PVH Corp Q4 2025 Earnings Call Transcript

PVH Corp (NYSE: PVH) Q4 2025 Earnings Call dated Apr. 01, 2026

Presentation

Operator

Good morning, everyone, and welcome to today’s PVH Fourth Quarter 2025 and Full Year Earnings Conference Call. [Operator Instructions]

It is now my pleasure to turn today’s program over to Sheryl Freeman, Senior Vice President of Investor Relations.

Sheryl Freeman — Senior Vice President of Investor Relations

Thank you, operator. Good morning, everyone, and welcome to the PVH Corp. fourth quarter and full year 2025 earnings conference call. Leading the call today will be Stefan Larsson, Chief Executive Officer, and Melissa Stone, Interim Chief Financial Officer and Executive Vice President, Global Financial Planning and Analysis. This webcast and conference call is being recorded on behalf of PVH and consists of copyrighted material. It may not be recorded, rebroadcast or otherwise transmitted without PVH’s written permission. Your participation constitutes your consent to having anything you say appear on any transcript or replay of this call. The information to be discussed includes forward-looking statements that reflect PVH’s view as of March 31, 2026, of future events and financial performance.

These statements are subject to risks and uncertainties indicated in the company’s SEC filings and the safe harbor statement included in the press release that is the subject of this call. These include PVH’s right to change its strategies, objectives, expectations, and intentions, and the company’s ability to realize anticipated benefits and savings from divestitures, restructurings, and similar plans, such as the actions undertaken to focus principally on its Calvin Klein and Tommy Hilfiger businesses and its initiatives to drive more efficient and cost-effective ways of working across the organization. PVH does not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimates regarding revenue or earnings. Generally, the financial information projections to be discussed will be on a non-GAAP basis as defined under SEC rules. Reconciliations to GAAP amounts are included in PVH’s fourth quarter 2025 earnings release, which can be found on www.pvh.com and in the company’s current report on Form 8-K furnished to the SEC in connection with the release.

At this time, I am pleased to turn the conference over to Stefan Larsson.

Stefan Larsson — Chief Executive Officer

Thank you, Sheryl. Good morning, everyone, and thank you for joining our call today. I want to start by thanking our teams around the world for delivering a strong fourth quarter and finish to the year on our multi-year journey to build Calvin Klein and Tommy Hilfiger into their full potential and make PVH one of the highest performing brand groups in our sector. While there is, of course, more work to do, we have made important progress on this journey, and I will discuss this more in a moment. In the fourth quarter, we exceeded our guidance across revenue, operating profit, and EPS. Total revenue for the company was up mid-single digits on a reported basis, above our guidance and flat in constant currency. Importantly, we drove better than expected gross margin performance in the quarter with sequential improvement across all regions.

We continue to manage our operating expenses thoughtfully, while strategically increasing marketing spend behind our two iconic brands and we drove a 10% non-GAAP operating margin, which would have been 11.7% without the gross tariff impact. For the full year, we delivered on our financial guidance across both the top and bottom line. And as planned, we returned to revenue growth for the year. Despite the choppy consumer and macroeconomic environment, we delivered a non-GAAP operating margin of 8.8% for the full year, above our guidance, including the impact of tariffs. When excluding the impact of gross tariffs, operating margin was 9.6%. We continued to simplify our operating model and drive more efficient ways of working, generating over 200 basis points of annualized cost savings.

We further strengthened our supply chain, ending the year with a good inventory position, up 5% versus last year or up 1% when adjusted for tariffs, positioning us well for Spring 2026. Finally, we returned over $560 million of capital to shareholders through our share repurchases, representing 15% of our shares outstanding. Looking ahead, while the macroeconomic environment remains uncertain, we have started 2026 with positive momentum and higher spring season sell-through trends across both brands and all three regions. While wholesalers remain cautious and the consumer macro environment continues to be uneven, our fall 2026 order books for Europe are positive. As we speak, we’re in the middle of some of the most important weeks of the quarter with Easter this coming weekend, which falls three weeks earlier than last year.

For Calvin Klein, we have strengthened our global product capabilities and have addressed the transitory operational challenges we faced in 2025. Our deliveries are now on time and our gross margins are back on plan. This year, we will strategically increase marketing spend and further invest in the shopping experience across digital, shop-in-shops, and store concepts. For fiscal 2026, we expect to grow total revenue slightly on a reported basis and be flat to up slightly in constant currency with planned growth in direct-to-consumer across both brands and all three regions. We expect our non-GAAP operating margins to hold steady at 8.8% or a 11% excluding the gross impact from tariffs. Additionally, we intend to continue to return capital to shareholders with a target of at least $300 million this year.

Now, let me share a brief update on what drove our performance for the fourth quarter and full year 2025. Starting with Calvin Klein. In 2025, we continued to drive strong brand relevance for Calvin in both product and marketing. We sharpened our focus on our core categories, strategically infusing innovation and newness in the worlds of underwear and denim, supported by full funnel 360 marketing. We reinvented our biggest underwear franchises with the launch of the Icon Cotton Stretch, amplified with Bad Bunny and Rosalia, which grew 20% in men’s and 13% in women’s, driving our broader underwear business up low single digits versus last year. We also grew our fashion denim category, which represents over 50% of our denim business with high single digits.

In addition, Calvin returned to the runway, creating a strong halo for the brand, and during the year, we opened new Calvin Klein flagship stores in both Tokyo and New York City. In the fourth quarter, we leveraged key consumer moments and delivered strong engagement and results, generating higher full price sales versus last year and sequential improvements in gross margin.

Turning to Tommy Hilfiger. Throughout the year, we took Tommy’s iconic DNA of classic American cool and cut through in major cultural moments from the Met Gala to F1 the Movie. We also launched our new partnership with Cadillac Formula 1 in Q4 with a positive consumer response. In addition, we announced one of the most significant new global partnerships for Tommy, our first football partnership with Liverpool Football Club. This news was the number one most engaged post ever to go out on Tommy’s social channels with strong resonance across Europe and driving immediate spikes in e-commerce traffic.

