PVH (PVH) Reaffirmed its Outlook as Tariff Refunds Lifted Margins. Can the Core Business Recover Without the One-Off Benefit?

PVH Corp. (NYSE:PVH) reported second-quarter revenue of $2.097 billion, down 3% from $2.167 billion one year earlier. Gross margin increased 530 basis points to 63.0% from 57.7%, but approximately 510 basis points came from $107 million of tariff refunds.

The remaining 20-basis-point improvement reflected lower product costs, including favorable foreign exchange and favorable mix. Those benefits were partly offset by increased promotional activity in Europe, the Middle East and Africa, higher tariff costs after mitigation actions and North American license transitions. The result indicates that underlying gross margin was broadly stable, while the reported expansion substantially overstated recurring improvement.

PVH Corp. also recorded a $439 million pre-tax noncash goodwill impairment, primarily reflecting changed valuation assumptions associated with geopolitical and macroeconomic factors. GAAP operating margin fell to negative 9.1% from positive 6.1%.

Bull Case

PVH Corp. produced some evidence that direct consumer demand is holding up. Direct-to-consumer revenue was approximately flat, with owned and operated digital-commerce revenue increasing 4%. Digital growth occurred across both Calvin Klein and Tommy Hilfiger. Inventory declined 3% to $1.738 billion, reducing the risk that excess stock forces heavier discounting.

Tommy Hilfiger revenue was approximately flat. Calvin Klein’s 7% revenue decline included an approximately four-percentage-point reduction from wholesale shipment timing in the Americas. Some of that business shifted into the second half rather than disappearing entirely, although conversion still depends on customers accepting and selling the product.

PVH Corp. reaffirmed full-year revenue of approximately flat, company-defined non-GAAP operating margin of approximately 8.8% and non-GAAP earnings per share of $11.80 to $12.10. PVH Corp. defines non-GAAP results by excluding specified restructuring and other items, including goodwill impairment, warehouse-sale gains, severance-related restructuring costs and related tax effects.

Maintaining the outlook despite weaker quarterly revenue suggests PVH Corp. still expects cost discipline, shipment timing, and brand investments to support the year.

Bear Case

The operating trends remain uneven. Wholesale revenue declined 6% across all regions, Calvin Klein revenue fell 7%, EMEA revenue declined 6%, and licensing revenue dropped 13%. Tommy Hilfiger’s approximately flat result included a three-percentage-point benefit from bringing previously licensed women’s product categories in-house in the Americas.

The refund also materially affected profitability. Company-defined non-GAAP operating margin reached 11.1%, up from 8.2%, but included the 510-basis-point tariff-refund benefit. Subtracting that disclosed benefit implies a refund-excluded margin near 6.0%, below the prior-year level. This calculation isolates the refund but does not adjust for other quarterly changes.

The $439 million impairment was noncash, yet it indicates that PVH Corp. reduced the value assigned to goodwill after revising geopolitical and macroeconomic assumptions. Combined with wholesale and Calvin Klein weakness, that leaves limited evidence of a broad core-business recovery.

Hedge Fund Sentiment

The filings available so far reflect positions held before PVH Corp. reported its second-quarter results and reaffirmed its full-year outlook. Insider Monkey’s database showed 38 hedge funds holding PVH Corp. at the end of 2Q2026, down from 47 funds three months earlier.

Conclusion

PVH Corp. preserved its annual outlook and delivered modest refund-excluded gross-margin improvement. However, wholesale contraction, Calvin Klein weakness and the goodwill impairment show that the turnaround remains incomplete. Brand revenue, full-price selling, normalized margins, and wholesale-order conversion will provide better evidence of recovery than the refund-supported quarter.

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This article is originally published at Insider Monkey.