The share prices of luxury companies have taken a beating since Kering’s alarming Q1 profit warning on March 19 and this bearish momentum may well continue into this earnings season after PVH Corp announced that 2024 revenues would fall 6 to 7 percent. This is sharply lower than an already negative market view that revenue would be down just over 2 percent and has sent PVH’s shares down over 20 percent today. The owner of Tommy Hilfiger and Calvin Klein pointed to much slower than excepted European sales as the key source of its weaker overall revenues.
Luxury shares have had two major momentum shifts so far this year. Expectations for a normalization of sales growth after extraordinary growth during the pandemic drove down our FSW High Frequency All Luxury Index by over 6 percent from the start of the year until mid-January. Yet very strong earnings reports by Hermès, Brunello Cuccinelli, Zegna, Ferrari and others and a good earnings report by industry giant LVMH powered share prices up by over 20 percent from mid-January to the end of March. Yet, the index has started to return to earth again since Kering’s profit warning.
The FSW Index closed down around 2 percent today while PVH’s American peers Ralph Lauren and Tapestry closed down over 4 percent.
Despite this recent run of bad news, analysts expect a strong Q1 earnings report from the industry’s major brands. LVMH announced today that it will release its results on April 16.