PVH Q2 2026: Tariffs to pressure Q4 margins by 175bps
- Enhanced Full-Funnel Marketing & Product Innovation: Executives emphasized ramping up marketing investments that integrate top-, mid-, and bottom-of-funnel efforts to drive product innovation and consumer engagement. This improved approach has already led to strong D2C performance and increased new consumer acquisition.
- Operational Improvements in Brand Transformation: Management highlighted progress in overcoming earlier operational challenges—especially in establishing Calvin Klein’s global product capabilities—resulting in on-time deliveries and margin improvements, which supports long-term profitability.
- Expansion of Global Retail Footprint: The announcement of a new flagship store in Harajuku, Tokyo, along with plans to open a SoHo location and renovate the global store fleet, underscores a commitment to strengthen brand expression and elevate the consumer experience globally.
- Tariff pressure risk: The increasing and accelerating impact of tariffs—especially with new higher rates expected in Q4—could continue to compress margins despite mitigation efforts.
- Wholesale environment caution: Normalization of wholesale shipment patterns and indications of cautious ordering from partners in North America signal potential revenue softness in the latter half of the year.
- Global consumer uncertainty: Ongoing macroeconomic uncertainty and uneven performance in key regions (such as challenges in APAC and uncertainty in domestic outlet trends) may adversely affect consumer demand and overall sales growth.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q3 2025 | Flat to a slight increase on a reported basis; down slightly on a constant currency basis | no guidance | no current guidance |
Revenue (Regional Breakdown) | Q3 2025 | The Americas: Up low single digits; EMEA: DTC growth, wholesale flat; Asia Pacific: Decline by low single digits | no guidance | no current guidance |
Gross Margin | Q3 2025 | Decline by approximately 175 basis points | no guidance | no current guidance |
SG&A | Q3 2025 | Increase by approximately 75 basis points as a percentage of revenue | no guidance | no current guidance |
Operating Margin | Q3 2025 | Approximately 8%, down 250 basis points | no guidance | no current guidance |
EPS | Q3 2025 | $2.35 to $2.45 | no guidance | no current guidance |
Tax Rate | Q3 2025 | Approximately 25% | no guidance | no current guidance |
Interest Expense | Q3 2025 | Approximately $22 million | no guidance | no current guidance |
Revenue | Q2 2025 | no guidance | Projected to be up low single digits on a reported basis and flat to up slightly on a constant currency basis | no prior guidance |
Gross Margin | Q2 2025 | no guidance | Expected to decline approximately 300 basis points | no prior guidance |
Operating Margin | Q2 2025 | no guidance | Projected to be approximately 6.5% to 7% | no prior guidance |
EPS | Q2 2025 | no guidance | Expected to be in the range of $1.85 to $2 | no prior guidance |
Tax Rate | Q2 2025 | no guidance | Estimated at approximately 20% | no prior guidance |
Interest Expense | Q2 2025 | no guidance | Projected to be approximately $25 million | no prior guidance |
Revenue | FY 2025 | Constant currency: Flat to a slight increase; Reported: Increase slightly to low single digits | Expected to be flat to a slight increase on both a reported and constant currency basis. Reported revenue is anticipated to land at the higher end | no change |
Gross Margin | FY 2025 | Decrease by approximately 250 basis points versus prior year | Projected to decrease by approximately 250 basis points compared to the previous year (includes an unmitigated impact of about 80 basis points due to tariffs) | no change |
Operating Margin | FY 2025 | Approximately 8.5% | Approximately 8.5% | no change |
EPS | FY 2025 | $10.75 to $11.00 | $10.75 to $11 | no change |
SG&A | FY 2025 | Lower in constant currency; decrease by approximately 100 basis points as a percentage of revenue | no guidance | no current guidance |
Interest Expense | FY 2025 | Approximately $80 million | no guidance | no current guidance |
Tax Rate | FY 2025 | Approximately 22% | no guidance | no current guidance |
Tariff Impact | FY 2025 | Incremental tariffs to have a net negative impact on earnings, with mitigation actions planned | no guidance | no current guidance |
