Under The Tension Of Trade, PVH Will Reduce Its Future Development Prospects.

In the less than a year, PVH Corp, the famous American brand Calvin Klein parent company, made two sharp reductions in its annual performance, which is attributed to the persistent fever in Sino US trade war and the "Anti China" protests in Hongkong.

After the second quarter update, PVH, which owns the Tommy Hilfiger brand, said that its sales grew by 1.3% to US $2 billion 360 million as of August 4th (2019), and net income rose from $165 million 200 thousand to 193 million 500 thousand US dollars.

Tommy Hilfiger revenue grew by 8% to 1 billion 100 million dollars alone, while Tommy Hilfiger International revenue grew 18% to 697 million dollars. According to the Generally Accepted Accounting Principles (GAPP) benchmark, it was calculated without deducting interest and pre tax profit, compared to $134 million in the same period (2018), and increased to $148 million this season, including the negative effects of a foreign currency conversion loss of $3 million.

Calvin Klein brand revenue grew 6% to $873 million. Calvin Klein International is driven by the sustained and steady growth of European business and the revenue from Australia's acquisition. Compared with the same period (2018), the company's revenue grew by 1% to 465 million US dollars (by fixed exchange rate growth 5%), while the other part was closed down by CK Collection and China's economy was experiencing a slowdown, resulting in reduced revenue. On the basis of the generally accepted accounting area (GAPP) benchmark, the interest rate and pre tax profit were reduced to $18 million during the same period (105 million) over the same period (2018), including the negative effects of the loss of foreign exchange 2 million dollars.

Heritage Brands revenue was flat this year, reaching $381 million, while same store sales fell 2% year-on-year.

According to the GAAP benchmark, interest deduction and pre tax profits, compared with $33 million a year ago, fell to $17 million this quarter, mainly due to the gross pressure from wholesale and retail businesses, and the Maori pressure is attributable to the need for more promotional activities in the US retail environment.

CEO Emanuel Chirico said the company's European business performed well, but the volume of trading flows in North America and Mainland China was weak, including the impact of Hongkong protests, which led to the need for more retail outlets to promote its retail environment.

"Although we are satisfied with the results of the second quarter and the first half of the year, we are conservative about the prospects for the second half of the year. Therefore, based on the current trend and expected overall environmental fluctuations, the global retail environment and the continued escalation of trade tensions between the US and China, all of our business will continue to be under pressure, and the protests in Hongkong will continue to be affected, thereby reducing our annual revenue target and earnings per share outlook.

Tariffs on goods exported to the United States, including products valued at $250 billion (tax list first, second and 3 batches), are currently 25%, and are expected to rise to 30% in October 1, 2019. The value of 300 billion US dollars (fourth batches of the tax list) has been raised to 15% in September 1, 2019 and December 15, 2019 respectively.

These tariffs are expected to cause negative earnings of about US $0.20 per share in 2019. PVH now estimates that the profit of the group will be between us $9.30 and US $9.40 per year, compared with the previous estimate of $10.20 to $10.30 per share. The company also downgraded its group's annual revenue forecast, down about 1% growth rate, lower than the previous estimate of about 3%.

John Kernen, an analyst at Cowen, said that in view of the rapid deterioration of the overall wholesale conditions and the aggravation of trade tensions, the company believes that the pre tax profit (EBIT) in US dollar denominated in the fiscal year 2020 will be lowered again.

"We estimate that tariff costs in 2020 may reduce PVH earnings per share to US $0.60 to US $1.20, which will further pressure the international market".