In the marketplace, we further improved our e-commerce experience, opened new stores globally, and in wholesale, we unveiled our new shop-in-shop concept at the iconic Galeries Lafayette in Paris. And finally, in the fourth quarter, just like in Calvin, we leaned into our best product categories where we drove strong growth for our iconic cable knit sweater franchise with sales up over 50%. Overall, when I look at our global business for the holiday, we navigated an uneven macro environment across both brands, and I was particularly pleased to see that where we brought newness into key product categories, we were able to drive growth with higher full price sell-through.

Now, I will turn to our regional performance, starting with Europe. For the full year, the region declined 1% in constant currency, with two quarters of strong D2C growth in the first half, followed by a more muted consumer in the second half. In wholesale, we delivered sequentially improving order books each season in Europe, returning to growth beginning with our fall 2025 season. In the fourth quarter, revenue was down low single digits in constant currency, in line with guidance and against a muted backdrop. In constant currency, wholesale was down 1% as positive order book growth was offset by lower in-season replenishment and D2C was down mid-single digits. For both Calvin and Tommy, the areas where we have introduced the most product innovation into key categories continue to drive growth, and our focus continues to be on scaling that innovation across bigger parts of the assortment.

We also continue to work more closely than ever with our wholesale partners, and in January, we held our second annual global partner day to kick off the fall 2026 market launch. We had over 500 key partners in attendance and received the strongest and most positive feedback yet. Next, turning to the Americas. For the full year, we delivered mid-single-digit growth driven by our wholesale channel and strength in our e-commerce business. The consumer backdrop has been uneven, and in stores, industry traffic trends were increasingly challenged, resulting in our total D2C business down low single digits for the year. In the fourth quarter, we grew overall revenue by 4%, driven by wholesale. as well as continued growth in digital. D2C declined mid-single digits due to lower store traffic, partially offset by AUR growth. Product-wise, we saw strength in denim for both men and women.

Our wholesale business increased high teens, partly driven by the take-back of our women’s sportswear and jeans business, with underlying growth in wholesale up mid-single digits. Despite lower traffic, we drove greater full price selling for the region and over 200 basis points in sequential year-over-year gross margin improvement. Moving to Asia Pacific, for the full year, revenue declined mid-single digits in constant currency or down low single digits excluding the timing impact from the Lunar New Year calendar shift. But importantly, we delivered sequential improvements in our top line performance each quarter over the course of the year. In the fourth quarter, excluding the Lunar New Year calendar shift, our APAC revenue returned to growth and was up low single digits in constant currency. In digital, we delivered the second consecutive quarter of high single-digit growth as we successfully concluded Double Eleven and the holiday period.

Overall, we are seeing good conversion and positive traffic improvements across key markets, including China and Japan. We continue to execute with discipline in the region, driving gross margin improvements and reinvesting into marketing with key local talent. Both brands were proud to participate as first-time exhibitors at the China International Import Expo, building on our long-standing presence and commitment to the market. Before we turn to 2026, I would like to take a moment to reflect on the progress we have made through our multi-year PVH+ Plan journey to date. While we have important work still ahead of us, since 2022, we have navigated a series of external headwinds, including exiting our Russia business, the introduction of tariffs, and we have also navigated specific geopolitical dynamics.

Throughout this period, we have remained steadfastly focused on executing our plan and delivering significant operational progress across all five critical areas of the PVH+ Plan. Winning with our hero products and categories, driving strong consumer engagement, strengthening our distribution in the marketplace by deepening our partnerships with key wholesale partners and expanding our D2C business, building a global demand-driven operating model, and driving operational efficiencies to power our investments in growth and in marketing. Through this work, we have built a more systematic, repeatable approach, which is a powerful foundation as part of our continued journey to build Calvin Klein and Tommy Hilfiger into their full potential. As we said we would, we divested profit dilutive non-core businesses, putting 100% of our attention behind our two globally iconic brands, Calvin and Tommy and on an underlying basis, ex divestitures, we have grown those brands at 2% CAGR in constant currency since 2021.

At the same time, we have built a strong leadership team with experience to unlock our brand’s full potential. Across our regions, we increased our Americas profitability to double digits ex tariffs. We drove higher quality of sales through our initiative in Europe and in APAC, drove a 5% growth CAGR in constant currency over the period. And as our important work continues, one of the biggest accomplishments is how we have driven brand relevance with the consumers who matters the most going forward. Our most recent consumer research not only confirms that Calvin Klein and Tommy Hilfiger are two of the most recognized and loved brands globally, both brands also outperform with the Gen Z and younger millennial consumers.

And within these, both brands are performing strongly with the highest value consumer segments, the status-oriented shoppers and style enthusiasts. This is important because these consumers shop more often, have higher order values, and are more loyal. This is a direct result of our multi-year work to ignite Calvin’s and Tommy’s brand DNA and make them even more relevant for today. A key part in our consumer engagement is the strength we have built on social, where Calvin has the most followers and the highest engagement of our competitive set, with 44 million followers across our four biggest platforms. Tommy has the third largest following in the industry with 31 million, and the same leading engagement levels as Calvin, approximately four times higher than most of our competitors. In addition, our consumer insights confirm clear product authority in some of the biggest and growing categories in the market.

For Calvin, this means the right to play and win in underwear, denim, outerwear, and knits and for Tommy, it means the right to play and win in outerwear, sweaters, shirts, and knits. The strength we have built with the consumer guides our path forward. We are increasingly targeting the best consumer segments for each brand as we expand our product strength across the top five categories. We put innovation and newness into creating the best product franchises, and we drive our consumer engagement with a full funnel 360 approach. To make this possible, we are leveraging the strong global product and marketing capabilities for both brands that we have worked to establish.

