Shares of PVH Corp (PVH 0.46%) sank on Thursday after the fashion conglomerate warned of a downturn in one of its major international segments.
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Mixed Q1 results
The parent company of Calvin Klein and Tommy Hilfiger reported a 2% year-over-year rise in revenue to $2 billion in its fiscal first quarter, which ended on May 3. However, excluding the effects of foreign currency fluctuations, PVH's sales declined by 2%.
Notably, PVH grew its direct-to-consumer revenue by 6% (and 3% on a constant-currency basis). Sales at its owned-and-operated stores and websites climbed 5% and 11%, respectively.
Conversely, the company's wholesale revenue was flat and declined 6% on a constant-currency basis.
NYSE: PVH
Key Data Points
All told, PVH's adjusted operating income fell to $131 million from $160 million in the year-ago quarter, as its operating margin decreased to 6.5% from 8.1%. Higher marketing and other brand-building costs contributed to the declines.
PVH's adjusted earnings per share, in turn, dropped 12.6% to $2.01.
A cautious outlook
Investors appeared more concerned about management's guidance. PVH warned that ongoing tensions in the Middle East would weigh on its sales. The company expects revenue to fall by 3% to 4% in the second quarter, driven by a downturn in its Europe, the Middle East, and Africa (EMEA) division.
"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," CEO Stefan Larsson said.
