Apparel maker PVH Corp reported quarterly revenue on Thursday that missed Wall Street estimates for the first time in at least two years, due to weakness in its Calvin Klein business, sending its shares down nearly 8 percent after-hours.
Calvin Klein, PVH’s second biggest segment in sales after Tommy Hilfiger, relaunched and rebranded its jeans collection bringing a younger feel and a stronger assortment to stores.
Its most recent relaunch – Calvin Klein 205W39NYC – includes ready-to-wear luxury clothing such as oversized sweaters, tie-dyed dresses and plaid trousers.
“We are disappointed by the lack of return on our investments in our Calvin Klein 205W39NYC halo business,” said PVH’s Chief Executive Officer Emanuel Chirico.
Chrico said that some of the relaunched Calvin Klein Jeans “was too elevated” and did not sell as well as planned.
Several retailers, including more affordable brands like Urban Outfitters Inc and Gap Inc, have launched apparel with styles from the 1990s and boosted their social media presence to attract millennials, their target shoppers.
PVH has also roped in millennial-favorite influencers such as singer Justin Beiber and has collaborated with Amazon.com Inc to set up pop-up stores where shoppers can try their jeans and order them on the online retailer’s app.
Despite its efforts, Calvin Klein’s third-quarter earnings, before taxes and interest, fell to $121 million, from $142 million a year earlier, mainly due to an increase in creative and marketing expenditures.
“We believe they (Calvin Klein) didn’t get the mix right in some places such as Macy’s and Amazon, the product might have been too fashion forward…I imagine that will be rectified,” said Jessica Ramirez, a retail analyst with Jane Hali & Associates.
Ramirez said it might have been a hiccup.
“Because it is a relaunch, they are still trying to get it right,” she said.
On the brighter side, PVH’s Tommy Hilfiger, which is banking on retro and streetwear trends, posted a 11 percent rise in quarterly revenue.
PVH raised its full year outlook going into the holiday quarter and now expects adjusted profit between $9.33 to $9.35 per share. It had previously forecast profit of $9.20 to $9.25 per share.
Excluding items, PVH earned $3.21 per share, topping the average estimate of $3.14, according to IBES data from Refinitiv.
Net income attributable to the New York-based company rose 1.6 percent to $243.1 million, or $3.15 per share.
Total revenue rose 7 percent to $2.52 billion, but fell short of analysts’ estimate of $2.53 billion.