We are also well underway to successfully transitioning the licensed women’s sportswear business in the US wholesale channel for both brands to ensure that our product creation across both men’s and women’s are brand-right and positioned to drive sustainable, profitable growth. In the marketplace, we have both increased our focus on our key wholesale partners and have meaningfully strengthened our D2C execution, which now represents approximately half of our sales, up from 44% in 2021. We have done this while elevating the brand experience across digital and stores, delivering digital penetration that is nearly double pre-COVID levels. We have also made significant operational progress in our journey to become a more data and demand-driven company, improving inventory management and building new capabilities, including in AI. Our new collaboration with OpenAI, which we announced in January will accelerate that progress.

Importantly, we drove over 300 basis points of cost savings, including 200 basis points of annualized cost savings from our cost efficiency initiatives. Over the past few years, through the disciplined PVH+ execution, and despite the multiple external headwinds, we have built a strong foundation in both Calvin Klein and Tommy Hilfiger to be able to drive sustainable, profitable growth with increasing pricing power across our three regions. As I’ve said before, every season you will see us expand on this further. Now, as we look ahead, I want to share our actions for 2026 that will help us do just that. Let me start with Calvin Klein. We can’t talk about Calvin Klein today without referencing Love Story, the TV show.

The cultural resonance of Love Story reinforces the timeless power of the Calvin Klein brand and its authentic place in American fashion, with the premiere driving a surge in online interest in Calvin. We’re capitalizing on the Love Story effect in multiple ways that are true to the brand, leveraging the 90’s focus in our product assortment and marketing and supercharging it in e-commerce and stores with a spring 90’s edit on calvinklein.com that is driving above average social engagement and click-through rates. We’re also styling key talent, including actress Sarah Pidgeon, who plays Carolyn Bessette Kennedy at the recent Vanity Fair Oscar party. And we hosted a New York Magazine pop-up collaboration at our new Soho store, achieving our highest daily sales and visitors to date.

We are continuing to lead the 90’s style conversations globally, a look that we helped define by leaning into the styles driving the trend today across our platform. You will see this across our spring campaign featuring global ambassador Jungkook, which pairs cultural influence with hero product storytelling to drive consumer demand. Here, strong social engagement is driving fantastic sell-throughs, with sales of campaign items up over 50% after launch, and the jacket Jungkook wore reaching 60% sell-through in just two weeks. In March, we launched a new spring campaign featuring FC Barcelona and Brazilian national team soccer star, Raphinha. Debuting our most recent underwear innovations, Icon Active Mesh and Icon Cotton Stretch with a stitch-free infinity bond waistband, we drove social engagement up 62% and sales of featured products were up 11% versus a similar campaign last year.

Our most recent runway show at New York Fashion Week once again placed Calvin Klein at the center of the cultural conversation, supported by top global talent, including Jennie, Dakota Johnson, Brooke Shields, and Lily Collins. The fall 2026 show was once again the number one in share of voice and number one in earned media value from all of New York Fashion Week. Finally, we just unveiled Calvin’s latest spring campaign, starring actor Dakota Johnson, styled in new underwear and denim styles. Since the campaign launch, website traffic has been up double digits versus last year in Europe. Sell-through has also been strong. Sales in key featured items shot up four times versus the time prior. For Tommy in 2026, we’re doubling down on our core product categories and set out to create the best product franchises in the market.

Moving forward, you’ll see us expand our category acceleration across sweaters, outerwear, knits, and shirts. We have started the new fiscal year with a healthy momentum with the launch of the brand’s spring 2026 campaign, which features an invitation to Tommy’s aspirational world. The campaign has been very well-received across markets, serving as both a brand beacon and amplifying our 2026 product priorities. We will continue to leverage our partnerships with Liverpool Football Club and Cadillac F1 throughout the year with a steady drumbeat of consumer engagement.

As part of our new multiyear Liverpool partnership, Tommy Hilfiger will dress the full team for match arrivals six to eight times per season, and each tunnel walk represents an opportunity to drive scaled brand visibility and product sales as we style players in our most aspirational Tommy icons and offer shop-to-look access. In our first tunnel walk, we drove a 200% increase in sales for these products in Europe compared to the prior week. For Cadillac Formula 1, we’re activating the partnership with store pop-ups, driver appearances, and local influencer styling. Following the first two races of the season in Melbourne and Shanghai, where we activated with Valtteri Bottas and Chinese driver Zhou Guanyu, together with local Tommy ambassadors, our China Tommy D2C sales were up double digits in March versus last year.

Our expanded partnership with Sergio Checo Perez also continues to drive a consistent uplift in traffic. And in the US, the Tommy icons Checo has worn so far this season, such as our cable knit polo, have seen double-digit sales increases. Overall, our exclusive Tommy partnerships are driving scaled global engagement with our consumers, generating over 700 million impressions and an increase of over 300% in media value versus prior campaigns. And earlier this week, Tommy announced Travis Kelce, American football icon, three-time Super Bowl champion, as a global brand ambassador and creative collaborator. One of sport’s biggest stars on and off the field, Kelce will bring his unique perspective to Tommy Hilfiger as part of a series of campaigns kicking off in fall 2026.

Looking ahead for our regions, we have started fiscal 2026 with momentum, which has continued through quarter to date, where we see spring product season do better than last year same time. In Europe, following a tough second half last year, this year we are expecting a gradual improvement in top-line trajectory as we progress through the year. You will see our investments in marketing and the consumer experience start to cut through in the marketplace. In wholesale, we closed our fall 2026 order book up low single digit, marking the third consecutive season of growth. When taken all together, we expect our overall revenue for the region to be up slightly in 2026 compared to 2025.

In the Americas, we continued to work towards unlocking our full potential and expect to grow across all channels by elevating the brand experience, including targeted remodels, strengthening the marketplace distribution, and driving pricing power. Overall, we expect modest growth for D2C 2026, and we expect continued growth in e-commerce as we continue to further strengthen our digital position. And in wholesale, we expect to see growth driven by the transition of previously licensed Tommy Hilfiger women’s sportswear in-house. In Asia Pacific, we’re off to a great start with Lunar New Year, where we launched a dedicated capsule featuring brand ambassador and global K-pop superstar Jisoo, exceeding expectations. We expect to continue to drive growth in the region in 2026, up low single digits in constant currency, powered by D2C. The region will continue to be a growth engine for us long term, and we expect to return to growth for the full year.

