(Filed Under Financial and General Interest News). PVH reported third quarter net income of $69.5 million on sales of $2.014 billion, compared to net income of $208.9 million on sales of $2.434 billion in the same period last year.
Interestingly, in the press release announcing the results none of following words were mentioned: intimates, underwear, Warner’s, Olga or True & Co. (the digital platform that PVH acquired some time ago). Much the same was true for the conference call with analysts, where, out of all, only the word “underwear” was mentioned twice.
In one instance president Stefan Larsson explained, “we’re seeing Calvin Klein continue to register strong 86% global brand awareness with increasing consumer consideration to purchase across all regions. Our increased focus on creating product consumers desire was captured through Calvin Klein’s underwear collaboration with Kith, featuring Gigi Hadid. We sold out 75% of the collection in just four days, highlighting incredible results with younger consumers both from an engagement and sales perspective, which we will continue to build upon as we head into 2021.”
The second reference came as Larsson described the “very strong partnership” PVH has with Tmall on underwear, as he discussed the overall challenges of reaching consumers, with all of its merchandise, during the pandemic.
PVH sells a wide variety of apparel, under a variety of brand names.
Speaking about the company’s results in general, chairman and CEO Emanuel Chirico explained, “our third quarter results exceeded our expectations across all markets and channels, with a very strong recovery in Europe and China, considering the ongoing COVID-19 pandemic. It is clear where we are winning with the consumer – in our international businesses, across our digital channels, and with casual assortments – and we increasingly are shifting our business towards these channels and categories.”
“We have outperformed our holiday season expectations in the fourth quarter to date, including Singles’ Day in Asia and our Black Friday promotions in North America and Europe, with particular strength across the digital channels. Although we are dealing with virus resurgences, including temporary store closures in parts of Europe, as well as brick and mortar traffic declines in North America, we are pivoting our businesses to capture where and how the consumer is shopping during this critically important holiday period. We believe that the accelerated investments we are making – from advancing our digital and omni-channel agendas and introducing new ways to engage our consumers – will benefit our businesses now and over the long-term.”
The company noted “overall revenue for the third quarter decreased 18% compared to the prior year period, and for the fourth quarter to date period is running down approximately 20%.”
“Total direct to consumer revenue for the third quarter declined 11% compared to the prior year period, which included a 70% increase in digital commerce. All regions and brand businesses experienced strong digital growth. The lack of international tourists coming to the U.S. continues to challenge the company’s North America brick and mortar retail businesses, as stores located in international tourist locations represent a significant portion of those businesses.”
PVH added that as of the start of December, “the company’s stores in Europe and North America continue to face significant pressure as a result of the recent resurgence of COVID-19 cases there, with approximately 40% of the company’s stores in Europe currently closed or closed earlier in the quarter. As a result, direct to consumer sales trends are running down approximately 25% compared to the prior year period, despite continued strong growth in digital commerce globally and continued overall positive trends in China.”
Speaking about its “global wholesale partners” PVH explained “wholesale revenue for the third quarter declined 22% compared to the prior year period, a sequential improvement compared to the percentage revenue decreases in the prior two quarters. The revenue decline was primarily driven by the company’s North America wholesale business due, in part, to recent bankruptcies of several customers. The company’s sales to the digital businesses of its traditional and pure play wholesale customers continued to exhibit double digit growth.” — NM
The complete PVH conference call transcript can be found here: https://seekingalpha.com/article/4392820-pvh-corp-pvh-ceo-manny-chirico-on-q3-2020-results-earnings-call-transcript
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