Q4 2025 Earnings Summary
- PVH's European business is returning to growth, driven by successful execution of the PVH+ Plan and focused quality of sales initiatives, leading to positive wholesale order books for Fall 2025 and expected low double-digit percent growth in profitability in euros.
- Strong partnerships with key wholesale partners in North America, exemplified by the successful launch of Calvin Klein Women's collection at Macy's Herald Square, are driving product relevance and differentiation in the North American wholesale market, indicating positive progress season after season.
- Innovative product campaigns and collaborations are increasing consumer engagement and sales, such as the Calvin Klein underwear campaign with Bad Bunny, which led to almost 30 million Instagram reach and 20% increase in sales of the Icon Cotton Stretch product, and Tommy Hilfiger's summer campaign with 160 million social media impressions, supporting ongoing growth.
- PVH is experiencing a challenging consumer environment in North America, with a significant step back in consumer demand observed in February, which could impact sales growth in the region.
- The company expects gross margins to decline by approximately 250 basis points in the first quarter due to increased promotional activity, higher freight costs, and negative impacts from the transition of G-III women's sportswear from a license to wholesale model, as well as Calvin Klein product delays.
- The transition of Calvin Klein women's sportswear business from a licensing model to an in-house wholesale model is causing short-term margin pressure, contributing around a 50 basis point decline in gross margin, and product delays will affect the first half, potentially impacting the company's profitability in the near term.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | -4.8% (from $2,489.9 million in Q4 2024 to $2,371.6 million in Q4 2025) | Lower overall sales performance in Q4 2025, likely driven by softer market demand and strategic realignments compared to the previous period. This decline indicates that challenges in key markets and adjustments in revenue mix impacted top‐line growth. |
Net Sales | Similar decline (from $2,369.7 million in Q4 2024 to $2,256.8 million in Q4 2025) | The net sales reduction mirrors the overall revenue drop, reflecting a combination of weaker unit sales and possible changes in channel strategies that resulted in lower overall sales volumes compared to Q4 2024. |
Gross Profit | -8% (from $1,501.2 million in Q4 2024 to $1,381.3 million in Q4 2025) | The decline in gross profit is more pronounced than revenue, suggesting pressure on margins possibly attributable to unfavorable product mix and increased input costs despite efforts to maintain operational efficiencies. |
Net Income | -42% (from $271.8 million in Q4 2024 to $157.2 million in Q4 2025) | A dramatic drop in net income implies that the combination of lower revenue and increased cost pressures had a material impact on bottom‐line profitability. Higher SG&A expenses and other operational inefficiencies, compared to the stronger performance of Q4 2024, intensified the impact. |
Income Before Interest and Taxes (IBIT) | -41% (from $356.9 million in Q4 2024 to $210.2 million in Q4 2025) | The significant decline in IBIT reflects operational challenges including revenue decreases and increased fixed costs such as restructuring-related charges or shifts in the product/channel mix, reducing overall operating efficiency relative to the previous period. |
Advertising and Other Revenue | -18% (from $24.8 million in Q4 2024 to $20.4 million in Q4 2025) | The drop in Advertising and Other Revenue suggests a reduction in ancillary revenue streams, even as royalty revenue remained steady near $94 million. This likely indicates adjustments in licensing or advertising burn patterns compared to Q4 2024. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q4 2024 | Flat to down 2% on a reported basis and flat to down 1% on constant currency | Decline of 6%–7% as reported and 4%–5% on constant currency | lowered |
Gross Margin | Q4 2024 | Decline of approximately 250 basis points | Decline of approximately 200 basis points | raised |
Operating Margin | Q4 2024 | Approximately 8%–8.5% | Approximately 10% | raised |
EPS | Q4 2024 | $2.10–$2.25 | $3.05–$3.20 | raised |
Tax Rate | Q4 2024 | Approximately 18% | 20% | lowered |
Interest Expense | Q4 2024 | Approximately $20 million | Approximately $15 million | raised |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
PVH+ Plan Execution Driving Margin Expansion | Discussed in Q1, Q2, and Q3 with consistent emphasis on gross margin improvements, SG&A efficiencies, and long‐term operating margin targets | In Q4 2025, the plan is again highlighted as key to margin expansion via record gross margins in previous periods, cost management, and regional execution | Consistently prioritized; sentiment remains positive with ongoing focus on cost efficiencies and incremental margin gains. |
European Wholesale Business Performance and Macroeconomic Challenges | Q1–Q3 saw discussions on revenue declines, quality of sales initiatives, and tough consumer/macro conditions in key markets like the U.K. and Germany | Q4 2025 noted a return to growth with low single digit order book improvements despite continued macro headwinds and strategic adjustments | Recurring but evolving; while macro challenges persist, signs of recovery and improved product strategies are emerging. |
North American Market Dynamics and Consumer Demand Fluctuations | Previously, Q1–Q3 emphasized strong profitability, improved conversion, and modest revenue growth despite consumer headwinds | Q4 2025 reflected a challenging consumer backdrop with a step-back in traffic yet maintained profitability and improved inventory quality | Generally positive with cautious optimism; despite short‐term consumer demand fluctuations, profitability is holding strong. |
Gross Margin and Profitability Trends | Q1 showcased record high gross margins and robust EPS; Q2 and Q3 detailed significant margin improvements and operating efficiency gains | Q4 2025 reports a temporary decline in gross margin due to promotional pressures and rising freight but expects sequential recovery and sustained profitability | Overall strong profitability history remains, though short-term margin pressures are recognized as transitory. |
