Tommy Hilfiger-owner PVH Shares Fall as Tepid Europe Demand Hits 2024 Forecasts

A look from Tommy Hilfiger’s autumn/winter 2024 collection at New York Fashion Week. (AFP)
A look from Tommy Hilfiger’s autumn/winter 2024 collection at New York Fashion Week. (AFP)
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Tommy Hilfiger-owner PVH Shares Fall as Tepid Europe Demand Hits 2024 Forecasts

A look from Tommy Hilfiger’s autumn/winter 2024 collection at New York Fashion Week. (AFP)
A look from Tommy Hilfiger’s autumn/winter 2024 collection at New York Fashion Week. (AFP)

Shares of PVH Corp slumped up to 25% on Tuesday, a day after the Calvin Klein-owner forecast a steeper-than-expected drop in its annual revenue on the back of weakening demand in Europe.

The apparel maker, which also owns Tommy Hilfiger, forecast fiscal 2024 revenue to fall between 6% and 7%, steeper than the 2.3% drop estimated by analysts, according to LSEG data.

PVH plans to significantly reduce the number of online platforms it sells to in Europe in mid-2024, CEO Stefan Larsson said on a conference call on Tuesday, adding that the move would lead to a 5% reduction in its total European sales this year.

"Where the consumer and macro (backdrop) are tougher, we are willing to sacrifice short term, low-quality revenues in order to strengthen our brand position and pricing power," Larsson said.

The decline in PVH stock also dragged shares of peers VF Corp, Tapestry and Ralph Lauren, all of which were down at least 5%.

"A slowing and increasingly promotional European market is a concern and the outlook comes as a surprise," Telsey Advisory Group analyst Dana Telsey wrote in a note.

PVH forecast its annual earnings per share in the range of $10.75 to $11.00, versus analysts' estimate of $11.89.

Retailers such as PVH, Levi Strauss and Ralph Lauren have struggled with weaker wholesale business in North America due to department stores and retailers cutting back on orders owing to slow consumer demand.

PVH's wholesale revenue declined 10% in the fourth quarter, as wholesale customers across North America and Europe continued to take a cautious approach.

The company, however, beat analysts' expectations for quarterly sales and profit on the back on a strong holiday demand and better inventory planning.

PVH's forward price-to-earnings multiple, a common benchmark for valuing stocks, is at 11.35, lower than Ralph Lauren and Lululemon Athletica's P/E ratio of 16.28 and 26.27, respectively.



Hermes 2Q Sales Rise 13% on Continued Appetite for High-End Luxury

People stand with Hermes shopping bags as they wait at a traffic light in Tsim Sha Tsui, a bustling shopping hotspot, in Hong Kong, China December 5, 2023. (Reuters)
People stand with Hermes shopping bags as they wait at a traffic light in Tsim Sha Tsui, a bustling shopping hotspot, in Hong Kong, China December 5, 2023. (Reuters)
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Hermes 2Q Sales Rise 13% on Continued Appetite for High-End Luxury

People stand with Hermes shopping bags as they wait at a traffic light in Tsim Sha Tsui, a bustling shopping hotspot, in Hong Kong, China December 5, 2023. (Reuters)
People stand with Hermes shopping bags as they wait at a traffic light in Tsim Sha Tsui, a bustling shopping hotspot, in Hong Kong, China December 5, 2023. (Reuters)

Birkin-bag maker Hermes reported a 13% rise in second-quarter sales on Thursday, demonstrating the continued appetite from wealthy shoppers for its luxury handbags, even as less affluent consumers pull back.

Sales at the French luxury group grew to 3.7 billion euros ($4.02 billion), a 13% organic sales rise that strips out currency fluctuations. The figure was in line with analyst expectations, according to a Visible Alpha consensus.

Operating profit for the first half was 3.1 billion euros, compared to a forecast from consensus provider Visible Alpha for 3.2 billion.

One of the most steady performers in the luxury goods sector -- even as economic conditions worsen -- the French group's results stand out after a string of disappointing earnings updates from peers which have raised investor concern about uncertain prospects for the sector in the coming months.

Hermes' famously classic designs and tight management of production and stock have helped reinforce the label's aura of exclusivity, and CEO Axel Dumas told reporters the company had seen "no big interruption in trends".

However, he said Hermes was seeing slightly less traffic with aspirational clients, which was impacting higher volume products like fashion accessories.