Fashion conglomerate PVH (NYSE: PVH) beat Wall Street’s revenue expectations in Q4 CY2024, but sales fell by 4.8% year on year to $2.37 billion. Its non-GAAP profit of $3.27 per share was 1.8% above analysts’ consensus estimates.

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Stefan Larsson, Chief Executive Officer, commented, “Driven by the strength of our two iconic global brands, Calvin Klein and TOMMY HILFIGER, and our disciplined execution of our PVH+ Plan, we finished the year strong and are well-positioned for 2025. In 2024, we beat our EPS guidance on a non-GAAP basis and delivered better-than-expected revenue in constant currency, with record gross margins and double-digit non-GAAP EBIT margin. In a challenging macro, we delivered another year of strong profitability in North America, drove sequential improvements in our wholesale order books in Europe while improving our quality of sales, and we achieved our third consecutive year of growth in Asia Pacific, on a constant currency basis.”

Company Overview

Founded in 1881 by a husband and wife duo, PVH (NYSE: PVH) is a global fashion conglomerate with iconic brands like Calvin Klein and Tommy Hilfiger.

Apparel and Accessories

Thanks to social media and the internet, not only are styles changing more frequently today than in decades past but also consumers are shifting the way they buy their goods, favoring omnichannel and e-commerce experiences. Some apparel and accessories companies have made concerted efforts to adapt while those who are slower to move may fall behind.

Sales Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, PVH’s demand was weak and its revenue declined by 2.7% per year. This was below our standards and is a sign of poor business quality.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. PVH’s annualized revenue declines of 2.1% over the last two years align with its five-year trend, suggesting its demand has consistently shrunk.

We can dig further into the company’s sales dynamics by analyzing its constant currency revenue, which excludes currency movements that are outside their control and not indicative of demand. Over the last two years, its constant currency sales averaged 2% year-on-year declines. Because this number aligns with its normal revenue growth, we can see that PVH has properly hedged its foreign currency exposure.

This quarter, PVH’s revenue fell by 4.8% year on year to $2.37 billion but beat Wall Street’s estimates by 1.5%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection suggests its newer products and services will catalyze better top-line performance, it is still below average for the sector.

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Operating Margin

PVH’s operating margin has been trending down over the last 12 months and averaged 9.5% over the last two years. The company’s profitability was mediocre for a consumer discretionary business and shows it couldn’t pass its higher operating expenses onto its customers.

This quarter, PVH generated an operating profit margin of 8.9%, down 5.5 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

PVH’s EPS grew at an unimpressive 4.3% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 2.7% annualized revenue declines and tells us management adapted its cost structure in response to a challenging demand environment.

In Q4, PVH reported EPS at $3.27, down from $3.72 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 1.8%. Over the next 12 months, Wall Street expects PVH’s full-year EPS of $11.76 to shrink by 3.1%.

Key Takeaways from PVH’s Q4 Results

It was great to see PVH’s full-year EPS guidance top analysts’ expectations. We were also glad its constant currency revenue and EPS outperformed Wall Street’s estimates. Overall, this quarter had some key positives. The stock traded up 11.1% to $71.96 immediately following the results.

PVH put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.