Turning to our licensing business, we continue to build out our already strong licensing business, where our licensing partners help bring our vision to life across multiple lifestyle categories, from watches and fragrances to eyewear and are critically important to how we drive sustainable, profitable growth. In conclusion, our focus is clear. To unlock the full potential of Calvin Klein and Tommy Hilfiger by building on the strong foundation we created and drive next-level execution of our PVH+ Plan. While we’re seeing early momentum in 2026, we remain conscious of the current macroeconomic environment and we are laser-focused on building out further strength in the consumer offerings in both of our brands.

And with that, I’ll turn the call over to Melissa.

Melissa Stone — Interim Chief Financial Officer

Thanks, Stefan. Good morning. My comments are based on non-GAAP results and are reconciled in our press release. As Stefan discussed, our fourth quarter and full year results delivered or exceeded expectations across key financial metrics. In the fourth quarter, we generated 6% reported revenue growth, flat in constant currency, drove sequential improvement in our year-over-year gross margin percent, and continued our focus on strong SG&A discipline. We drove significant sequential improvement in our operating margin, reaching 10% for the quarter, despite a negative 170 basis point gross tariff impact and ahead of plan. EPS was 17% higher than the prior year.

For the full year, we delivered 3% reported revenue growth, up slightly in constant currency, both in line with our guidance, with 8.8% operating margin for the year, despite a negative 80 basis points gross tariff impact and EPS of $11.40. Throughout the year, we drove quarterly sequential improvements in our gross margin comparisons, as we set out to do, and exited the year with over 200 basis points of annualized cost savings from our Growth Driver Five cost savings actions.

We ended the year with healthy inventory levels, up 5% compared to last year and 1% excluding the impact of tariffs, well-positioned heading into 2026. We delivered strong free cash flow for the year of over $500 million and returned over $560 million to shareholders through the repurchase of nearly 8 million shares of common stock through our accelerated repurchase program and open market purchases. Looking ahead to 2026, we are planning full year reported revenue up slightly compared to 2025, and flat to up slightly in constant currency. We project operating margin to be approximately 8.8% in line with 2025, even with a negative 215 basis point gross tariff impact as we drive underlying gross margin strength and tariff mitigation actions, while investing in our brands through full funnel marketing.

I will now discuss our 2025 results in more detail and then move to our 2026 outlook. Reported revenue for the fourth quarter was up 6% and flat in constant currency, exceeding our guidance. From a regional perspective, EMEA was up 8% reported and down 3% in constant currency. Direct to consumer trends from Q3 generally continued in Q4, down mid-single digits in constant currency with wholesale down 1%. Revenue in Americas was up 4% driven by high teens growth in wholesale, reflecting a mid-single digit increase in the base business, the impact of bringing Calvin Klein women’s sportswear and jeans wholesale in-house, and initial shipping related to the Tommy Hilfiger women’s sportswear and performance wholesale transition in-house. D2C revenue in Americas was down mid-single digits in total and in stores, partially offset by continued growth in our e-commerce business.

In Asia-Pacific, revenue was flat as reported and down 2% in constant currency, which included an approximately 4% headwind from the timing of Lunar New Year compared to the fourth quarter last year. Excluding the Lunar New Year impact, Asia-Pacific returned to growth in the fourth quarter. D2C revenue was down low single digits in constant currency, but up excluding the Lunar New Year timing effect, with continued growth in our e-commerce business driven by strong Double Eleven performance in China. Wholesale revenue was down mid-single digits in constant currency as our wholesale partners in the region continued to take a cautious approach. In our licensing business, revenue was up 10%, primarily due to the impact of non-recurring contractual royalties in the quarter.

Turning to our global brands, Tommy Hilfiger revenues were up 7% as reported, and up 1% in constant currency. Calvin Klein revenues were up 3% as reported and down 1% in constant currency. From an overall PVH channel perspective, our direct-to-consumer revenue was up 1% as reported and down 3% in constant currency, which included an approximately 1% headwind from the timing of Lunar New Year compared to the fourth quarter last year. Sales in our retail stores were flat as reported and down 4% in constant currency. Sales in our owned and operated e-commerce business were up 5% as reported and flat in constant currency as strong growth in Asia-Pacific and Americas was offset by the decline in EMEA. Total wholesale revenue was up 11% as reported and up 4% in constant currency, which reflects the North America license transitions, partially offset by the decreases in EMEA and Asia-Pacific.

In the fourth quarter, our gross margin was 57.6% stronger than planned, reflecting significant sequential improvement across all regions as compared to the third quarter. The decrease of 60 basis points compared to last year includes a decrease of approximately 170 basis points due to the gross impact of tariffs, a decrease of approximately 50 basis points from our North America license transitions, as we’ve previously discussed, and a marginally higher promotional environment. These decreases were largely offset by our proactive tariff mitigation actions, enabling us to mitigate over 40% of the increased tariff in the quarter and our efforts to lower product costs as well as favorable foreign exchange. Importantly, we saw significant sequential improvement in Calvin Klein gross margins in the fourth quarter as we steadily worked through the previously discussed transitory operational issues.

SG&A as a percent of revenue improved 20 basis points versus last year to 47.7%, reflecting efficiencies from our Growth Driver Five cost savings actions, partially offset by our increased full funnel marketing investments to build momentum heading into 2026. EBIT for the fourth quarter was $250 million, and operating margin was 10%, roughly in line with 10.3% operating margin in 2024, despite the 170 basis point negative gross tariff impact. Fourth quarter EPS was $3.82, a 17% increase over $3.27 last year, reflecting a negative $0.70 gross impact related to tariffs and a positive $0.33 benefit related to exchange. Interest expense was $19 million, and our tax rate was approximately 23%.

