Tommy Hilfiger-owner PVH shares fall as tepid Europe demand hits 2024 forecasts
Reuters
Published Apr 02, 2024 07:27AM ET
Updated Apr 02, 2024 10:31AM ET
By Savyata Mishra
(Reuters) -Shares of PVH Corp (NYSE:PVH) 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 (NYSE:VFC), Tapestry (NYSE:TPR) and Ralph Lauren (NYSE:RL), 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 (NYSE:LEVI) 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 (NASDAQ:LULU)'s P/E ratio of 16.28 and 26.27, respectively.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.