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Shares of PVH (NYSE: PVH), the parent of apparel brands like Calvin Klein and Tommy Hilfiger, posted disappointing results in its fourth-quarter earnings report.

As a result, the stock closed down 22.2%.

Image source: Getty Images.

PVH delivers a solid quarter…

PVH actually beat estimates in the Q4 report but came up short on guidance as it expects revenue to fall in 2024.

In Q4, revenue was flat or down 1% to $2.49 billion, but that beat expectations at $2.42 billion. The company also benefited from an extra week in the calendar.

Wholesale revenue fell 10%, and direct-to-consumer revenue rose 9% in line with its PVH+ plan. Inventory also declined 21% as it recovers from previous supply chain challenges, and gross margin surged, as a result, from 55.9% to 60.3%.

On the bottom line, adjusted earnings per share (EPS) jumped from $2.38 to $3.72.

CEO Stefan Larsson said,

Looking ahead to 2024, we will continue to build momentum with our PVH+ Plan, driving brand desirability for both Calvin and Tommy in product, consumer engagement and marketplace execution, powered by our demand-driven underlying operating engine.

The company also announced a $2 billion share-buyback authorization.

…But guidance misses expectations

While the Q4 results showed the company making progress, PVH’s guidance missed the mark.

For the full year, the company expects revenue to decline 6% to 7%, though 3% of that decline was related to the sales of the Heritage Brands intimates business and the loss of the 53rd week in the fiscal calendar. Management also said revenue would be 5% lower as it stops selling on certain third-party digital platforms, prioritizing top wholesale partners. Revenue guidance of $8.57 billion to $8.66 billion was well below the consensus at $9.06 billion.

It also forecast EPS of $10.75 to $11, which was slightly better than the $10.68 it reported in 2023 but significantly worse than the consensus at $12.08.

While PVH stock is cheap at a price-to-earnings ratio of just 10, the guidance shows the PVH+ plan is going to take longer than expected to deliver results.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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