PVH Corp posted dismal results for first-quarter fiscal 2020, wherein both top and bottom lines declined year over year.
Results were affected by temporary store closures for about six weeks since the onset of the Coronavirus. Going ahead, management predicts the ongoing pandemic to weigh on the second quarter and fiscal 2020 results.
It also expects second-quarter revenues to witness a more pronounced impact of the pandemic on a sequential basis.
As a result, the company refrained from providing fiscal 2020 guidance. Although PVH Corp. has reopened a few stores, revenues for those stores are currently down roughly 25% year over year on a global basis.
It expects more than 85% of stores to reopen globally by mid-June. Nevertheless, the digital business continued to witness strong momentum.
In the fiscal first quarter, revenues declined 43% to $1,344 million and missed the Zacks Consensus Estimate of $1,354 million.
On a constant-currency (cc) basis, revenues plunged 42%. Sluggish performance in all its segments hurt the top line.
Also, revenues at its retail stores declined roughly 50-65% year over year due to temporary store closures and soft traffic before that. Moreover, wholesale revenues fell 41% as store closures led to a significant reduction in shipments.
Meanwhile, store closures led the company’s digital sales to rise 47% year over year with solid growth in all regions. Notably, sturdy demand for Tommy Hilfiger and Calvin Klein brands across all regions led to a double-digit to triple-digit rise in digital sales.
The company’s total gross profit decreased nearly 49% to $665.9 million, while gross margin contracted 550 basis points to 49.5%.
However, adjusted SG&A expenses fell 11.4% to $917.3 million in the quarter under review. Adjusted loss before interest and taxes was $247 million against earnings before interest and taxes of $267 million in the last year quarter.
The downside can be attributable to a dismal top-line performance stemming from COVID-19 impacts, and adverse impacts of accounts receivable write-offs and inventory reserves to the tune of $97 million.
“PVH Corp. reports financial results under three segments — Calvin Klein, Tommy Hilfiger and Heritage Brands.
Revenues at Calvin Klein plunged 46% (down 45% at cc) year over year with Calvin Klein North America and International declining 54% and 40%, respectively.”
Revenues at the Tommy Hilfiger segment declined 39% (down 37% at cc) year over year in the reported quarter. Further, Tommy Hilfiger North America and International fell 51% and 32%, respectively.
The Heritage Brands segment’s revenues fell 47% year over year during the quarter under review.