Inventory | FY 2025 | Expected to align with the sales plan by year-end, excluding tariffs | no guidance | no current guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Enhanced Full-Funnel Marketing & Product Innovation | Q3 2025 and Q4 2025 discussions featured culturally relevant campaigns (e.g., Bad Bunny, mega talents) to drive D2C and elevated product storytelling and innovation. | Q2 2026 emphasized a full-funnel approach with detailed regional execution in North America and Asia Pacific, increased marketing investments, and further product innovation for both Calvin Klein and Tommy Hilfiger. | Continued emphasis with deeper regional execution and a refined, integrated approach to product and D2C marketing. |
Global Retail Footprint Expansion | Q3 2025 referenced a new Calvin Klein flagship store in SoHo while Q4 2025 highlighted flagship openings (e.g., Paris Champs-Élysées) and retail renovations. | Q2 2026 detailed the opening of a new flagship store in Tokyo’s Harajuku and plans for a Soho store, underscoring a focus on key global urban and youth-culture hubs. | Consistent focus on expansion with a shift toward locations that reinforce brand relevance in trendsetting markets. |
Operational Improvements in Brand Transformation | Q3 2025 and Q4 2025 discussed initiatives including centralized product capabilities, on-time deliveries, margin headwinds from transition challenges, and SG&A savings. | Q2 2026 highlighted the successful achievement of on-time deliveries for Spring 2026 and secured margin enhancements, indicating improved operational stability. | Marked improvement in operational execution with stable on-time deliveries and better margin performance. |
Tariff Pressure Risk | Not mentioned in Q3 or Q4 2025 [N/A]. | Q2 2026 provided detailed coverage of tariffs doubling and their impact—contributing to a significant margin compression and outlining mitigation strategies. | Newly emerged risk driving additional margin pressure, with active mitigation initiatives introduced. |
Wholesale Environment Caution | Q3 2025 and Q4 2025 noted cautious partner ordering, strategic timing shifts, and a focus on quality of sales to manage wholesale shipments. | Q2 2026 described normalized wholesale shipment timing in North America and refreshed emphasis on balanced first-half and second-half shipments with modest growth in full-price wholesale partners. | Ongoing cautious approach with more balanced and normalized shipping patterns amid a shifting wholesale environment. |
Global Consumer Uncertainty | Q3 2025 and Q4 2025 addressed a challenging macro backdrop in North America, Europe, and Asia Pacific, with issues such as soft consumer demand and regional slowdowns. | Q2 2026 reiterated uncertainty—especially due to tariffs and mixed regional backdrops—while also noting stable performance in Europe and proactive measures via the PVH+ Plan. | Persistent uncertainty remains, though strategic steps and proactive operational measures aim to mitigate regional and macroeconomic headwinds. |
European Business Growth & Regional Performance | Q3 2025 mentioned revenue declines (reported basis and in euros) offset by quality of sales initiatives and new leadership announcements , and Q4 2025 highlighted flat revenue with sequential order book improvements. | Q2 2026 described EMEA revenue being up on a reported basis (though down in constant currency), slight D2C growth, and renewed order book growth while attributing previous timing effects. | Shifting from a focus on quality-of-sales driven challenges to incremental order book recovery and modest D2C improvements in a challenging currency environment. |
Strategic North American Wholesale Partnerships | Q3 2025 focused on strong wholesale execution with elevated full-price sales and partnerships, while Q4 2025 spotlighted milestone partnerships like Calvin Klein’s collaboration with Macy’s. | Q2 2026 highlighted normalized shipments and re-balancing of wholesale shipment timing in North America, reflecting a transition from earlier robust success to a more cautious, normalized environment. | A shift from earlier high-profile successes to a more normalized, balanced approach amid a cautious wholesale environment. |
