PVH Corp. announced that it is working with local authorities to ensure the health, wellness and safety of its associates and business partners in connection with the coronavirus outbreak in China.
Emanuel Chirico, chairman and chief executive officer, commented, “We are closely monitoring the situation in China. Our priority is the well-being of our associates and business partners, their families and local communities, and our hearts are with those that have been impacted by the coronavirus. I want to sincerely thank our dedicated associates in Asia who are going above and beyond, with many working remotely from home, to drive our business forward.”
Currently, the majority of the total Calvin Klein and Tommy Hilfiger stores (company-operated and franchise) in China are temporarily closed due to coronavirus concerns, including as a result of related government-imposed restrictions. Further, the stores that are open are operating for limited hours and are experiencing significantly lower than planned traffic and sales trends.
Greater China is expected to account for approximately 7 percent of the company’s 2019 revenue and the Asia Pacific region is expected to account for approximately 16 percent of the company’s 2019 revenue. Additionally, approximately 20 percent of the company’s global sourcing is derived from China, including approximately 10 percent of sourcing inbound to the U.S.
The company also announced an update to its earnings guidance:
GAAP Basis
The company currently expects its earnings per share on a GAAP basis for the fourth quarter and full-year 2019 will be lower than its guidance previously announced on January 9, 2020, due to an actuarial loss expected to be recognized on its retirement plans in the fourth quarter of 2019, primarily resulting from a decrease in the discount rate in the latter part of January 2020. Earnings-per-share on a non-GAAP basis for these periods discussed below, exclude this loss and the resulting estimated tax effect, as well as the other amounts for the applicable period described below under the heading “Non-GAAP Exclusions.” The company’s guidance for earnings per share on a GAAP basis previously announced on January 9, 2020, is approximately $(0.20) for the fourth quarter 2019 and approximately $6.32 for the full-year 2019.
Non-GAAP Basis
Although the company’s earnings guidance announced on January 9, 2020 did not contemplate the coronavirus outbreak, the company is reaffirming its guidance with respect to earnings per share on a non-GAAP basis, which is expected to be at least $1.79 for the fourth quarter 2019 and at least $9.45 for the full-year 2019, as previously announced on January 9, 2020. The company believes that it would have exceeded its non-GAAP earnings guidance had the coronavirus outbreak not occurred during the last two weeks of its fiscal year.
Chirico continued, “While the coronavirus will impact our businesses in the near-term, our long term growth opportunities across the Asia Pacific region are significant. Given our diversified, global business model and the strength of our iconic brands, we are well-positioned to manage this period of uncertainty. We will provide an operational and financial update on our upcoming fourth quarter and full-year 2019 earnings call.”
PVH’s portfolio includes the Calvin Klein, Tommy Hilfiger, Van Heusen, Izod, Arrow, Speedo, Warner’s, Olga And Geoffrey Beene brands, as well as the digital-centric True&Co. intimates brand. On January 9, PVH announced that it has entered into a definitive agreement to sell its Speedo North America business to Pentland Group, the parent company of Speedo International Limited, for $170 million in cash.
Photo courtesy PVH corporate
