PVH Corp. posted disappointing first-quarter financial results as its stores gradually open back up amid the coronavirus pandemic.
For the three months ended May 3, the Calvin Klein and Tommy Hilfiger parent logged a loss of $3.03 per share. The retail group said that its stores were shut down for an average of six weeks, leading revenues to drop 43% to $1.34 billion.
Analysts had forecasted a loss of $1.60 and revenues of $1.36 billion. The weaker-than-expected report pulled its stock down 9% to $48 after Thursday’s market close.
At Calvin Klein, revenues decreased 46% from the previous year, while Tommy Hilfiger recorded a 39% decline. Sales at Heritage Brands, on the other hand, slid 47%.
However, PVH’s digital commerce businesses rose 47%, which was attributed to “strong growth in all regions.”
By mid-June, the company anticipates that more than 85% of its global brick-and-mortar fleet will be back in business. (The majority of these stores are expected to operate on reduced hours.) It noted that sales for the reopened outposts for the second quarter-to-date are running down 25% in North America, 20% in Europe and 25% in Asia — with China approximately flat — compared with the prior year period.
“While it is still early, we are seeing improving traffic and conversion trends in most markets,” chairman and CEO Manny Chirico said in a statement. “At the same time, our digital commerce businesses continue to experience outsized growth, even as stores reopen. While the pandemic will continue to have a profound impact on consumer purchasing habits for the foreseeable future, these trends underscore that our brands are strong.”
At the end of the quarter, PVH had about $1.8 billion of liquidity, consisting of $800 million of cash on hand and $1 billion of available borrowings under its revolving credit facilities.
To preserve liquidity and improve its financial flexibility, the company had previously reduced payroll cuts, including implementing salary reductions and furloughs; eliminated operating expenses such as marketing and travel costs; canceled some inventory commitments; and redirected resources to its digital platforms.
Although it predicts that the decline in revenues will be “more pronounced” in the second quarter versus the first, PVH did not provide more detailed guidance due to uncertainties stemming from the COVID-19 health crisis.