Innovative Product Campaigns & Collaborations | Q3 2025 and Q4 2025 discussed numerous celebrity endorsements and high-impact events (e.g., Bad Bunny campaign, Caribbean event) driving significant social media engagement and product sell-through. | Q2 2026 featured robust campaigns including new collaborations (e.g., K-pop star endorsements, celebrity partnerships) and upcoming flagship store initiatives, reinforcing a global culturally resonant marketing strategy. | Consistent high-profile initiatives with expanded influencer and celebrity engagements to enhance product visibility and consumer engagement on a global scale. |
Margin Pressure & Gross Margin Volatility | Q3 2025 noted a mixed picture with gross margin improvements (driven by DTC mix and cost efficiency) alongside expected promotional and freight cost pressures, and Q4 2025 detailed margin declines linked to promotions and freight costs. | Q2 2026 reported a gross margin of 57.7% with a 240 basis points decline largely due to higher promotions, tariff effects, and wholesale mix changes, while outlining mitigation strategies for future stabilization. | Persistent volatility remains with ongoing pressures from tariffs and promotions; although mitigation measures are underway, margin challenges continue to impact profitability. |
In-House Transition of Women's Product Assortment | Q3 2025 explained the strategic move to bring the women's assortment in-house for long-term competitive advantage, while Q4 2025 highlighted early positive consumer feedback (increased AURs) but noted temporary margin headwinds. | Q2 2026 conveyed that the transition is contributing to double-digit wholesale growth in the Americas with normalized shipment weighting and improved execution, despite past operational challenges. | An ongoing strategic shift with demonstrated revenue benefits and improved execution, though short-term margin headwinds persist as the transition continues. |
Supply Chain Disruptions & Freight Cost Increases | Q3 2025 described modest freight surcharges and transitory supply chain disruptions with limited long-term impact, while Q4 2025 detailed rising freight costs (e.g., due to Red Sea disruptions) impacting gross margins. | Q2 2026 discussed a combination of ongoing freight cost challenges and new tariff pressures, with emphasis on leveraging global sourcing partnerships and mitigation efforts to offset these cost pressures. | Long-standing supply chain disruptions remain an operational challenge; however, they are now compounded by increased tariffs, prompting expanded mitigation measures to protect profitability. |
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Tariff Impact
Q: How will tariffs affect margins into 2026?
A: Management noted that tariffs are impacting everyone and are expected to pressure gross margins by about 175 bps in Q4, with ongoing mitigation efforts through supply chain efficiencies and selective pricing actions to ease the impact over time. -
Wholesale Environment
Q: Are wholesale partners showing increased caution?
A: Management observed normalization in wholesale shipments, with North American partners now following historical trends and any front‐end growth expected to moderate later in the year. -
DTC & Order Books
Q: What drove DTC gains and how are order books shaping up?
A: In The Americas, sequential DTC improvement was driven by stronger product launches, enhanced marketing and expanded mid‐funnel engagement, while Europe’s fall and spring order books reflect robust growth in key categories across both brands. -
Marketing Investments
Q: What’s behind the increased marketing spend?
A: Management attributes the rise in marketing investment to a successful full‐funnel approach combining product innovation with high-impact global talent, as seen with campaigns like Bad Bunny, which is expected to continue fueling brand momentum. -
Store Enhancements & Promotions
Q: How are promotions and store renovations evolving?
A: While international promotional trends remain stable, management highlighted sequential improvements in outlet traffic and announced major flagship openings in Harajuku and SoHo along with a broad plan to renovate the store fleet globally. -
Calvin Klein Transformation
Q: What progress on the Calvin Klein operational transformation?
A: Management confirmed that initial operational challenges for Calvin Klein have been resolved, with key improvements made in efficiency and on-time product deliveries setting a strong foundation for long-term benefits.
Research analysts covering PVH CORP. /DE/.