Loading...
01/11 17:46
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary reveals several negative indicators: declining gross margins, reduced non-GAAP net income, and increased inventory levels due to tariffs. Although there are positive aspects such as growth in owned brands and a net cash position, the Q&A section highlights management's unclear guidance and challenges with tariffs and brand transitions. The market cap suggests a more pronounced reaction, leading to a likely negative stock price movement of -2% to -8% over the next two weeks.
Net Sales Net sales for the second quarter were $613 million, compared to $645 million in the same period last year, representing a decrease. The decline in sales is primarily attributable to the exit from the Calvin Klein jeans and Sportswear License businesses.
Wholesale Segment Net Sales Net sales of the Wholesale segment were $590 million, compared to $620 million in the previous year. The decline is due to the exit from the Calvin Klein jeans and Sportswear License businesses.
Retail Segment Net Sales Net sales of the Retail segment were $41 million for the quarter, compared to $37 million in the previous year, reflecting growth due to turnaround initiatives despite a decrease in store footprint in the North American outlet business.
Gross Margin Percentage The gross margin percentage was 40.8% in the second quarter of fiscal 2026, compared to 42.8% in the previous year's second quarter. The decrease of 230 basis points was due to higher-than-expected tariff costs and an unfavorable product mix.
Wholesale Segment Gross Margin Percentage The Wholesale segment's gross margin percentage was 38.9%, compared to 41.2% in the previous year. The decline was driven by higher-than-expected tariff costs and an unfavorable product mix.
Retail Operations Gross Margin Percentage Gross margin in the retail operations segment was 52.4%, down from 54.4% in the prior year. This decline reflects the liquidation of the G.H. Bass branded product, which is transitioning to a license arrangement with the ALDO Group.
Non-GAAP SG&A Expenses Non-GAAP SG&A expenses were $226 million, compared to $229 million in the previous year. The decrease was driven by lower compensation expenses and reduced advertising expenses, partially offset by higher supply chain expenses.
Non-GAAP Net Income Non-GAAP net income for the second quarter was $11 million, or $0.25 per diluted share, compared to $24 million, or $0.52 per diluted share, in the previous year. The reduction was primarily due to lower sales and additional tariff costs.
Inventory Levels Inventories were $640 million at the end of the quarter, increasing 5% from last year's $610 million. This reflects the planned acceleration of inventory receipts due to tariffs.
Net Cash Position The company ended the quarter in a net cash position of $286 million after repurchasing $25 million worth of shares, compared to last year's net neutral cash position.
Donna Karan Weekend Collection: Soft launch planned for Holiday 2025, with a robust collection in Spring 2026. Focus on casual offerings and handbags.
Karl Lagerfeld Expansion: Added 150 domestic points of sale, expanded assortments in suit separates, handbags, and footwear.
DKNY Marketing Campaign: Launched with Hailey Bieber, achieving 2.3 billion impressions in 24 hours.
Vilebrequin Beach Clubs: Opened new beach clubs in Crete, Miami, and Oman, expanding lifestyle offerings.
International Expansion: Owned brands like DKNY and Donna Karan remain underpenetrated internationally, presenting significant growth opportunities.
Karl Lagerfeld in Asia: Building presence in Asia, where the brand currently has a small footprint.
DKNY in Middle East: Opening 3 new mono-branded boutiques in the Middle East.
Warehouse Consolidation: Exiting 4 facilities and reducing staff by year-end to generate savings.
Digital Transformation: Investing in 3D design, AI automation, and other digital tools to enhance efficiency.
Tariff Mitigation: Adjusting inventory positions and sourcing to manage increased tariff costs.
Focus on Owned Brands: Prioritizing owned brands like DKNY, Donna Karan, Karl Lagerfeld, and Vilebrequin for higher margins and sustainable growth.
Exit from PVH Licenses: Transitioning away from Calvin Klein and Tommy Hilfiger licenses, creating opportunities to capture market share.
Omnichannel Enhancements: Improving North American retail operations and strengthening digital ecosystem.
Tariff Costs: Higher-than-expected tariff costs have impacted gross margins, driven by a greater volume of tariff inventory shipments than initially forecasted. The company is absorbing a portion of these costs to remain competitive, which could pressure profitability in the near term.
Retail Partner Caution: Retail partners are increasingly cautious on inventory buys, particularly for Calvin Klein and Tommy Hilfiger businesses, due to anticipated tariff increases. This has led to a disproportionate reduction in open-to-buy budgets, affecting sales.
