The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
NEW YORK, United States — PVH Corp on Friday allayed investor concerns over its Calvin Klein business and said early holiday sales were above its expectations, sending its shares up as much as 5 percent.
Shares fell 8 percent in extended trade on Thursday after a weakness in the high-end brand in the third quarter led the company to report its first revenue miss in at least two years.
"We went too far, too fast on both fashion and price," chief executive Emanuel Chirico said on a post-earnings call on Friday.
"We're working on fixing this fashion miss, and we believe that our CK Jeans offering will be much more commercial and fashion-right beginning in 2019," Chirico said.
ADVERTISEMENT
The company will also reevaluate spending on Calvin Klein's 205W39NYC line to improve profit margins in 2019.
Management appears to not only have a better understanding of the driver behind Calvin Klein's weakness but has executed clear fixes to self-inflicted missteps of the past, J.P. Morgan analyst Matthew Boss said in a note.
Chirico said the company was seeing strong sales at key brands Calvin Klein and Tommy Hilfiger in North America since the start of the holiday season.
"Given commentary that includes accelerating Q4-to-date results and a plan in place to improve Calvin Klein operating margins in FY19, we are taking this opportunity to get incrementally more constructive on the stock," said C.L. King & Associates' analyst Steven Marotta, who upgraded his rating to "strong buy" from "buy."
PVH forecast fourth-quarter adjusted earnings of $1.58 to $1.60 per share, in line with analysts' expectation, according to IBES data from Refinitiv.
The company also flagged sluggish consumer traffic in China in the third quarter, compared with the first two quarters, due to a softening economy and an escalating trade dispute between Washington and Beijing.
"We're still moving but the traffic levels in the store are not what they were in Spring season," Chirico said.
PVH said it expected $75 million increase in cost of goods if the proposal to raise tariffs to 25 percent is implemented.
ADVERTISEMENT
"It's not insignificant," Chirico said, adding that if the raised tariffs are implemented on January 1 there will be "no time to react."
By Soundarya J and Uday Sampath; editor: Sriraj Kalluvila
Fast-growing start-ups like Hettas, Saysh and Moolah Kicks created sneakers designed specifically for active women. The sportswear giants are watching closely.
The companies agreed to cap credit-card swipe fees in one of the most significant antitrust settlements ever, following a legal fight that spanned almost two decades.
In an era of austerity on Wall Street, apparel businesses are more likely to be valued on their profits rather than sales, which usually means lower payouts for founders and investors. That is, if they can find a buyer in the first place.
The fast fashion giant occupies a shrinking middle ground between Shein and Zara. New CEO Daniel Ervér can lay out the path forward when the company reports quarterly results this week.