PVH Corp. Sees FY Outlook Impacted by Middle East Conflict

PVH Corp. reported first-quarter results that topped expectations, with revenues expanding 3 percent at Tommy Hilfiger and 1 percent at Calvin Klein. The company slightly lowered its sales outlook for the year due to the challenging macro environment on its EMEA business, partly due to the Middle East conflict.

Earnings guidance for the year was maintained as impacts from the benefit of tariff refunds are expected to offset the estimated negative prolonged effects from the conflict in the Middle East and its broader macroeconomic pressures.

Stefan Larsson, chief executive officer, commented, “We delivered on our plan and commitments in the first quarter, reflecting our disciplined PVH+ Plan execution and the consumer momentum we are building with our two iconic global brands, Calvin Klein and Tommy Hilfiger. Importantly, we grew our direct-to-consumer business, with growth in stores and online across both brands. We also grew multiple full hero categories in DTC –– underwear and denim for Calvin and sweaters and outerwear for Tommy –– as we scale the impact of our stronger product, cut-through campaigns and improved consumer experience. Season by season, we are delivering our long-term growth strategy and expanding our commercial impact.”

Larsson continued, “As we look forward, we are balancing two opposing forces: on one side, the increasing brand and business momentum we are driving in both Calvin and Tommy, and on the other, the prolonged effects of the Middle East conflict, which is putting pressure on the consumer in EMEA. We are adjusting to the moment, while keeping our long-term approach to fueling our brand and business momentum –– including growing our APAC and Americas businesses overall, fueling new consumer acquisition and e-commerce strength in all regions, and continuing to invest in our effective marketing –– on our journey to build Calvin Klein and Tommy Hilfiger into their full potential.”

Melissa Stone, interim chief financial officer, said, “For the first quarter, we delivered our overall plan and exceeded our EPS guidance, reflecting disciplined execution across the business in a highly dynamic operating environment. For the full year, while we continue to expect growth in our Americas and APAC businesses, our EMEA performance is expected to be negatively impacted by the prolonged effects of the Middle East conflict, resulting in our now lowered full year revenue outlook. We are maintaining our overall operating margin guidance, as our earnings outlook now includes the benefit of tariff refunds, enabling us to absorb the prolonged effects of the Middle East conflict while continuing our planned investments. We continue to strengthen our data- and demand-driven operating model, improve inventory productivity, and balance a disciplined approach to managing expenses with continued high-value brand-accretive investments to support the long-term growth of Calvin Klein and Tommy Hilfiger.”

Key Highlights

• First quarter:
  • Revenue: Increased 2 percent to $2.025 billion compared to the prior year period and exceeded guidance of a slight increase. Decreased 2 percent on a constant currency basis, in line with guidance of a low single-digit decrease.
  • Operating margin:
    • GAAP basis: 6.1 percent, includes items that are described under the heading “Non-GAAP Exclusions,” which have been excluded from the company’s results on a non-GAAP basis.
    • Non-GAAP basis: 6.5 percent, in line with guidance of 6.0 percent to 6.5 percent.
  • EPS:
    • GAAP basis: $1.90, includes items that are described under the heading “Non-GAAP Exclusions,” which have been excluded from the company’s results on a non-GAAP basis.
    • Non-GAAP basis: $2.01 exceeded guidance of $1.65 to $1.80.
  • Inventory: Decreased 5 percent to $1.510 billion compared to the prior year.
• Full year outlook:
  • Revenue: Projected to be approximately flat compared to a slight increase previously. Projected to decrease slightly on a constant currency basis compared to flat to a slight increase previously.
  • Operating margin: Reaffirms outlook of approximately 8.8 percent on a non-GAAP basis.
  • EPS: Reaffirms outlook of a range of $11.80 to $12.10 on a non-GAAP basis.