Expiration of Key Licenses: The expiration of several key PVH licenses, including Calvin Klein and Tommy Hilfiger, is expected to result in a significant reduction in sales, with remaining PVH sales projected to drop to $400 million in fiscal 2027 from a peak of $1.5 billion.
Inventory Management Challenges: The company is facing increased cost pressures and a narrower selling period, requiring disciplined inventory management. This includes prioritizing margin over sales, which could limit revenue growth.
Macroeconomic and Consumer Environment: A challenging macroeconomic environment and cautious consumer behavior are impacting the retail landscape, leading to reduced open-to-buy budgets and affecting most of the company's portfolio.
Supply Chain Adjustments: Higher supply chain expenses have been incurred due to the acceleration of inventory receipts to mitigate tariff impacts, adding to operational costs.
Digital and Technology Investments: While investments in digital tools and technology are aimed at long-term efficiency, they represent a near-term cost burden, potentially impacting short-term financial performance.
Gross Margins: Anticipated to normalize and ultimately expand as the company exits licenses, increases penetration of owned brands, and implements selective price increases.
Retail Partner Inventory Buys: Retail partners are increasingly cautious on inventory buys in anticipation of more pronounced tariff increases.
Fiscal 2026 Guidance: Net sales expected to be approximately $3.02 billion, with non-GAAP diluted earnings per share between $2.55 and $2.75.
Tariff Impact: Total incremental cost of tariffs expected to be approximately $155 million, with an unmitigated impact of $75 million in fiscal 2026. Majority of costs expected in the second half of the year.
Owned Brands Growth: Key owned brands (DKNY, Donna Karan, Karl Lagerfeld, and Vilebrequin) are expected to grow at a mid-single-digit rate this year.
Capital Expenditures: Expected to be approximately $40 million, primarily for shop-in-shop build-outs and new technology implementation.
Gross Margin Rate: Expected to decrease by approximately 300 basis points for fiscal 2026, with the fourth quarter seeing the highest impact from tariff inventory.
Adjusted EBITDA: Expected to be between $198 million and $208 million for fiscal 2026, compared to $325 million in fiscal 2025.
Long-Term Growth Strategy: Focus on enhancing omnichannel capabilities, investing in technology, and expanding owned brands globally to offset lost sales from expiring licenses.
Share Repurchase: The company repurchased $25 million worth of shares in the past quarter, ending the quarter in a net cash position of $286 million. The company also mentioned that it will consider opportunistically returning capital to shareholders through stock repurchases in the future.
The earnings call presents mixed signals: strong retail and digital sales growth, particularly in owned brands like Donna Karan and Karl Lagerfeld, contrasts with challenges in the wholesale segment due to expired licenses and tariff impacts. The Q&A reveals management's cautious optimism and strategic focus on owned brands, but also highlights uncertainties in guidance and gross margin recovery. Despite positive trends in certain areas, the lack of specific guidance and tariff pressures suggest a balanced outlook, leading to a neutral sentiment prediction for the stock price.
The earnings call summary reveals several negative indicators: declining gross margins, reduced non-GAAP net income, and increased inventory levels due to tariffs. Although there are positive aspects such as growth in owned brands and a net cash position, the Q&A section highlights management's unclear guidance and challenges with tariffs and brand transitions. The market cap suggests a more pronounced reaction, leading to a likely negative stock price movement of -2% to -8% over the next two weeks.
Despite some positive aspects like improved liquidity and shareholder returns, the company's earnings call highlights several challenges, including supply chain disruptions, regulatory issues, and competitive pressures. The negative impact of exiting a major license business, coupled with weak guidance and uncertain tariff impacts, outweighs the positives. The cautious optimism in consumer spending and the lack of clarity on tariff mitigation further contribute to a negative outlook, likely resulting in a stock price decrease of -2% to -8% over the next two weeks.
The earnings call shows strong financial performance with record EPS growth, improved margins, and a robust cash position. Despite challenges like tariff risks and licensing revenue loss, the company has diversified sourcing and mitigated impacts. The positive outlook is reinforced by raised earnings guidance, successful brand launches, and share repurchases. Analysts' questions revealed confidence in management's strategies. With a market cap of $1.2 billion, the stock is likely to see a positive reaction, driven by strong earnings, optimistic guidance, and strategic initiatives.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
