Key Takeaways
- A warning from PVH sent ripples throughout the high-end retailing industry, driving down shares of others in the sector as well.
- PVH gave much lower-than-expected guidance as sales were affected by a weak European market and a slowdown in wholesalers making purchases.
- Ralph Lauren and V.F. Corporation have also reported lower wholesale demand.
- Shares of Ralph Lauren, V.F. and Tapestry all fell sharply on Tuesday.
Shares of upscale retailers sank after PVH Corp. (PVH) warned that slowing demand in Europe and cautious wholesale buyers will be a drag on results this year.
The owner of brands including Calvin Klein and Tommy Hilfiger predicted 2024 earnings per share (EPS) would be in the range of $10.75 to $11, more than $1 below estimates. It sees sales dropping 6% to 7%, also worse than analysts anticipated.
The company noted that it faced “a continued challenging macroeconomic environment in Europe,” as well as wholesale customers taking “a cautious approach” to purchases. Wholesale revenue dropped 10% in the quarter.
Others in the luxury retail segment have voiced similar concerns about wholesale buyers pulling back on orders as consumer demand slowed. For example, Ralph Lauren (RL) said in its fiscal 2024 third quarter earnings report that North American wholesale revenue dropped 15%, even as overall revenue was up 6%. North Face parent V.F. Corporation (VFC) reported during its third quarter wholesale revenue plunged 26%.
Shares of PVH lost 22.2% to close Tuesday at $108.68, a four-month low. Ralph Lauren shares slipped 4.6% to $176.19, while V.F. Corporation shares fell 6.7% to $14.28 and Tapestry, owner of the Coach and Kate Spade brands, dropped 4.2% to $46.10.