Can PVH Overcome Margin Pressures Amid Tariffs and Promotions?

PVH Corporation PVH is navigating a more promotional retail landscape across key markets, particularly in the United States and China, where softer consumer sentiment has pressured demand. In the second quarter of fiscal 2025, the company’s gross margin fell 240 basis points (bps) year over year to 57.7%, with management citing higher promotional activity as one of the biggest contributors. While these promotions supported competitive positioning and consumer traffic, they limited pricing power and created a drag on profitability.Beyond promotions, tariffs represent a growing challenge, with rates effectively doubling in the fiscal fourth quarter compared with the prior year. In the fiscal second quarter, tariffs accounted for an estimated 20 bps of margin impact, but the company anticipates greater pressure in the second half of fiscal 2025. Management expects tariffs to reduce EBIT by $70 million, or $1.15 per share, for fiscal 2025, up from earlier estimates. Although PVH is implementing mitigation strategies across its supply chain, logistics, and sourcing, much of the impact will need to be absorbed in the near term.Despite these headwinds, PVH is leaning on cost discipline and operational efficiencies to cushion margins. SG&A, as a percentage of revenues, improved 140 bps year over year in the fiscal second quarter, reflecting progress under the company’s Growth Driver 5 Actions, which include simplifying operations and streamlining global functions. Management expects these efforts to deliver 200 bps of operating margin benefit by year-end, helping to partially offset promotional intensity and tariff costs. While profitability remains under pressure, PVH’s structural improvements position it for margin recovery and more sustainable growth in 2026 and beyond.Management emphasized that while margin pressures will remain elevated through the back half of 2025, PVH’s brand power in Calvin Klein and Tommy Hilfiger, combined with strong consumer engagement and digital growth, provides resilience. The company is strategically reinvesting efficiency savings into marketing to drive top-line momentum, ensuring its brands remain relevant and desirable. This balance between defensive cost management and proactive brand building reflects PVH’s confidence in navigating near-term headwinds while preserving its long-term growth trajectory.PVH’s Zacks Rank & Share Price PerformanceShares of this Zacks Rank #3 (Hold) company have gained 30.4% in the past three months against the industry and the broader Consumer Discretionary sector's fall of 3.3% and 0.5%, respectively. The stock also outperformed the S&P 500, which gained 9.1% in the same period.PVH Stock's Past Three-Month PerformanceImage Source: Zacks Investment ResearchIs PVH a Value Play Stock?PVH currently trades at a forward 12-month P/E ratio of 7.55X, which is lower than the industry average of 11.58X and notably below the sector average of 19.94X. This valuation positions the stock at a modest discount relative to both its direct peers and the broader consumer staples sector.PVH P/E Ratio (Forward 12 Months)Image Source: Zacks Investment ResearchStocks to ConsiderWe have highlighted three better-ranked stocks, namely, Ralph Lauren Corporation RL, Hanesbrands Inc. HBI and Revolve Group, Inc. RVLV. Ralph Lauren, a designer and distributor of premium lifestyle products, including apparel, accessories and footwear, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Ralph Lauren has a trailing four-quarter earnings surprise of 8.5%, on average. The Zacks Consensus Estimate for RL’s current sales and earnings indicates growth of 6% and 19.7%, respectively, from the year-ago period’s reported figures.  Hanesbrands engages in the design, manufacture, sourcing and sale of apparel essentials. It currently carries a Zacks Rank of 2. HBI has a trailing four-quarter earnings surprise of 56.1%, on average.   The consensus estimate for Hanesbrands’ current financial-year earnings indicates a surge of 65% from the year-ago reported figure.  Revolve Group is an e-commerce fashion company. It markets and sells men's and women's designer apparel, shoes and accessories. RVLV has a Zacks Rank #2 at present. The Zacks Consensus Estimate for RVLV’s current financial-year sales indicates growth of 6.8% from the year-ago reported figure. RVLV has a trailing four-quarter earnings surprise of 48.8%, on average.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ralph Lauren Corporation (RL): Free Stock Analysis Report Hanesbrands Inc. (HBI): Free Stock Analysis Report PVH Corp. (PVH): Free Stock Analysis Report Revolve Group, Inc. (RVLV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks