effectively doubling.” “EPS… was lower than last year, but it was better than expected.”

Q&A:

• Question from Jay Sole (UBS): What drove the increased marketing investments and how will they impact the P&L?
  Response: PVH is leaning into full-funnel campaigns behind core categories and mega-talent in H2; SG&A will deleverage in Q3 from higher marketing, then re-leverage in Q4 as cost-savings (Value Driver 5) continue.

• Question from Michael Binetti (Evercore): How will tariff headwinds evolve into 2026 and what mitigation levers exist? Also, any update on outlet traffic?
  Response: Tariffs roughly doubled for Q4; 2025 mitigation percent will be lower, but actions expand through 2026 via supply-chain efficiencies and targeted pricing; outlet traffic improved sequentially from Q1 to Q2.

• Question from Brooke Roach (Goldman Sachs): Update on Calvin Klein transformation and execution outlook into 2026?
  Response: Calvin’s operational issues are being resolved: Fall ’25 shows sequential improvement; Spring ’26 margins restored and deliveries on time; the global product engine is now set to drive multi-year benefits.

• Question from Matthew Boss (JPMorgan): Drivers of Americas DTC sequential improvement and details on Europe order books for F25 and initial S26?
  Response: Americas DTC improved via stronger product, expanded mid-funnel marketing, and growth in new/retained/reactivated consumers; Europe wholesale order books grew for F25 and S26 on product strength across categories.

• Question from Dana Telsey (Telsey Group): Promotional trends by region and store portfolio plans (e.g., SoHo)?
  Response: US outlook uncertain with tariffs; Europe consumer stable; APAC choppy but improving with stronger execution; opening Calvin flagships in Harajuku now and SoHo later this year, plus a multi-year fleet renovation.

• Question from Tom (Firm not disclosed): Any increased caution from North American wholesale partners and impact on insourcing of G-III licenses?
  Response: H1 wholesale benefited from CK women’s jeans/sportswear intake and growth with key full-price partners; 2025 shipments are normalized across halves versus last year’s back-half skew.