First Quarter Review:

• Revenue of $2.025 billion increased 2 percent compared to $1.984 billion in the prior year period (decreased 2 percent on a constant currency basis).Revenue performance for the company’s reportable segments in the first quarter compared to the prior year period was as follows:
  • EMEA revenue increased 2 percent compared to the prior year period (decreased 5 percent on a constant currency basis). The decrease in revenue on a constant currency basis was driven by declines in both the direct-to-consumer and wholesale businesses, including softer consumer demand due to the prolonged effects from the conflict in the Middle East and its broader macroeconomic effects.
  • Americas revenue decreased 1 percent compared to the prior year period (decreased 2 percent on a constant currency basis), as growth in the direct-to-consumer business was more than offset by a decrease in the wholesale business. The decrease in wholesale revenue included (i) a decrease in the first quarter related to the overall impact of a shift in the timing of wholesale shipments from the first half to the second half of 2026 as compared to the prior year period partially offset by (ii) an increase driven by the transition in-house of previously licensed women’s product categories.
  • APAC revenue increased 10 percent compared to the prior year period (increased 6 percent on a constant currency basis). The increase in revenue on a constant currency basis includes an approximately 4 percent favorable impact from the timing of Lunar New Year, which occurred in the first quarter of 2026 but did not occur in the first quarter of 2025. The increase in revenue on a constant currency basis reflected growth in the direct-to-consumer business partially offset by a decrease in the wholesale business.
  • Licensing revenue decreased 7 percent compared to the prior year period, primarily due to license transitions in North America.

Revenue performance for the company’s global brand businesses in the first quarter compared to the prior year period was as follows:

• Tommy Hilfiger revenue increased 3 percent compared to the prior year period (decreased 2 percent on a constant currency basis).
• Calvin Klein revenue increased 1 percent compared to the prior year period (decreased 3 percent on a constant currency basis).

Revenue performance for the company’s directly operated channels in the first quarter compared to the prior year period was as follows:

• Direct-to-consumer revenue increased 6 percent compared to the prior year period (increased 3 percent on a constant currency basis).
  • Owned and operated store revenue increased 5 percent compared to the prior year period (increased 2 percent on a constant currency basis). On a constant currency basis, revenue growth in Americas and APAC was partially offset by a decline in EMEA.
  • Owned and operated digital commerce revenue increased 11 percent compared to the prior year period (increased 6 percent on a constant currency basis). On a constant currency basis, revenue increased in all regions.
• Wholesale revenue was flat compared to the prior year period (decreased 6 percent on a constant currency basis). On a constant currency basis, revenue declined in all regions.

• Gross margin was 58.6 percent compared to 58.6 percent in the prior year period. Gross margin in 2026 reflects the impacts of (i) increased tariffs on goods coming into the U.S., (ii) an increased promotional environment and (iii) the gross margin differential due to the transition of previously licensed women’s product categories to an in-house wholesale business. These decreases were offset by (i) tariff mitigation actions, (ii) a favorable shift in mix and (iii) lower product costs, including a positive impact of foreign exchange.
• Inventory decreased 5 percent compared to the prior year period.
• Earnings (loss) before interest and taxes (“EBIT”) on a GAAP basis was $124 million, inclusive of a $12 million positive impact attributable to foreign currency translation, compared to $(332) million in the prior year period. Included in the first quarter of 2025 were noncash goodwill and other intangible asset impairment charges of $480 million, which were primarily due to a significant increase in discount rates.EBIT on a non-GAAP basis was $131 million, inclusive of the $12 million positive impact attributable to foreign currency translation, compared to $160 million in the prior year period. The decrease includes the impact of a planned increase in marketing and other brand-building investments compared to the prior year period. The company continues to take a disciplined approach to managing expenses, driving cost efficiencies while making these targeted investments to drive its strategic initiatives.
• Operating margin on a GAAP basis was 6.1 percent compared to (16.7) percent in the prior year period. Operating margin on a non-GAAP basis was 6.5 percent compared to 8.1 percent in the prior year period.
• Earnings (loss) per share (“EPS”)
  • GAAP basis: $1.90 compared to $(0.88) in the prior year period.
  • Non-GAAP basis: $2.01 compared to $2.30 in the prior year period.

EPS on both a GAAP and a non-GAAP basis for the first quarter of 2026 includes the positive impact of $0.21 per share related to foreign currency translation.

