The company is sticking by its profit guidance for the fourth quarter ended Feb. 2 — when the outbreak was still in its early stages — but said the majority of its owned and franchised Calvin Klein and Tommy Hilfiger stores in China were now temporarily closed. And the rest of the doors are staying open for only part of the regular selling day and are “experiencing significantly lower than planned traffic and sales trends.”
Emanuel Chirico, chairman and chief executive officer, said: “Our priority is the well-being of our associates and business partners, their families and local communities, and our hearts are with those that have been impacted by the coronavirus. I want to sincerely thank our dedicated associates in Asia who are going above and beyond, with many working remotely from home, to drive our business forward.”
The update seems largely in keeping with what other large fashion companies have already outlined as Chinese officials shut down large parts of the country in hopes of containing the outbreak.
Late year, Greater China accounted for about 7 percent of the company’s revenues while the whole Asia-Pacific region made up approximately 16 percent of the top line.
But sales are only part of the equation as China is also an important production hub with many cut and sew factories, but also raw material producers and component-makers.
Roughly one-fifth of the company’s goods are delivered from China — and about half of those deliveries are bound for the U.S.
Given that the early part of the coronavirus outbreak only impacted the last two weeks of PVH’s fiscal year, the company reaffirmed its adjusted guidance for fourth-quarter adjusted earnings per share of $1.79. Without the virus, PVH said it believes it would have topped estimates.
On a net basis, the company said its earnings would also take a hit from an actuarial loss tied to its retirement plans as well as other previously revealed items, including the $105 million charge to restructure the Calvin Klein business, laid out just over a year ago.
“While the coronavirus will impact our businesses in the near-term, our long-term growth opportunities across the Asia-Pacific region are significant,” Chirico said. “Given our diversified, global business model and the strength of our iconic brands, we are well-positioned to manage this period of uncertainty.”