For the full year 2025, we delivered our overall revenue plan. Regionally, EMEA was down low single digits in constant currency, with positive first half D2C trends offset by muted consumer activity in the second half, driven by a tougher backdrop in the region. In the Americas, we delivered a mid-single-digit increase in revenue, driven by the North America license transitions and strength in e-commerce. And in Asia Pacific, we drove steady quarterly sequential top-line improvement after a challenging start to the year, ending the year overall down mid-single digits in constant currency, including a low single-digit impact from the Lunar New Year timing. While gross margin of 57.5% was lower than last year, including the approximately 80 basis points negative impact of growth tariffs, of which we mitigated approximately 30% for the year, it was stronger than planned.

SG&A as a percentage of revenue improved 70 basis points over the prior year to 48.7% as we drove meaningful savings from our Growth Driver Five cost savings actions. We achieved operating margin of 8.8%. Interest expense was $79 million. Taxes were approximately 22% and EPS was $11.40, which included a negative impact of $1.10 from gross tariffs and a positive impact of $0.56 from exchange. This compared to last year’s record high non-GAAP earnings per share of $11.74.

Now moving on to our 2026 outlook. As Stefan discussed, in 2026, we will build on the strong foundation we’ve created and drive the next level execution of the PVH+ Plan. While wholesalers remain cautious and the consumer macro environment continues to be uneven, our European order books are positive, and we are expecting growth in D2C in both brands and in all three regions for the full year. At the same time, we expect to absorb the full impact of US tariffs in 2026. Our outlook assumes a 15% tariff rate on goods coming into the US starting from February 24 of this year, with inventory receipts prior to that at tariff rates previously in place. Our guidance does not assume any tariff refunds. We expect an approximately $195 million gross tariff cost in EBIT or approximately $3.30 per share based on these assumptions.

We continue to take tariff mitigation actions with the benefit of our actions planned to increase quarter-by-quarter throughout 2026 as we work to fully mitigate tariffs over time. It’s important to highlight that significant uncertainty remains around the conflict in the Middle East as well as evolving global trade policies, the broader macroeconomic environment and consumer spending behavior. Our business in the Middle East, excluding Turkey, is about 1% of our total revenue and solely a wholesale business, so the profit impact is disproportionate at approximately 7%. Our guidance is based on current macro and geopolitical conditions and excludes any potential impacts from a prolonged, expanded, or more intense conflict in the Middle East.

For the full year, our overall reported revenue is projected to be up slightly versus 2025 and flat to up slightly in constant currency. We expect full-year operating margin will be approximately 8.8%, in line with 2025, and up excluding the impact of tariffs in each year as we drive operational growth margin improvements and annualize our Growth Driver Five cost savings, some of which we will reinvest in the business, particularly in marketing. We are projecting earnings per share in a range of $11.80 to $12.10 compared to $11.40 in 2025. Regionally, in EMEA, where we saw lower traffic and weaker consumer sentiment in the market in the back half of 2025, for 2026, we are planning for a gradual top-line improvement as we progress through the year.

We expect the first half to continue to be tougher within this backdrop with second half improvement as our investments in marketing and in elevating the consumer experience drive even greater strength in the region. In wholesale, as Stefan mentioned, we closed our fall 2026 order books up low single digit. At the same time, the overall macro environment remains choppy, and we are planning our revenues prudently. We expect our overall revenue for EMEA will be up slightly in constant currency compared to 2025. In the Americas, we are planning revenue up low single digits compared to 2025, with growth in wholesale driven by the Tommy Hilfiger women’s sportswear and performance wholesale transition. And in D2C, despite the choppy consumer backdrop and lower traffic trends in stores in 2025, we entered 2026 with momentum, which has continued in the first quarter to date.

We also expect continued growth in e-commerce as we continue to further strengthen our digital position. Overall, we are planning modest growth in D2C for 2026. Next, in Asia Pacific, we are planning 2026 revenue up low single digits in constant currency led by growth in D2C, partially offset by a decrease in wholesale as we expect our partners in the region to continue to take a cautious approach. Our licensing business is expected to be down low teens, reflecting the North America license transitions. Excluding the impact of these transitions, we expect low double single digits growth in the balance of the licensing business. Overall, the impact of the licensing transitions, net of the increase in wholesale, is expected to result in a less than 1% net increase in our total revenue.

We expect gross margins to be up slightly compared to 2025 as we plan to more than offset an approximately 215 basis point impact of gross tariffs in 2026. Which compares to approximately 80 basis points in 2025 and an approximately 50 basis point impact from the North America license transitions. With gross margin improvements driven by our tariff mitigation actions, favorable product costs, including foreign exchange and other business improvements. We expect to mitigate approximately 60% of the tariff impact for the full year, with the impact of our mitigation strategies becoming progressively more meaningful as we move through the year, exiting the year with over 75% mitigation on an annualized basis heading into 2027.

We expect SG&A as a percentage of revenue to be up slightly as we reinvest savings from our Growth Driver Five cost savings actions back into the business, including an over 50 basis point increase in marketing as a percentage of sales compared to 2025. We expect our full year operating margin will be approximately 8.8%, including the 215 basis point gross headwind from tariffs and in line with 2025. Interest expense is projected to be approximately flat compared to $79 million in 2025. Our tax rate is estimated at a range of 22%-23%, and EPS is projected to be a range of $11.80-$12.10.

Looking at the balance sheet, we are projecting capital spending of approximately $250 million as we invest globally to refresh our stores and our shop-in-shops and our wholesale partner stores and continue to strengthen our digital position. We are planning at least $300 million of share repurchases in 2026. Now turning to the first quarter. We are projecting first quarter reported revenue to increase slightly versus 2025 and decrease low single digits in constant currency, with growth in D2C offset by lower wholesale. Importantly, as Stefan mentioned, we have started 2026 with positive momentum and higher spring season sell-through trends across both brands and all three regions.