• Net interest expense decreased to $16 million from $17 million in the prior year period.
• Effective tax rate was 18.9 percent on a GAAP basis compared to 87.2 percent in the prior year period. The effective tax rate was 19.1 percent on a non-GAAP basis compared to 17.1 percent in the prior year period.The effective tax rate on a GAAP basis for the first quarter of 2025 included the impact of the $480 million pre-tax noncash goodwill and other intangible asset impairment charges that were recorded in the first quarter of 2025, which were non-deductible for tax purposes and factored into the company’s annualized effective tax rate. The effective tax rate on a non-GAAP basis for the first quarter of 2025 excluded this impact.

Stock Repurchase Program
The company did not make any common stock repurchases under the stock repurchase program during the first quarter of 2026. The company currently expects to repurchase at least $300 million of shares of its common stock for the full year 2026.

2026 Outlook
The company is updating its full-year 2026 outlook. The company’s operating margin outlook is unchanged at approximately 8.8 percent, but now includes offsetting impacts from the benefit of tariff refunds and the estimated negative prolonged effects from the conflict in the Middle East and its broader macroeconomic pressures. The company is also updating its revenue outlook to reflect the impact of the challenging macro environment on its EMEA business. The company continues to expect growth in its Americas and APAC businesses.

The company’s tariff outlook continues to assume a negative impact related to a full year blended rate of approximately 15 percent tariffs on goods coming into the U.S., including an approximately $195 million gross impact to full year 2026 EBIT, or approximately $3.30 per share, and a partially offsetting impact of planned mitigation actions, which is unchanged. The company’s outlook has been updated to reflect approximately $100 million of refunds related to IEEPA tariffs previously paid, which is currently expected to be recognized in the second quarter.

Full Year 2026 Guidance

• Revenue:Projected to be approximately flat on a reported basis compared to a slight increase previously. Projected to decrease slightly on a constant currency basis compared to flat to a slight increase previously.
• Operating margin:Reaffirming outlook of approximately 8.8 percent on a non-GAAP basis, flat compared to 8.8 percent on a non-GAAP basis in 2025. Operating margin on a GAAP basis was 2.6 percent in 2025.The full year operating margin projection includes an estimated net negative impact related to the tariffs on goods coming into the U.S., including a gross impact of approximately 215 basis points and a partially offsetting impact of planned mitigation actions; and an estimated positive impact of approximately 100 basis points related to tariff refunds.
• EPS: Reaffirms outlook in a range of $11.80 to $12.10 on a non-GAAP basis compared to $0.52 on a GAAP basis and $11.40 on a non-GAAP basis in 2025.The full year 2026 EPS projection includes:
  • an estimated net negative impact related to the tariffs on goods coming into the U.S., including a gross impact of approximately $3.30 per share and a partially offsetting impact of planned mitigation actions;
  • an estimated positive impact of approximately $1.70 per share related to tariff refunds; and
  • an estimated positive impact of approximately $0.40 per share related to foreign currency translation.
• Net interest expense is projected to be approximately $75 million compared to $79 million in 2025.
• Effective tax rate is projected to be in a range of 22 percent to 23 percent.

Second Quarter 2026 Guidance

• Revenue: Projected to decrease 3 percent to 4 percent compared to the second quarter of 2025 (decrease 4 percent to 5 percent on a constant currency basis).
• Operating margin:Projected to be approximately 9.5 percent on a non-GAAP basis, compared to 8.2 percent on a non-GAAP basis in the second quarter of 2025. Operating margin on a GAAP basis was 6.1 percent in the second quarter of 2025.The second quarter operating margin projection includes an estimated positive impact of approximately 470 basis points related to tariff refunds.
• EPS:Projected to be in a range of $3.00 to $3.10 on a non-GAAP basis compared to $4.63 on a GAAP basis and $2.52 on a non-GAAP basis in the second quarter of 2025.The second quarter 2026 EPS projection includes an estimated positive impact of approximately $0.05 per share related to foreign currency translation.
• Net interest expense is projected to decrease to approximately $18 million compared to $22 million in the second quarter of 2025.
• Effective tax rate is projected to be approximately 22 percent.

Image courtesy Tommy Hilfiger