PVH: Middle East conflict dampens expectations

US apparel group PVH Corporation reported solid results for the first quarter of the 2026/27 fiscal year on Wednesday evening. However, management lowered its sales forecast for the full year due to the foreseeable negative impact of the war in Iran.

In the first quarter, which ended on May 3, group revenue amounted to almost 2.03 billion US dollars. This represented an increase of 2.1 percent compared to the same period last year. However, adjusted for currency fluctuations, revenue decreased by 2.3 percent.

Overall, the group exceeded expectations. According to the company, this was primarily due to growth in key categories for its two main brands in its own retail channels: namely denim and underwear at Calvin Klein, and sweatshirts and outerwear at Tommy Hilfiger.

Overall, Tommy Hilfiger's revenue increased by 2.8 percent (a 2.0 percent decrease on a currency-neutral basis) to 1.08 billion US dollars. Calvin Klein achieved an increase of 1.0 percent to 895.2 million US dollars, while on a currency-neutral basis, the label's revenue fell by 2.9 percent.

Middle East conflict impacts development in EMEA region

The individual market regions performed differently in the first quarter. The growth driver was the Asia-Pacific region, with a revenue increase of 10.0 percent (up 5.8 percent on a currency-neutral basis) to 387.0 million US dollars. In the EMEA region, which includes Europe, the Middle East and Africa, the group's revenue rose by 2.0 percent to 946.1 million US dollars. However, on a currency-neutral basis, it decreased by 5.3 percent. The company attributed the unexpectedly weak performance in the region to the “ongoing effects of the Middle East conflict and its broad macroeconomic impact”. In the Americas, revenue shrank by 0.9 percent (down 1.7 percent on a currency-neutral basis) to 602.9 million US dollars. Global licensing revenue fell by 7.0 percent to 89.1 million US dollars.

The gross margin remained unchanged at 58.6 percent compared to the same period last year. According to the company, a favourable product mix; the expected repayment of illegal customs duties; lower product costs; and positive currency effects offset the impact of higher tariffs and more extensive discounts.

The bottom line was a reported net profit of 88.0 million US dollars, compared to a loss of 44.8 million US dollars in the first quarter of 2025/26. However, adjusted for special items, particularly high impairment charges and restructuring costs in the prior-year period, net income decreased by 21.2 percent to 93.4 million US dollars. This was, however, still above expectations.

Management lowers its sales forecast

CEO Stefan Larsson stressed that the group had achieved the goals of its current 'PVH+' reform plan in the first quarter. However, the impact of the Middle East conflict had “put pressure” on consumers in the EMEA region.

In light of the resulting weaker outlook for this region, management revised its sales forecast for the current fiscal year downwards. It now only expects revenue to be on par with the previous year, after previously anticipating a slight increase.

The earnings forecasts, however, remained unchanged. The group therefore continues to expect an operating margin adjusted for special items of around 8.8 percent and an adjusted profit per share in the range of 11.80 to 12.10 US dollars.

This article was translated to English using an AI tool.

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