PVH Corp's Q3 2024 Earnings: A Closer Look

PVH Corp, the global apparel holding company, recently reported its Q3 2024 earnings, providing valuable insights into the company's performance and strategic initiatives. The earnings call revealed a mixed picture, with revenue beating expectations but falling short of previous year's levels, while earnings per share (EPS) surged past guidance. This article delves into the key takeaways from PVH Corp's Q3 2024 earnings call and assesses the company's trajectory.

PVH Corp's revenue for the third quarter decreased 5% year-over-year (YoY), beating guidance of a 6% to 7% decrease. This performance can be attributed to the company's relentless execution of the PVH+ Plan, which focuses on driving consumer engagement and improving product strength. Despite the revenue decline, PVH's EPS on a GAAP basis came in at $2.34, surpassing guidance of approximately $2.30. On a non-GAAP basis, EPS was $3.03, exceeding the projected range of around $2.50.

The company's gross margin expanded by 170 basis points to 58.4% of sales, reflecting its successful inventory management and cost-control strategies. PVH Corp reduced inventory by 25% relative to sales, optimizing outgoing inventory to match seasonal demand. This strategic move, coupled with strong expense discipline, enabled solid profitability despite the revenue decline.

Stefan Larsson, CEO of PVH Corp, highlighted the company's progress in executing the PVH+ Plan. The plan drove powerful consumer engagement for both Calvin Klein and Tommy Hilfiger, leading to significantly improved sell-throughs for the Fall 24 season across all regions and brands. This marked the first season created with the PVH+ mindset from the start, led by hero products standing as pillars for the brands.

The divestment of the Heritage Brands women's intimates business in November 2023 contributed to a 2% decline in Q3 2024 revenue. Despite this, overall revenue decreased only 5% compared to the prior year period, demonstrating the resilience of the company's core Calvin Klein and Tommy Hilfiger brands. PVH's relentless execution of the PVH+ Plan helped mitigate the impact of the divestment and maintain growth momentum in other areas.

PVH Corp's full-year outlook remains unchanged, with revenue projected to decrease 6% to 7% (6% to 7% on a constant currency basis) and operating margin projected to be approximately 9.2% on a GAAP basis, compared to approximately 9.8% previously. Non-GAAP operating margin is reaffirmed at approximately flat compared to 10.1% in 2023. EPS is projected to be in a range of $10.55 to $10.70 on a GAAP basis, compared to $11.20 to $11.45 previously, and $11.55 to $11.70 on a non-GAAP basis, compared to $11.55 to $11.80 previously. The updated EPS guidance includes a negative impact of approximately $0.15 per share related to foreign currency translation, compared to approximately $0.05 previously.

In conclusion, PVH Corp's Q3 2024 earnings call provided a mixed picture, with revenue beating expectations but falling short of previous year's levels, while EPS surged past guidance. The company's strategic initiatives, particularly the PVH+ Plan, have driven consumer engagement and improved product strength. Despite the divestment of the Heritage Brands women's intimates business, PVH Corp's core brands have demonstrated resilience, and the company remains focused on driving sustainable, profitable growth. As the global apparel market continues to evolve, PVH Corp's ability to adapt and innovate will be crucial in maintaining its competitive edge.