Proactive Investors - PVH Corp. (NYSE:PVH), the owner of Tommy Hilfiger and Calvin Klein, downgraded its sales guidance for the year on Wednesday, causing its share price to tumble on after-hour sales.
The brand house said in a statement that it forecasts group revenue to increase by 1% this year, compared to prior sales growth estimations of 3% to 4% for 2023, or 2-3% on a constant currency basis.
The downgrade in its sales outlook comes as the group expects its sales to fall by up to 4% in the fourth quarter of 2023, compared to the same period a year ago, following the sale of Heritage Brands.
It said the revised outlook includes the impact from the recently concluded sale of the Heritage Brands intimate apparel business.
The sale of the lingerie business closed earlier this month, generating US$150 million of net proceeds that the group said it intends to use to repurchase shares this year.
PVH plans to increase its share repurchase programme to US$550 million, up from US$400 million, by the end of the year.
Stefan Larsson, Chief Executive Officer at PVH Corp. said, “based on our solid year-to-date performance, we are raising our EPS guidance for the full year”.
“We delivered another strong quarter, with high single-digit revenue growth for our direct-to-consumer businesses across Calvin Klein and TOMMY HILFIGER, with growth in all regions, and we exceeded our EPS guidance," he said.
“Through our disciplined PVH+ Plan execution, we are gaining increasing traction in our product category offense and hero products, our cut-through marketing campaigns, and building out our demand-driven supply chain.”
The fashion house has raised its standardised earnings per share (EPS) for the year to US$9.75, up from prior guidance of US$9.60 per share, with EPS for the third quarter alone beating guidance at US$2.66.
During the third quarter, the group boosted sales by 4%, or 1% at constant currency, year over year to US$2.36 billion, which was just “in line with guidance” that estimated a mid single-digit increase.
Earnings rose to US$230 million, benefiting from a US$9 million foreign currency boost, with performance much improved compared to the US$214 million loss it generated a year ago.
Quarterly revenue was driven by increases in sales at Calvin Klein, where international sales grew 10%, and consistent growth in the Tommy Hilfiger brand, where its North American business sales expanded by 6%.
Zac Coughlin, Chief Financial Officer at PVH Corp, said: “We are relentlessly focused on delivering strong profitability, significant cash flow and attractive returns for our shareholders, while pursuing sustained, long-term growth in a choppy macroenvironment.”
PVH Corp’s share price was down 4.37% within hours after the New York Stock Exchange closed yesterday, dropping to US$87.50, compared to US$91.50 at closing.