As discussed in Part One of the series, PVH Corporation (PVH) reported its 2Q16 results on August 24, 2015. Its management seemed satisfied with its performance during the quarter.
Emanuel Chirico, chair and CEO of PVH, said, “Our strong performance year to date exceeded our expectations and demonstrated our ability to deliver against our 2016 plan, despite the challenging macroeconomic environment.”
Chirico continued, “We experienced strong momentum in our Calvin Klein and Tommy Hilfiger International businesses and have seen improvement across our North America wholesale businesses, but we continue to be pressured by weakness in traffic and consumer spending trends at our Tommy Hilfiger and Calvin Klein U.S. stores located in international tourist locations.”
Discussing weakness in the North American retail business
As outlined in Chirico’s statement, the company’s performance has been great in international markets, but its North American retail sales have been under pressure. The US retail business is experiencing soft traffic and a highly promotional environment.
Tommy Hilfiger’s retail business in North America has been the worst affected. The brand reported a same-store sales fall of 7% in 2Q16 after plunging 10% in 1Q16. To know more about Tommy Hilfiger’s performance, read the next part of this series.
Calvin Klein also saw its sales comps fall by 4% during the quarter. The company has cited weakness in traffic and consumer spending trends in its international tourist stores as key reasons for the decline.
Peers are also seeing strong international revenue but weakness in North America
Many other apparel and fashion companies have also been witnessing falls in their North American sales. Ralph Lauren (RL) recently reported an 11% fall in its North American revenue. Its international sales, however, registered a 10% rise.
VF Corporation (VFC) saw its international sales rise by 5% YoY (year-over-year), but its overall sales fell by 2.7% YoY in its most recent quarter. HanesBrands (HBI), which reported a 3.2% fall in its total sales, saw international revenue growth of 1.9% YoY in its most recent quarter.
ETF investors seeking to add exposure to PVH can consider the iShares Morningstar Mid-Cap ETF (JKG), which invests 0.52% of its portfolio in PVH.