PVH (Baa3, BBB-; Double Pos) 1Q24 Earnings Call

€27/29s -3/unch, equities +2.4% (SPX +0.7%)

Not much new on the call with a lot of focus on PVH+ plan's progress - company pointing to the the controlled pull-back in Europe wholesale already benefiting margins in 1Q. It was asked about the Tommy Hilfiger & Europe CEO departure - there wasn't much mgmt wanted to add on that. €27s leading the move tighter today is confusing to us (27/29s gives +45bp for 1.5yr term extension - very steep). Our cheapest view on the sector is back on the 29s, and pre-earnings caution for those on sidelines is removed.

• Its guiding to gross margin up ~200bps yoy range in Q2 and Q3 - that is down from the +350bp (to 61.4%) this quarter mainly on the rolling off benefit of higher product costs last year. 4Q expected to be lower as the last quarter of last year already reflected some of its strategic shifts (margin was a high 60.3% then). Net it's expected to leave FY gross margin at around 60% (consensus there already) - which would be an all time high.
• SG&A costs and follow through EBIT margin failed to get any upside guidance (from current 10.1% which is unch yoy). It points to more benefits in SG&A coming in CY25.
• It was asked about the -5% constant currency fall in online sales; its saying growth in NA and Asia but fall in Europe on 1) strategic pull back from 3rd party platforms and 2) discounting less on its own site.

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