PVH Non-GAAP Operating Margin Reaches 11.1%
The apparel company posted second-quarter non-GAAP earnings of $3.70 a share, above its $3.00 to $3.10 outlook.
PVH Corp. (PVH) reversed a first-quarter revenue increase into a 3% second-quarter decline, landing at $2.097 billion, in line with guidance of a 3% to 4% drop. Constant-currency sales fell 3%, beating a 4% to 5% decline the company had projected. Profitability, however, ran well above plan. Non-GAAP operating margin was 11.1%, versus guidance of about 9.5% and 8.2% a year earlier. Non-GAAP earnings were $3.70 a share, against a $3.00 to $3.10 range and $2.52 a year earlier.
Gross margin was 63.0%, compared with 57.7% in the year-ago quarter. The 530-basis-point lift included an approximately 510-basis-point benefit from $107 million of tariff refunds. Excluding those refunds, gross margin rose 20 basis points, reflecting lower product costs, including a positive foreign-exchange impact, and favorable mix, partly offset by a more promotional environment in EMEA, higher net tariff costs, and North America license transitions. Non-GAAP EBIT was $233 million, versus $178 million a year earlier. The increase reflected the tariff-refund benefit, partly offset by a planned rise in marketing and brand-building investment.
On a GAAP basis, the quarter included a $439 million pre-tax noncash goodwill impairment, primarily due to changes in valuation assumptions associated with geopolitical and macroeconomic factors. GAAP operating margin was (9.1)% and GAAP earnings were $(2.23) a share. Net interest expense fell to $12 million from $22 million a year earlier, primarily on higher interest income from larger cash balances.
Direct-to-consumer revenue was approximately flat on both a reported and a constant-currency basis, after a 6% increase in the first quarter. Owned and operated digital commerce rose 4% (3% in constant currency). Owned and operated stores declined 1%, with APAC store growth more than offset by declines in EMEA and Americas. Wholesale fell 6%, with declines in all regions.
By region, EMEA revenue decreased 6% on both a reported and a constant-currency basis, reflecting continued soft consumer demand from the prolonged effects of the Middle East conflict and broader macroeconomic impacts. The decline was driven primarily by wholesale; in DTC, digital-commerce growth was more than offset by a decrease in stores. Americas revenue decreased 1%. A slight DTC increase was more than offset by wholesale, including a shift in Calvin Klein shipment timing to the second half and a lift from bringing in-house previously licensed TOMMY HILFIGER women’s categories. APAC revenue increased 3% (1% in constant currency), reflecting DTC growth partly offset by a wholesale decrease. Licensing revenue decreased 13% on planned North America license transitions, partly offset by growth in the ongoing licensing business. Those transitions are expected to be complete by the end of 2026.
Tommy Hilfiger revenue was approximately flat, including an approximately 3% increase from the in-house transition of previously licensed women’s categories in Americas. Calvin Klein revenue decreased 7%, including an approximately 4% decrease from Americas wholesale shipment timing. Inventory decreased 3% to $1.738 billion.
Chief Executive Officer Stefan Larsson said the company delivered revenue in line with guidance and profitability exceeding expectations, with DTC growth in both Americas and APAC and improved EMEA performance compared with the first quarter. He said the company is reaffirming its top- and bottom-line outlook, stepping up cost actions, and continuing to invest behind strategic priorities, including more campaigns with global talent later in the fall. The company also welcomed Alexis Rollier as chief financial officer.
PVH reaffirmed full-year 2026 revenue of approximately flat (a slight constant-currency decrease), non-GAAP operating margin of approximately 8.8%, and non-GAAP EPS of $11.80 to $12.10. It did not make common stock repurchases in the first six months of 2026 and currently expects to repurchase at least $300 million of shares for the full year.
For the third quarter, the company projects revenue to decrease low single digits versus the year-earlier quarter, non-GAAP operating margin of approximately 7.5%, and non-GAAP EPS of $2.50 to $2.65.