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PVH Corp. shares fall on cautious outlook for year

The Associated Press

PVH Corp. shares sank Tuesday after the clothing company gave a weak outlook for the year.

THE SPARK: The company, whose brands include Calvin Klein and Tommy Hilfiger, warned late Monday that is taking a cautious stance on the remainder of the year due to uncertain economic conditions.

Consumer spending has been weak in some markets, as the economy's slow recovery weighs on many.

PVH forecast earnings for the year of $7, below the $7.13 per share that analysts polled by FactSet had predicted.

THE BIG PICTURE: Consumer spending on clothing has softened as shoppers have shifted their spending toward cars, housing and education. That has hurt retailers and clothing companies.

CEO Emanuel Chirico said on a call with investors that from a consumer point of view, the larger economy is volatile. That led to some erratic trends in sales during the company's most recent quarter.

PVH on Monday also reported a loss for its second quarter due to costs tied to its acquisition of rival clothier Warnaco in February. After adjusting for that and other special items, the company earned $1.39 per share for the period on revenue of $1.96 billion. Analysts were anticipating $1.36 per share with revenue of $1.89 billion.

THE ANALYSIS: Citi analyst Kate McShane said in a research note that she believes the company is providing conservative guidance. She said the company's management has remained consistently conservative in the recent past, but continues to beat market expectations. She said a drop in share price could be an opportunity for some investors to buy up shares.

SHARE ACTION: Shares fell $8.58, or 6.5 percent, to $123.53 at midday Tuesday. The company's stock remains at the upper end of its 52-week trading range of $90.15 to $134.98.