PVH Corporation (PVH Quick QuotePVH - Free Report) reported better-than-expected results in the fourth quarter of fiscal 2024, wherein both earnings and revenues topped the Zacks Consensus Estimate. However, the bottom and top lines fell year over year. Results were hurt by a tough macro backdrop.

PVH reported adjusted earnings of $3.27 per share, down 12.1% from the year-ago quarter's $3.72. The bottom line beat the Zacks Consensus Estimate of earnings of $3.19 per share and the company’s guidance of $3.05-$3.20. The figure included the negative impacts of foreign currency translations of 12 cents a share.

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Let’s Delve Deeper Into PVH’s Q4 Performance

Revenues fell 5% year over year (down 2% at constant currency) to $2.372 billion but beat the consensus mark of $2.347 billion. Management had guided a revenue decline of 6-7% and 4-5% on a constant currency basis. This included a 1% drop from the sale of the Heritage Brands women’s intimates business in 2023.

The company's international businesses saw a 6% dip in revenues (down 3% on a constant currency basis).  In North America, revenues in the Tommy Hilfiger and Calvin Klein businesses on a combined basis inched up 1% year over year, as gains from a shift in timing of wholesale shipments from the previous quarter into the reported quarter were mainly compensated by a decline from the 53rd week last fiscal year.

Direct-to-consumer revenues fell 5% from the prior-year period (down 2% on a constant-currency basis). This included a 4% drop from the impact of the 53rd week last fiscal year. Revenues in the company’s owned and operated physical stores dipped 4% year over year (down 1% on a constant currency basis). The digital commerce unit of the owned and operated stores decreased 10% (down 8% on a constant-currency basis) year over year, as growth in North America was more than mitigated by the continuation of PVH’s strategic reduction of sales in Europe to boost the overall quality of sales in the region.

Wholesale revenues fell 5% from the prior-year period (down 2% on a constant-currency basis). The decline was due to a 2% decline in sales of the Heritage Brands women's intimates business. The remaining decline was attributed to the company’s ongoing strategic effort to reduce sales in Europe.

The company's gross profit of $1.4 billion dipped 6.7% year over year. The gross margin expanded 210 bps to 58.2%, thanks to the higher promotional backdrop, an adverse shift in channel mix and increased freight costs.

Selling, general and administrative expenses were almost flat year over year at $1.2 billion. The company’s adjusted earnings before interest and taxes totaled $244.4 million, down 18.9% from the prior-year quarter.

PVH’s Segmental Analysis

Revenues for the Calvin Klein segment were down 2% year over year (up 1% on a constant currency basis) to to $1 billion. The segment recorded a 3% jump at Calvin Klein North America, mainly due to the timing of wholesale shipments, and a 4% decrease (down 1% in constant currency) at Calvin Klein International. The Zacks Consensus Estimate is pegged at $1 billion.

Revenues for the Tommy Hilfiger brand dropped 5% year over year (down 3% in constant currency) to $1.3 billion. Revenues were down 7% year over year (down 4% in constant currency) in Tommy Hilfiger International. Revenues at Tommy Hilfiger North America were flat year over year. The Zacks Consensus Estimate is pegged at $1.3 billion.

The Heritage Brands segment's revenues plunged 41% year over year. This included a 28% year-over-year decline in the sale of the Heritage Brands women's intimates business.

A Closer Look at PVH's Financial Performance

PVH ended the fiscal fourth quarter with cash and cash equivalents of $748 million, long-term debt of $1.6 billion and stockholders' equity of $5.1 billion.

In alignment with the PVH+ Plan's objective to return excess cash to shareholders, the company executed the repurchase of 2.4 million shares of its common stock, amounting to $247 million in the reported quarter. It made a total repurchase of 4.7 million shares for $500 million in fiscal 2024. 

Concurrently, PVH has announced that it will enter into ASR agreements with one or more dealers this April to buy back $500 million of shares of the common stock this year. The agreements will be included under the company’s present $5 billion stock repurchase authorization approved by its board, of which $1.8 billion remained available for share repurchases as of Feb. 2, 2025.

What to Expect From PVH in Q1 & FY25

For the first quarter, revenues are projected to be flat to down 2% (flat to down 1% in constant currency) from the year-ago quarter.

Earnings per share, on a non-GAAP basis, are expected to be in the range of $2.10-$2.25 compared with $2.45 in the year-ago quarter. This view includes an unfavorable currency impact of five cents per share. Interest expenses are anticipated to increase to $20 million compared with $18 million in the first quarter of 2024, while the effective tax rate is projected to be 18%.

For fiscal 2025, the company anticipates revenues between flat to up slightly year over year, which is consistent on a constant-currency basis. PVH expects the adjusted operating margin to be nearly flat compared with 10.1% in fiscal 2023. On a GAAP basis, the operating margin is likely to be about 9.2%, down from 10.1% projected earlier. 
 
Management now envisions non-GAAP EPS to be in the range of $12.40-$12.75 compared with $11.74 delivered in fiscal 2024. The EPS guidance for fiscal 2024 includes a negative impact of around 20 cents per share from currency movements. Interest expenses are likely to increase to roughly $85 million compared with $67 million last year, and the effective tax rate is forecast to be approximately 22%.

Shares of this Zacks Rank #4 (Sell) company have lost 38.3% in the past three months compared with the industry's 19.7% decline.

Key Picks

We have highlighted three better-ranked stocks, namely, G-III Apparel Group (GIII Quick QuoteGIII - Free Report) , Gildan Activewear (GIL Quick QuoteGIL - Free Report) and Royal Caribbean (RCL Quick QuoteRCL - Free Report) .

G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. 

GIII Apparel has a trailing four-quarter earnings surprise of 117.8%, on average. The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales indicates a drop of 1.2% from the year-ago figure.

Gildan Activewear, a manufacturer of premium quality branded basic activewear, carries a Zacks Rank #2 (Buy) at present. GIL has a trailing four-quarter earnings surprise of 5.3%, on average. 

The consensus estimate for Gildan Activewear’s current financial-year EPS indicates growth of 16% from the year-ago figure.

Royal Caribbean carries a Zacks Rank of 2 at present. RCL has a trailing four-quarter earnings surprise of 15.7%, on average.

The Zacks Consensus Estimate for RCL’s 2025 sales and EPS indicates an increase of 9% and 26.7%, respectively, from the year-ago levels.