PVH Corp. 10-Q Summary: Fiscal 2026 Q2 (Ended August 2, 2026)
Business Context and Reporting Period
This report covers the thirteen and twenty-six weeks ended August 2, 2026. PVH Corp. is a global apparel company owning the TOMMY HILFIGER and Calvin Klein brands, with additional licensed brands (Van Heusen, Nike). The company operates through four segments: EMEA, Americas, APAC, and Licensing. The reporting period was significantly impacted by geopolitical instability in the Middle East, evolving U.S. trade policies, and a major non-cash goodwill impairment charge.
Key Financial Metrics
| Metric (in millions) | 13 Weeks Ended 8/2/26 | 26 Weeks Ended 8/2/26 | 26 Weeks Ended 8/3/25 |
|---|---|---|---|
| Revenue | $2,097.0 | $4,122.1 | $4,150.8 |
| Gross Profit | $1,321.8 | $2,508.0 | $2,412.5 |
| Gross Margin % | 63.0% | 60.8% | 58.1% |
| Net (Loss) Income | $(102.9) | $(14.9) | $179.4 |
| Diluted EPS | $(2.23) | $(0.32) | $3.59 |
| Operating Cash Flow (26 wks) | $336.4 | ||
| Cash & Equivalents (8/2/26) | $965.9 | ||
| Total Debt (Long-term + Current) | $2,248.0 |
Material Changes vs. Prior Period
- Revenue: Total revenue decreased 3% in Q2 and 1% in the first half of 2026 compared to the prior year. EMEA revenue declined 6% due to soft consumer demand linked to the Middle East conflict. Americas revenue was down 1%, driven by wholesale shipment timing shifts, partially offset by the transition of previously licensed women's apparel in-house.
- Profitability: The company reported a net loss of $102.9 million for Q2, compared to net income of $224.2 million in the prior year. This reversal was primarily driven by a $439.0 million non-cash goodwill impairment charge recorded in the EMEA segment due to revised valuation assumptions reflecting geopolitical risks.
- Gross Margin: Gross margin expanded 530 basis points in Q2 to 63.0%. This improvement was largely due to a $106.7 million benefit from tariff refunds received in Q2 related to previously paid IEEPA tariffs. Excluding this benefit, margin expansion was driven by lower product costs and favorable foreign exchange impacts.
- SG&A Expenses: SG&A expenses increased slightly as a percentage of revenue (53.1% vs 52.1% in Q2 prior year) due to increased marketing investments and the deleveraging effect of lower revenue, partially offset by cost savings from the "Growth Driver 5" restructuring initiative.
Guidance, Outlook, and Risks
- Full Year 2026 Outlook: Management expects full-year revenue to be approximately flat compared to 2025. Gross margin is expected to increase approximately 100 basis points, driven by tariff refunds and lower product costs, partially offset by new tariffs and the transition of licensed products. SG&A as a percentage of revenue is expected to be relatively flat.
- Tax Rate: The effective tax rate for the first half was 84.2%, heavily influenced by the non-deductible goodwill impairment. Absent this charge, the expected full-year effective tax rate is 22% to 23%.
- Key Risks:
- Geopolitical Conflict: The ongoing conflict in the Middle East continues to disrupt supply chains, increase fuel costs, and dampen consumer sentiment in Europe and the Middle East.
- Trade Policy: New Section 301 tariffs (10-12.5%) were imposed in July 2026. The company expects a negative impact on gross profit from a blended tariff rate of approximately 15% for the full year.
- China Investigation: PVH remains on China's Ministry of Commerce "List of Unreliable Entities." While no measures have been imposed yet, potential fines or trade restrictions could materially impact operations, as China represents approximately 6% of revenue.
- Capital Allocation: The company expects to repurchase at least $300 million of common stock in 2026. Capital expenditures are projected at approximately $250 million for the full year.
Investor Verification Checklist
- Goodwill Impairment Sustainability: Verify the assumptions used in the EMEA goodwill impairment test, specifically the discount rates and long-term growth projections, to assess the risk of further impairments if geopolitical conditions worsen.
- Tariff Mitigation Effectiveness: Monitor the company's ability to pass on new Section 301 tariff costs to consumers versus absorbing them, and the actual realization of the $106.7 million tariff refund benefit in future quarters.
- China Regulatory Status: Track any updates regarding the MOFCOM investigation and the potential imposition of fines or trade bans that could disrupt the supply chain or sales in the APAC region.
- Wholesale Demand Trends: Analyze the shift in wholesale shipment timing in the Americas and whether this represents a temporary deferral or a structural decline in demand from key retail partners.
- Debt Refinancing Terms: Review the terms of the new 2026 credit facilities entered in June 2026 to ensure covenant compliance remains robust given the current loss position.