In EMEA, we expect revenue to be down mid-single digits in constant currency overall and in both channels, reflecting the choppy macro environment that has continued into 2026 and wholesale shipping timing, including a slightly larger portion of the spring season shipping in Q4 last year than in Q1 this year. In Americas, we expect revenue to be down slightly as growth in D2C is expected to be more than offset by lower wholesale, reflecting a first half to second half timing shift compared to 2025. In Asia Pacific, we expect revenue to be up low single digits in constant currency as growth in D2C, including the favorable timing of Lunar New Year compared to the prior year, is offset by lower wholesale as our wholesale partners in the region continue to take a cautious approach.

In our licensing business, revenue is expected to be down mid-single digits driven by the previously mentioned North America license transitions. The balance of the license business is expected to grow low single digits. Tariff impacts will weigh more heavily on our year-over-year gross margin comparisons in the first half due to the timing of when the tariffs were effective in 2025, as well as the sequentially increasing impact of our mitigation strategies. In Q1, we project a gross tariff impact of approximately 230 basis points, about half of which we expect to offset through our tariff mitigation actions in the quarter.

Despite this significant negative impact, we are projecting first quarter gross margin to be nearly flat compared to the prior year as our operational improvements to drive gross margin expansion, including our tariff mitigation actions and favorable product costs, are offset by the negative tariff impact and the gross margin differential from transitioning license categories in North America back in-house. We are projecting first quarter SG&A as a percent of revenue to be up approximately 150 basis points versus 2025. We are reinvesting a portion of our Growth Driver Five cost savings back into the business, including an approximately 100 basis point increase in marketing spend compared to Q1 last year. In the first quarter of 2025, we reduced our marketing spend due to the Calvin Klein product delays and the environment in China.

This year, we are more heavily weighting our marketing spend to the first half to amplify our cut-through campaigns and drive brand heat early in the year. While this will drive our first quarter operating margin down, we’ll see sequential improvement each quarter throughout 2026. In total, we are projecting our first quarter operating margin to be in a range of 6%-6.5%, including the 230 basis point gross tariff headwind compared to 8.1% last year, which did not include the higher tariff. Earnings per share is projected to be in a range of $1.65 to $1.80 compared to $2.30 in the prior year. Our tax rate is estimated at approximately 22%, and interest expense is projected to be approximately $20 million.

Before we open up for questions, I want to reiterate that while we continue to navigate macro uncertainty, we have a clear focus on what is within our control and driving the next level execution of the PVH+ Plan. We have started 2026 with positive momentum and are expecting growth in D2C in both brands and in all regions for the full year. We are continuing to invest in our brands and our business throughout the year and expect to drive gross margin up despite the impact of tariffs, with operating margin for 2026 at approximately 8.8% in line with 2025 and reflecting underlying strength.

With that, operator, we would like to open it up to questions.

Question & Answers

Operator

Thank you. [Operator Instructions] We’ll take our first question from Bob Drbul with BTIG. Please go ahead. Your line is open.

Bob Drbul

Hi. Good morning. Stefan, I was just, you know, wondering, can you talk about how you leverage the information about your consumer, and the brand health across the PVH plan throughout the business?

Stefan Larsson — Chief Executive Officer

Yes, good morning, Bob, and thanks for the question. It’s a really important one. So, as we shared in our prepared remarks, we do extensive consumer research and really exciting to see that the work that we have done over the past few years result in standing stronger with the Gen Z and young millennial than our peer group. And within the Gen Z and young millennial, it’s really the combination between the strengths with the Gen Z and young millennial and within those groups, the segments that the status interested segments, the style driven consumer segments, because we know that they shop more often, they spend more, and they’re more loyal. So, the way we deploy that knowledge is through social, through e-commerce, expanding. We target these consumers, and we build out our category strength from the two, three categories where we see real strength already today in both Calvin and Tommy to the top five categories. Top five categories is over 60% of the business.

So, it’s really targeting the consumers where we are the strongest, that spends the most and the most interested in style and status, and then driving 360 consumer engagement with that consumer. That’s how we are starting to turn the consumer flywheel and that’s part of why we delivered a stronger than expected Q4 and why we are off to a strong start despite the uncertain macro, that’s why we’re off to a strong start in the beginning of 2026 as well.

Bob Drbul

Great. Thank you very much. Good luck.

Stefan Larsson — Chief Executive Officer

Thanks, Bob.

Operator

Thank you. We will move next with Michael Binetti with Evercore. Please go ahead. Your line is open.

Michael Binetti

Hey, guys. Thanks for taking our questions here. I guess this might be for Melissa, but maybe on the EBIT margins. So, we entered the year with margins down 160 to 200 basis points in the first quarter, but then we get to flat in the year and I think you said EBIT margin improves each quarter. Could you just clarify, is that the level or the year-over-year? Maybe just give us a little bit of help on how to think about the cadence of EBIT margin through the year after first quarter. And then I guess backing up, Stefan, on Americas, the revenues planned down slightly in the first quarter, D2C growth, but I think you said wholesale negative. I would think you would have about a mid-single digit lift from the licenses. So, I’m maybe just a bigger picture thought on why you think we can see all the marketing, and we can see, you know, everything with Calvin going viral. I’m just curious why you think wholesalers have such a gap to what you’re seeing in some of the successes and growth in D2C at this point, and if that can reconcile itself as we move through the year?

Stefan Larsson — Chief Executive Officer

Yeah. Thanks, Michael. Let me start, and then Melissa will be able to take you through. There is timing shift in wholesale, to your point, Michael, in Q1, and there are a number of other shifts as well, like the tariff impact that starts off higher and then goes down. So, let me start from a business perspective and just say we are quite far into Q1 by now, and we have a positive momentum in the spring season sell-through for both Calvin and Tommy across all regions. So, we see the stronger D2C trend across both brands, all regions. And in Q1, one factor that also impacts Q1 is that we are strategically increasing our marketing spend, and some of that spend is somewhat front-loaded in the year. So, full-year basis marketing spend is up double-digit, but the first quarter, as Melissa mentioned, there are shifts from the market conditions last year to this year that gives us the confidence to invest more early. And we see that in Calvin through the strength in the spring campaign. We see it with the fashion show, with the amplification of the Love Story interest. In Tommy, we see it through Cadillac Formula 1. We see it with the Liverpool partnership. We see it with the spring campaign. So, we’re really leaning in to turn that consumer flywheel.