Transition from Licensing to In-house Wholesale for Women's Product Business | Absent in Q1; introduced in Q2 with phased, multiyear plans and further elaborated in Q3 emphasizing complexity and gradual revenue impact | Q4 2025 detailed its impact—with temporary margin headwinds and improved product AURs—and reaffirms its strategic role in aligning brand vision | A relatively new and evolving focus; while short-term challenges exist, it is expected to drive long-term brand strength and profitability. |
Innovative Product Campaigns, Social Media Engagement, and Influencer Collaborations | Q1–Q3 consistently showcased robust campaigns with high-profile talent, significant social engagement, and record influencer collaborations | Q4 2025 continued this trend with innovative product launches for both Calvin Klein and Tommy Hilfiger, strong social media metrics, and impactful celebrity partnerships | A consistently strong and evolving area—with continuous innovation and growing consumer engagement reinforcing brand desirability. |
Direct-to-Consumer (DTC) Performance and Challenges | Q1 presented strong DTC growth across channels; Q2 and Q3 noted mixed performance with regional variances and challenges in clearance and e-commerce | Q4 2025 reported modest overall DTC revenue growth in stores and mixed e-commerce results, influenced by promotional and inventory challenges | Mixed performance; while some regions show growth, challenges persist that require continued strategic focus on inventory and channel optimization. |
Supply Chain Disruptions and Rising Freight Costs | Not discussed in Q1–Q2; Q3 mentioned modest freight increases due to specific disruptions | Q4 2025 emphasized notable freight cost increases due to Red Sea disruptions and rising premium freight, impacting short-term margins | A newer pressing issue emerging in recent periods; seen as a temporary headwind but one that could materially impact margins if prolonged. |
Increased Promotional Activity Impacting Margins | Q2 began referencing a modestly more promotional environment; no mention in Q1; Q3 noted holiday promotions affecting Q4 guidance | Q4 2025 explicitly linked increased promotions—especially in North America—to a decline in gross margins, along with other cost pressures | An emerging challenge; increased promotional activity is now recognized as a key factor compressing margins, though viewed as transitory with strategic countermeasures in place. |
Strategic Initiatives in Product Assortment and Inventory Management | Q1–Q3 consistently featured initiatives on inventory optimization, improved product assortment, and new product innovation including RFID rollout and demand‐driven models | Q4 2025 continued the focus with strategic actions to optimize inventory—boosting freshness and better aligning assortments—to support growth and mitigate inventory shortages | A core and continually evolving focus area; long-term positive impact is expected as these initiatives drive efficiency, improved sell-through, and operational excellence. |
Leadership and Management Turnover in Key Regions | Q1 saw significant leadership transitions in Europe and within brands; Q2 indicated an imminent permanent appointment in Europe; Q3 highlighted key promotions and new regional CEOs | Q4 2025 announced major leadership appointments with new CEOs for EMEA and the Americas, alongside segment reorganization | Consistently prioritized; leadership restructuring continues to be a strategic focus aimed at reinforcing regional execution and driving the broader PVH+ Plan forward. |
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Future Margin Outlook
Q: How should we think about 2026 margin profile and drivers?
A: Management expects significant margin improvements due to cost efficiencies, European growth, and Calvin Klein margin recovery, leading to higher operating margins entering 2026. They anticipate the fourth quarter operating margin to be much higher than 2024, serving as the new starting point for 2026. -
North America Trends and Gross Margins
Q: What recent changes in North America are affecting inventory planning, and what's the outlook for gross margins?
A: The company observed a consumer slowdown in North America starting in February, with slight improvements in March, and is focusing on controllable factors like product strength and marketing. They feel confident about inventory levels, emphasizing fresh and less aged stock. Gross margins are expected to decline due to a more promotional environment, increased freight costs, and the transition from licensing to wholesale in G-III women's sportswear, impacting gross margin by approximately 50 basis points. -
Europe Recovery and Growth
Q: What have you learned from Europe's quality of sales initiatives and impact on business?
A: Strategic actions in Europe—such as reducing third-party sales and improving inventory—combined with the PVH+ Plan execution, led to recovery in direct-to-consumer growth, improved gross margins, and strengthening wholesale order books. Europe is positioned for low single-digit growth in Fall 2025 and expects profitability in euros to grow by low double-digit percent this year. -
Inventory Management
Q: How can you accelerate inventory turns amid product changes?
A: Management is enhancing inventory planning and optimization to better align inventory with demand, becoming more data and demand-driven to improve inventory turns over time. They aim to optimize inventory season by season, learning from past experiences to avoid being too lean or overstocked. -
Wholesale Partnerships in North America
Q: Elaborate on your wholesale partnerships in North America and outlook?
A: The company maintains strong relationships with key wholesale partners like Macy's, focusing on product strength and relevance. They are optimistic about growth in their core business and the recently transitioned business from G-III, highlighting successful initiatives like Calvin Klein's collaboration with Lily Collins at Macy's Herald Square. -
Marketing and Product Engagement
Q: How are product and engagement being rolled out globally this year, and what is marketing spend?
A: Management is systematically connecting product strength with consumer engagement through campaigns featuring talent like Bad Bunny for Calvin Klein and events with influencers for Tommy Hilfiger. They continue to invest significantly in growth, with marketing being a top priority across global regions.
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