PVH falls the most since the 1987 crash after warning of stumbling in Europe

(Bloomberg) — Shares of PVH Corp. fell the most since the Black Monday crash of 1987, after the company issued full-year sales guidance that fell short of expectations.

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The clothing manufacturer, which owns the Tommy Hilfiger and Calvin Klein brands, expects sales to decline 6% to 7% this year, compared with a 2% increase last year. While some of the expected decline comes from sales of Heritage Brands, its women’s intimate apparel division, the company also noted a difficult macroeconomic backdrop, especially in Europe.

The 23% drop as of 9:35 a.m. in New York was the biggest decline for PVH since October 19, 1987.

PVH has been working to implement a transformation plan aimed at strengthening Calvin Klein and Tommy Hilfiger, which have lost momentum among shoppers in recent years. In the fourth quarter, which includes the crucial holiday season, profitability exceeded analysts’ average estimates, partly due to better inventory management.

Yet sales growth is not sustainable in some regions. Calvin Klein’s North American sales fell 8% in the fourth quarter due to a decline in wholesale sales, while Tommy Hilfiger’s international sales fell 1%.

“PVH deserves a lot of credit for what it has accomplished with Calvin Klein and Tommy Hilfiger, making them two of the biggest brands in history,” BMO analyst Simeon Siegel said in a note. “That said, we believe CK has reached a sales peak and could benefit from an increased focus on profits versus sales.”

(Updates with stock details in first and third paragraphs, analyst commentary in last paragraph.)

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