But, Melissa will be able to take you through more of the quarter-to-quarter timing.

Melissa Stone — Interim Chief Financial Officer

Yeah. Sure. Thank you, Stefan. So, as we think about the trajectory for the year, there’s several moving parts. Just on the top line, we have started the year, as we talked about, with positive momentum, with spring season products selling up versus last year in both brands and all three regions. And while the macroeconomic environment remains uncertain, we do expect growth for the full year. But in the first half, we’re lapping the stronger comparisons in Europe and the Americas from last year. While in the second half, we expect to drive improvement as we continue to focus on what is within our control and see our investments drive strength to consumer. And I would just add that in Q1, when you look at our overall revenue on a two-year stacked basis, which takes out some of the wholesale timing that’s impacting our comparisons, our total revenue growth in constant currency is sequentially improving from Q3 to Q4, and then from Q4 to Q1.

And then, when we look at the profit cadence, there are also two main parts that I’d highlight. I mean, first, as Stefan mentioned, there’s the tariffs, and in the first half we are burdened by tariffs, which only had a very small impact in the Q2 last year. At the same time, we expect that our tariff mitigation actions will become increasingly impactful as the year progresses and we expect to exit the year with over 75% of the tariff mitigated on an annualized basis.

And then the second piece, as Stefan mentioned, is marketing, where we’ve strategically weighted our investment to the first half, particularly Q1, ahead of the key consumer moments to align with our commercial plan and activate the full funnel and drive that heat early in the year. And you’ll remember that in the second half of 2025, we had already stepped up our marketing investment versus our original plans, and so that we lap that in the second half of 2026. And then lastly, from an FX perspective, there’s just two things I’d highlight. With translation, we see a favorable impact year-over-year, more heavily weighted to the first half, and you can see that effect in our Q1 revenue guidance.

And then on our inventory costs, it’s actually opposite where we see the favorable impact building as the year progresses and that comes through and strengthen our growth margins. And importantly, I would just add that on inventory costs overall, we’re starting to see the benefit in our product costs as we leverage the scale and the power of PVH and our two global product kitchens. And we saw that benefit start to come through in Q4, and we’ll continue to see that benefit in 2026. A lot of parts, but overall, you know, we expect progressive year-over-year improvement in our operating margins.

Michael Binetti

Okay. Thanks a lot, Melissa. Appreciate it.

Operator

Thank you. We will move next with Jay Sole with UBS. Please go ahead.

Jay Sole

Great. Thank you so much. Stefan, I want to ask you about Love Story. I mean, it really was a phenomenon. Just want to ask about the learnings from it, just because was it bigger than you expected and how did it play out? Like I said, what are the learnings that you’ll take going forward?

Stefan Larsson — Chief Executive Officer

Yeah, thanks, Jay. It’s almost impossible to have a conversation about Calvin right now without Love Story. So, it’s also a really great question. So, could we anticipate it? I don’t believe anyone could have anticipated the magnitude of the hit it has become globally and across generations. If you look, we just got the data yesterday that over 40 million people have watched Love Story, Hulu’s most streamed show ever. So, what’s the learning for us and what’s the effect? When the show launched, we could see the search increase for Calvin Klein e-commerce traffic, D2C, is positive. The consumer is looking for iconic Calvin, starting with iconic underwear and iconic denim. The most sold denim style right now is the 90s fit. So, some of the key learnings here is you can’t plan for these things, but what I’m really excited about, and is what the team has done over the past three, four years, is we have gone back to the DNA of what made Calvin collide with culture back in the 90s when that happened, and really taken 100% of that iconic DNA and then working hard to make it 100% current. So, when something like Love Story hits, it’s just a really nice sync up with where we are with the brand. So, it also shows the power of the brand.

So, we’re talking about since we started the PVH+ journey, that there is something special in Calvin and Tommy because they are one of a handful of brands that have collided with culture and become globally iconic. This is a good example of this because the interest we see spans generations. And then one of the biggest audience parts of Love Story is also where we have built the most strength with it, which is within the young millennial and the Gen Z consumer. So, Calvin really helped shape American fashion and the nineties look and yeah, just we see it in the demand. We see it in the interest for the brands, but this is something that has been built over the last three or four years, and we just appreciate it. And for those of you who haven’t watched Love Story, please do. It’s a great show.

Jay Sole

Got it. Thank you so much.

Stefan Larsson — Chief Executive Officer

Thanks, Jay.

Michael Binetti

Thank you. We will move next with Brooke Roach with Goldman Sachs. Please go ahead.

Brooke Roach

Good morning, and thank you for taking our question. Stefan, I was wondering if I could get your latest thoughts on the path to deliver sequentially and sustainably stronger sales momentum in your Europe business. Beyond the easier compares, what are the most important drivers of that sequential improvement that’s planned throughout the year? And what is a more appropriate medium-term algorithm for European growth on a go-forward basis? Thank you.

Stefan Larsson — Chief Executive Officer

Yeah, thanks, Brooke. As we mentioned, there are two big factors here. One is that the spring product season in both Calvin and Tommy in Europe is up versus last year. We’re still relatively early in the spring, so we are one week away from Easter. Last year, it was three weeks later. But we have a very good read on early spring product up versus last year and that is both in D2C and wholesale. And then the forward-looking wholesale order books for fall is up low single digits. So, you will see it’s the combination of keep building the D2C momentum, powered by our increase, because also in Europe, we are stepping up the marketing investments and we see the effect of that, and we will see the effect of that gradually improve over the year. So, you will see our market presence for Calvin and Tommy step-by-step through the year improve, and then we build on the positive start to spring, and then we have the belief from our partners in the forward-looking order books.

Brooke Roach

Great. Thanks so much.

