PVH Corp. (PVH) shares are climbing Friday even though weakness in its Calvin Klein brand pulled third quarter sales for the apparel maker below Wall Street estimates and it cautioned that tariffs on clothing imports from China could hit its bottom line.
PVH shares rose 0.7%.
PVH, which owns both the Calvin Klein and Tommy Hilfiger brands, posted earnings for the three months ending on November 4, its fiscal third quarter, of $3.21 per share, firmly ahead of the Street consensus of $3.14 and up 6.3% from the same period last year. Group sales rose 7% and barely missed analysts forecasts at $2.52 billion, putting pressure on the shares in pre-market trading even as the company added 10 cents a share to the upper end of its fourth quarter earnings forecast.
"We are pleased with the strong earnings performance in the third quarter, which exceeded our expectations, driven by the power of our diversified global business model," said CEO Emanuel Chirico. "We continue to over-deliver against our 2018 plan and are raising our full year earnings outlook based on our third quarter outperformance and our confidence in the opportunities for the fourth quarter, despite recent retailer bankruptcies in the U.S. and U.K. and increasing geopolitical volatility around the world."
PVH shares were marked 5.6% lower in pre-market trading Friday, indicating an opening bell price of $103.54 each, a move that would extend the stock's year-to-date decline past 25% and value the New York, NY.-based clothing group at just under $8 billion.
PVH noted in its SEC filing that "the imposition of significant tariffs on apparel, footwear and accessories imported from China or any of the Company's other significant sourcing countries" could be a material factor that affects is current outlook, which sees fourth quarter EPS of $9.33 to $9.35 per share, while Chirico told Jim Cramer's "Mad Money" program on CNBC late Thursday that higher tariffs would mean higher consumer prices.
"I'm not going to say to you, 'If tariffs go in, it won't be painful for us,'" Chirico said. "But on a competitive basis, ... a little less than 20 percent of our U.S. production comes from China, and given that over half our sales are outside of China, it represents about 7 to 8 percent of our cost of goods sold."