PVH Corp cut annual profit forecast by 10 cents on Wednesday as the Calvin Klein and Tommy Hilfiger brands owner grapples with tariffs and slowing retail growth, exacerbated by weak spending from overseas shoppers in the face of a strong US
REUTERS: PVH Corp has its annual profit forecast at 10 cents on Wednesday as the Calvin Klein and Tommy Hilfiger brands owner grapples with tariffs and slowing retail growth, exacerbated by weak spending from overseas shoppers in the US dollar, sending its shares down 12per cent after hours.
Escalating trade tensions between China and the United States have emerged as a new headache for U.S. retailers, with a clutch warning that additional tariffs would thin their earnings and margins
"Looking ahead, the volatile and challenging macroeconomic backdrop has continued into the second quarter, with particular softness across the US and China retail landscape, "Chief Executive Emanuel Chirico said in a statement.
Tariffs on Chinese imports are a concern, as PVH sources in the majority of its apparel, footwear and accessories from the Asian country. In 2018, the company imported about US $ 400 million of inventory from China.
Earlier this month, U.S. President Donald Trump escalated the trade by raising tariffs on US $ 200 billion worth of Chinese goods to 25per cent from 10per cent. This was in addition to the 25 per cent tariff on US $ 50 billion worth of Chinese imports already in place.
Chirico, in an interview on CNBC, said the latest discussions on tariff and trade issues, which includes proposed tariffs on a further US $ 300 billion worth of Chinese imports
"That (tariffs) is not the issue going forward … What is seeing is a slowdown in growth and a slowdown in retail sales, "he told CNBC, highlighting a slowdown in international tourism in the United States and a strong dollar.
" We've really seen some softness in business, "he said.
PVH projected a 10 cent cut in full-year adjusted profit per share due to the strong dollar. The now expects 2019 adjusted profit between US $ 10.20 and US $ 10.30 per share, which includes the impact of the latest round of tariff. Wall Street was expecting US $ 10.42 per share, on average.
"Of course the CEO's comment is making investors nervous. And he didn't really say anything beyond the tariff subject," Paula Rosenblum, co-founder of retail research firm RSR Research said
PVH's first-quarter revenue rose 1.8per cent to US $ 2.36 billion, but fell short of analysts' estimate of US $ 2.37 billion, according to Refinitive IBES data.
Excluding items, the company earned US $ 2.46 per share, a cent above the average estimate.
Investors will likely hear more comments from Chirico on the analysts call on Thursday.
" the remainder of the year, "Bernstein analyst Jamie Merriman said.
(Reporting by Nivedita Balu in Bengaluru; Editing by Shailesh Kuber and Bill Rigby)