PVH Corporation's share price plummeted by approximately 11% in today's trading.
PVH Corp's Second-Quarter Results and Stock Drop
PVH Corp, the parent company of brands like Calvin Klein and Tommy Hilfiger, reported a revenue of $2.1 billion for its second quarter, marking an 8% decrease compared to the same period in 2021. Despite the revenue growth of approximately 1.3% year-over-year, the market anticipated a significant decline in earnings per share (EPS), with expectations around $1.97, down approximately 34.6% from the prior year. This earnings weakness overshadowed the revenue growth, leading to a 11% drop in PVH Corp's stock on Wednesday.
The earnings miss and the departure of a top executive at PVH Corp are believed to be the primary reasons for the stock's fall. Technical chart indicators, such as the MACD Death Cross and Bearish Marubozu patterns, also signaled increased selling pressure and momentum toward lower prices after a previous rapid rise.
PVH Corp's CEO, Stefan Larsson, attributed the company's struggles in North America to ongoing supply chain pressures. However, he noted that countries not currently impacted by Covid are performing significantly above pre-pandemic levels in Europe and Asia.
In response to the challenging market conditions, PVH Corp has cut its guidance for the entirety of 2022 to around $8 per share in adjusted net income. This new guidance is under the average analyst estimate of $8.68. The company also plans to split the CEO position into two roles: one for the Americas region and one for global brand leadership of the Calvin Klein line.
Trish Donnelly, PVH's previous CEO, is leaving to pursue other opportunities. Her departure occurred after market hours on Tuesday, but specific details about her departure or the new CEO positions were not provided in the article.
Despite the challenges, PVH Corp reported a non-GAAP (adjusted) net income of $140 million for its second quarter, a 29% decrease from the same period last year. The company's newly installed interim CEO is Stefan Larsson.
In conclusion, the stock drop reflects investor reaction to disappointing profit expectations and technical sell signals, despite the firm’s solid revenue performance. This signifies market focus on earnings quality and future profitability over raw revenue numbers.
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