Operator

Thank you. We will move next with Dana Telsey with Telsey Group. Please go ahead.

Dana Telsey

Hi, good morning, everyone. As you think about the uptick in the marketing spend as we go through the year, the first quarter having the most pronounced impact, how do you think of Tommy and Calvin, what we should be watching for newness moving through? On the addition of Travis Kelce to the platform, are there other new celebrities or sports icons that we should be watching for also? And, Stefan, how do you think these as sales drivers for the brand? Thank you.

Stefan Larsson — Chief Executive Officer

Yeah. Thanks, Dana. So, let me start with Tommy this time. I’m really excited. Earlier this week, as you alluded to, we revealed that American football icon, three-time Super Bowl winner, Travis Kelce is becoming our Tommy brand ambassador and creative collaborator. And we know when we have done these collaborations in the past, how much power there is, because there is a lot of love for Travis Kelce out there, a lot of love for Tommy, and then combining those really creates energy and interest. And the way we build that collaboration is, again, going back to the DNA of Tommy’s classic American cool. And then as I mentioned, for Tommy, we’re building out and putting innovation into our strongest franchises into our five most important categories.

So, when looking at categories for Tommy, it’s outerwear, sweaters, shirts, knits, as an example. So, it’s putting innovation and newness. It’s almost like internally it’s very clear, and I push it all the time with the teams, is it has to be 100% iconic and 100% current. So, that’s what we’re going to do through the collaboration with Travis. We’re also doing it in Tommy. What you will see more of is building out the Cadillac Formula One partnership and the Liverpool Football Club partnership. So, Liverpool became, as I mentioned, the number-one engaged social post ever in the history of the brand.

And what’s really exciting about how the brand makes these collaborations shoppable is Cadillac Formula One. We were able to launch the fan wear, the Tommy Cadillac Formula One fan wear around the Super Bowl. And, for a few days there, 50% of the sales in our US e-commerce was Cadillac Formula One Tommy. There is an enormous interest in that. Then through the races, we work with the drivers, we work with local influencers, and then we have shop the looks. So, when you see Tommy show up with your Formula One team that you follow, or you see Tommy with some of the best footballers in the world in Liverpool, you can shop the looks starting from social all the way to e-commerce to emails.

So, some of the biggest impressions we have had since we launched Cadillac Formula One and Liverpool. You’ll just see us build out Tommy’s presence through those partnerships. And then in Calvin, what you will see in Calvin is, starting this spring, already you have seen the spring campaign with Jungkook, the famous K-pop star, campaign items. If you look closer at those campaigns, we build out newness and innovation in underwear, in denim, in outerwear, in knits, and you start to see how that drives sales. So, if you look at the Jungkook featured products prior to the campaign and after the campaign, they’re up 50%. And the outerwear that he wore had a 60% sell-through in two weeks. Dakota Johnson, same thing. What she wore in innovation in underwear was shop the look and became one of the highest-selling underwear styles that we have. So, when we introduce innovation and newness into our icons, whether it’s underwear or denim, etc, that’s how we drive this 360 engagement. You will just see a consistent drumbeat of that towards that consumer target, the Gen Z, the young millennial, and the status shopper and the style enthusiast. So, that’s over time, you’ll just see us build that out.

Dana Telsey

Thank you.

Stefan Larsson — Chief Executive Officer

We have time for one more question. I look at Sheryl now. I get the signal. One more question.

Operator

Thank you. We will take our last question from Tom Nikic with Needham. Please go ahead. Your line is open.

Tom Nikic

Hey, thanks very much for squeezing me in here. Just wanted to ask about the expectations for direct-to-consumer growth this year and I’m wondering how much of that is driven by pricing in order to mitigate tariffs, and how much is driven by expectations for improvement and traffic or unit volume? Thanks.

Stefan Larsson — Chief Executive Officer

Yeah, thanks, Tom. So, let me start and then hand over to Melissa. Overall, we are pleased to see in North America how we are able to take pricing by offering the consumer great value. So, you see that in D2C. You see that across channels really, but your question was about D2C. So, you see the pricing power and the tariff mitigation, that coming out of this year, we will have mitigated 75% of the tariffs. And then across the board, we make sure that we drive pricing power in multiple ways. But it starts by being really focused on these four or five categories that we accelerate and then putting innovation in the franchises and then cutting the long tail of product. There is a lot of pricing power and margin gain over time that we will tap into more and more. And when we drive the consumer engagement on top of that product strategy and then make it come to life all the way through, that’s when we see we’re able to drive pricing power. So, it’s very much connected to where we strengthen the consumer offering, so in Calvin Klein underwear denim, we’re able to drive pricing power because we offer something that’s more valuable to the consumer.

Melissa Stone — Interim Chief Financial Officer

Yeah, and I would just add to that, Tom, that from a D2C perspective, we’re planning our overall D2C business up low single digits in 2026, and that includes growth in both brands and across all regions for the full year, not just in our North America business where we’re faced with tariffs.

Tom Nikic

Great. Thanks very much, and best of luck this year.

Stefan Larsson — Chief Executive Officer

All right. Thank you very much, Tom, and thanks everyone for joining our call today. Looking forward to reconnecting after Q1 and we are heads down ready for the big Easter period here. So, we’re going to get back to business, and looking forward to speaking with you in a quarter. Thank you.

Michael Binetti

[Operator Closing Remarks]

Brooke Roach

Sa. Sam. Sa.

Michael Binetti

Sa. Good morning everyone and welcome to today’s PVH fourth quarter 2025 and full year earnings conference call. At this time, all participants are in a listen only mode. Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the Star and One keys on your touchtone phone. Please note this call may be recorded and that I will be standing by should you need any assistance. It is now my pleasure to turn today’s program over to Cheryl Freeman, Senior Vice President of Investor relations.

Sheryl Freeman — Senior Vice President of Investor Relations

Thank you, operator. Good morning, everyone, and welcome to the PVH Corp. Fourth quarter and full year 2025 earnings conference call. Leading the call today.