PVH Corp. shares drop 35% as FY25 earnings forecast falls 20% due to tariff impacts.

PVH Corp, owner of Tommy Hilfiger and Calvin Klein brands, has seen a 35% drop in its stock price since April 2024. The company's FY25 earnings forecast has fallen by 20%, with 40% of the revision attributed to tariff impacts.

PVH Corp., the parent company of Tommy Hilfiger and Calvin Klein, has experienced a significant decline in its stock price, dropping approximately 35% since April 2024. The company's earnings forecast for FY25 (ending February 1, 2026) has fallen by 20%, with 40% of the revision attributed to tariff impacts [1].

The stock's recent performance can be attributed to several factors. The company's Q1 FY25 financial report indicated a weaker-than-expected performance, with earnings of $2.30 per share (non-GAAP) and Adj. EBIT of $160 million on revenue of $1.98 billion, compared to $2.45 per share (non-GAAP) and Adj. EBIT of $195 million on revenue of $1.95 billion in Q1 FY24. The decline was primarily due to a challenging consumer environment in the APAC region, which saw a 13% decrease in revenue [1].

Additionally, the company's gross margin fell 280 basis points year-over-year to 58.6% due to a greater mix of sales in the wholesale channel, greater promotions, higher freight costs, and incremental discounts provided to customers to address the impact of Calvin Klein product delivery delays [1].

PVH has also been impacted by geopolitical tensions. In February 2025, Chinese authorities placed PVH on their list of unreliable entities, which could subject the company to unfavorable measures, restrictions, fines, etc. China was responsible for ~20% of the company’s operating income and 6% of its revenue in FY24 [1].

Management has attempted to quantify tariff impacts, stating that under the current regime, it would reduce FY25 EBIT by $65 million and non-GAAP earnings by ~$1.05 a share under a worst-case (no mitigation) scenario. As such, PVH was compelled to lower its FY25 outlook from $12.63 per share (non-GAAP) on flat year-over-year revenue to $10.88 per share (non-GAAP) on flat year-over-year revenue [1].

The analyst community is mixed on the prospects of PVH Corp. Since first quarter results hit the wires, seven analyst firms have maintained Hold ratings on the shares while six analyst firms have reissued Buy ratings on PVH. On average, they expect the company to earn $10.88 a share (non-GAAP) on revenue of $8.82 billion FY25, followed by $12.23 a share (non-GAAP) on revenue of $9 billion in FY26 [1].

Despite the challenges, PVH Corp. has maintained its capital allocation strategy, declaring its regular quarterly dividend of $0.038 per share and continuing to aggressively repurchase its stock. The company's CEO, Stefan Larsson, also invested a $1 million to cost-average his position after the Q1 FY25 financial report [1].

In conclusion, PVH Corp. faces significant challenges in the coming quarters due to tariff impacts and a challenging consumer environment. However, the company's stock has limited downside potential at a current P/E on FY25E non-GAAP EPS of around seven and an EV/TTM Adj. EBITDA of approximately five. The company's ability to execute on its PVH+ strategy and a possible negative regulatory surprise out of China will be key factors to watch in the near-to-intermediate term.

References:
[1] https://seekingalpha.com/article/4806096-the-current-prognosis-for-pvh-tariff-impacts