Apparel stocks undermined by downbeat outlook from PVH

Apparel stocks are under heavy selling pressure Tuesday in sympathy with a freefall in PVH Corp. (NYSE:PVH). The parent company of Calvin Klein and Tommy Hilfiger is down by another 23%+ adding to Monday’s after-hours loss of 27% on the heels of disappointing Q1 and 2024 guidance.

Warning that the company faced continued challenging macroeconomic conditions in Europe, PVH (PVH) said it expects Q1 sales to drop by 11% and by 6%-7% in 2024, setting profit guidance below the Street’s expectations.

While most Wall Street analysts maintained their current ratings, J.P. Morgan and Well Fargo lowered their price targets for PVH (PVH) by 11% and 8%, respectively.

PVH’s (PVH) downbeat outlook for both 2024 and the outlook in Europe is weighing on the apparel sector with V.F. Corporation (VFC) down 6%, Ralph Lauren (RL) lower by 4%, Tapestry (TPR) losing 5.5%, and Abercrombie & Fitch (ANF) more than 4% in the red on Tuesday, driving the SPDR retail ETF (XRT) down 3%, wiping out March gains in the last two days.

The spillover pressure on other consumer discretionary names in the sector seems unwarranted, however, given Q4 results from Ralph Lauren (RL), Tapestry (TPR), and Abercrombie & Fitch (ANF), all of which are expecting at least modest revenue growth in 2024 versus PVH’s (PVH) dismal outlook.