Shares of PVH Corp. (NYSE:PVH) plunged nearly 19% on Thursday morning after the apparel maker cut its full-year earnings forecast, citing the impact of tariffs and continued margin pressure, despite topping revenue estimates in the first quarter.
The company, which owns Calvin Klein and Tommy Hilfiger, reported adjusted earnings of $2.30 per share in the quarter ended May 5, above analysts' consensus estimate of $2.25.
Revenue rose 1.6% year-over-year to $1.98 billion, surpassing guidance and Wall Street expectations, thanks to strong demand for Tommy Hilfiger and a viral Calvin Klein campaign.
However, PVH took a $480 million non-cash impairment charge tied to its China business, and its gross margin fell 285 basis points year-over-year to 58.6%, weighed down by increased promotions, a weaker channel mix, and costs associated with a license transition.
The company lowered its full-year non-GAAP earnings guidance to a range of $10.75 to $11 per share from a prior range of $12.40 to $12.75, citing an estimated $1.05 impact from unmitigated tariffs. Analysts had expected $12.41.
Operating margin is now forecast to decline by 150 basis points for the year, with the company pointing to Calvin Klein-related delays and ongoing promotional activity.
Jefferies analysts said the results were "mixed," noting that while the revenue outlook remained intact, the reduced margin forecast and lack of clarity on tariff mitigation efforts were near-term concerns.
The brokerage also flagged that second-quarter guidance implies continued pressure on operating margin before a potential recovery in the second half, supported by cost savings.
In the quarter, segment revenue exceeded expectations across the board, with Tommy Hilfiger generating $1.05 billion versus $962 million expected, and Calvin Klein bringing in $886 million versus estimates of $826 million. Still, EBIT results were uneven, with Asia-Pacific EBIT down 22.5% year-over-year and Americas EBIT falling 9%.
Despite reaffirming its full-year revenue outlook, investors appeared rattled by the softer earnings guidance and persistent macroeconomic uncertainty, sending the stock to its lowest level in nearly a year.