Fashion conglomerate PVH (NYSE: PVH) beat Wall Street’s revenue expectations in Q1 CY2025 as sales only rose 1.6% year on year to $1.98 billion. Its non-GAAP EPS of $2.30 per share was 2.2% above analysts’ consensus estimates.

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StockStory’s Take

PVH’s first quarter results reflected the company’s efforts to drive growth at Calvin Klein and Tommy Hilfiger through product innovation and targeted marketing despite an increasingly challenging retail environment. CEO Stefan Larsson highlighted the successful launch of Calvin Klein’s Icon Cotton Stretch Underwear for Men, which drove a 25% increase in sales for that franchise, and noted a 14% gain in Calvin Klein’s fashion denim assortment due to expanded fits and designs. Direct-to-consumer e-commerce saw growth, while store traffic remained pressured. Larsson acknowledged that weaker consumer sentiment led to higher promotional activity, particularly in North America and China, which weighed on margins.

Looking forward, PVH’s management signaled a cautious outlook amid ongoing macroeconomic headwinds, including new tariffs and persistent softness in consumer demand. Larsson stated, “We are not yet in a place to fully compensate for the effects of these strong macro forces,” while CFO Zac Coughlin emphasized that the company’s updated guidance accounts for a more promotional environment and the impact of tariffs, especially in the U.S. Management aims to mitigate these challenges by expanding key product launches, increasing marketing investment, and executing cost-saving initiatives. The addition of new leadership at Calvin Klein and the scaling of PVH’s operational improvements are intended to position the company for margin recovery in the second half of the year and into 2026.

Key Insights from Management’s Remarks

Management attributed the quarter’s revenue growth to product innovation and expanded wholesale activities, but highlighted that consumer softness and increased promotion led to margin compression and a downward revision of full-year profit guidance.

• Product innovation drove select growth: The launch of Calvin Klein’s Icon Cotton Stretch Underwear franchise, supported by a high-profile marketing campaign, resulted in 25% higher combined sales for that category. Fashion denim also saw a 14% lift due to updated fits and designs, showing where targeted innovation can still deliver growth.

• Wholesale outperformed direct retail: PVH benefited from earlier wholesale shipments in The Americas, as well as the relaunch and in-housing of Calvin Klein women’s sportswear and jeans. However, direct-to-consumer revenue—especially in brick-and-mortar stores—declined amid lower traffic, only partially offset by e-commerce gains.

• Europe stabilized, Asia lagged: Europe saw mid-single-digit revenue growth in both wholesale and direct-to-consumer, with improved conversion during key shopping periods. In contrast, Asia Pacific, particularly China, faced continued weakness in consumer sentiment, contributing to a double-digit sales decline in the region.

• Promotional activity pressured margins: Management cited a more promotional retail environment globally—especially in the U.S. and China—as a key factor behind the decline in gross margin. This trend is expected to persist throughout the year, as PVH absorbs both macroeconomic pressure and new tariff impacts.

• Operational challenges at Calvin Klein: The transition to a centralized global product creation model for Calvin Klein led to operational hurdles, constraining product development timelines and sourcing. Management addressed these by bringing in new leadership and expects sequential improvements by next spring, but acknowledged that these issues contributed to first-half margin weakness.

Drivers of Future Performance

PVH expects macro headwinds, ongoing promotional intensity, and cost-saving initiatives to determine its revenue and margin trajectory through the rest of the year.

• Tariff and macro pressure: Management anticipates that recently enacted U.S. tariffs will reduce earnings by about $65 million this year, with most headwinds in the second half. The company is leveraging its global sourcing network and considering selective price adjustments, but expects only partial mitigation in the near term.

• Cost savings and operational fixes: PVH aims to realize 200 basis points of operating margin benefit from cost-saving actions—such as technology consolidation and logistics optimization—by year-end. Management believes these efforts, combined with the resolution of Calvin Klein’s product development challenges, will support margin improvement exiting the year.

• Marketing and product launches: The company is increasing marketing investments for both Calvin Klein and Tommy Hilfiger, focusing on high-impact campaigns and new product introductions in key categories like underwear, denim, and outerwear. Management expects these initiatives to drive consumer engagement and offset some of the pressure from promotional environments.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will monitor (1) the pace of inventory normalization as PVH adjusts its supply to match demand, (2) tangible improvements in Calvin Klein’s product development and on-time deliveries following operational changes, and (3) the effectiveness of increased marketing spend in generating higher traffic and conversion rates. Additional focus will be on how successfully PVH manages the ongoing promotional intensity and tariff headwinds in its core markets.

PVH currently trades at a forward P/E ratio of 6.1×. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).

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