PVH's Q2 2026 Earnings Call: Contradictions Emerge on Tariff Impact, Marketing Investments, and Strategy Shifts

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

Date of Call: August 27, 2025

Financials Results

• Revenue: Up 4% reported, up 1% constant currency YOY
• EPS: $2.52, vs $3.01 prior year (which included ~$0.55 one-time); ex-benefit prior-year EPS ~$2.46
• Gross Margin: 57.7%, down 240 bps YOY; includes ~20 bps early tariff impact and ~50 bps from NA license transitions
• Operating Margin: 8.2%

Guidance:

• Q3 revenue: flat to slight increase reported; down slightly in constant currency
• Q3 gross margin: down ~175 bps YOY (includes ~80 bps unmitigated tariff, partially mitigated)
• Q3 SG&A: up ~75 bps as % of revenue; operating margin ~8% (down ~250 bps)
• Q3 EPS: $2.35–$2.50; tax ~25%; interest ~$22M
• FY25 constant-currency revenue: flat to slightly up; reported up slightly to low single digits (FX tailwind)
• FY25 operating margin: ~8.5%; EPS: $10.75–$11; tax ~22%; interest ~$80M
• FY25 gross margin: down ~250 bps YOY; SG&A as % revenue down ~100 bps (cost actions)
• Tariffs: net negative ~$(70)M EBIT (~$1.15/share) in 2025; mitigation to increase over time

Business Commentary:

* Revenue and Earnings Growth: - PVH Corp. reported revenue growth of 4% on a reported basis for Q2 2026, with 1% growth on a constant currency basis. - The growth was driven by better-than-expected gross margin performance and EBIT margins, as well as increased strategic investments in marketing.

• Brand Performance and Product Innovation:
• Calvin Klein's underwear and denim categories showed significant momentum, with sales up 14% globally for men's cotton stretch styles in Q2.

• This was attributed to successful marketing campaigns featuring global superstars like Bad Bunny and innovative product launches.

• Direct-to-Consumer (D2C) Revenue Trends:

• Total direct-to-consumer revenue was flat in constant currency, showing sequential improvement compared to the first quarter.

• The improvement was driven by stronger D2C performance and increased consumer engagement through targeted marketing campaigns.

• Regional Performance and Order Books:

• PVH's EMEA business experienced 3% growth on a reported basis, while the Americas saw 11% growth, driven by double-digit wholesale growth.
• This was due to increased strength in product offerings and improved sales team execution, particularly in North America.

Sentiment Analysis:

• Management beat Q2 guidance on revenue and EPS, raised reported revenue outlook, and reaffirmed FY operating margin and EPS. However, gross margin fell 240 bps YOY due to promotions, mix, operational delays, and tariffs, with further Q3 margin pressure expected (OM ~8%, GM down ~175 bps). Macro/tariff uncertainty persists, especially with doubled U.S. tariff rates impacting 2H.

Q&A:

• Question from Jay Daniel Sole (UBS): What is driving the step-up in marketing investments, and how should we think about their P&L impact?
  Response: PVH is increasing H2 marketing to amplify product-led campaigns (CK and Tommy) after strong Q2 traction; Q3 will show SG&A deleverage from this spend, but full-year cost actions keep margin targets on track.

• Question from Michael Charles Binetti (Evercore ISI): How will tariffs affect gross margin into 2026, and what are you seeing at outlets?
  Response: Tariff headwinds intensify in 4Q; 2025 mitigation is lower given doubled rates, but broader value-chain actions and targeted pricing aim to fully mitigate over time; outlet traffic improved sequentially from Q1.

• Question from Brooke Siler Roach (Goldman Sachs): Provide an operational update on the Calvin Klein transformation and opportunities into 2026.
  Response: CK’s new global product engine is stabilized: fall ’25 shows planned sequential improvement; spring ’26 go-in margin gains are locked with on-time deliveries, positioning CK for multi-year benefits.

• Question from Matthew Robert Boss (JPMorgan): What drove the sequential DTC improvement in the Americas, and how are Europe order books shaping up?
  Response: Americas DTC improved via stronger product, expanded mid-funnel marketing, and better customer acquisition/retention; Europe wholesale order books grew low single digits for spring ’26 after fall ’25 growth, driven by product strength.

• Question from Dana Lauren Telsey (Telsey Advisory Group): How do promotional trends differ internationally vs. the U.S., and what store upgrades are coming?
  Response: Europe’s consumer backdrop is stable; APAC remains choppy but improving with stronger execution; PVH is opening Calvin flagships (Tokyo Harajuku now, Soho year-end) and plans broad fleet renovations over the next three years.

• Question from Unidentified Analyst (Unknown): Are North American wholesale partners showing more caution, and does this affect CK women’s in-sourcing?
  Response: Q2 NA wholesale benefited from CK women’s in-sourcing and growth with key full-price partners; 2025 shipments are normalized to a more balanced 1H/2H, so 2H moderates (especially Q3); no change to in-sourcing plans.