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UPDATE 2-Calvin Klein-owner PVH expects hit from strong dollar, trade spat; shares fall

Nivedita Balu

shares fall@ (Adds background, analyst comments, Q2 earnings forecast)

May 29 (Reuters) - Calvin Klein and Tommy Hilfiger brands owner PVH Corp said it expects a 10 cent hit to its full-year adjusted earnings from a stronger dollar and a prolonged U.S.-China trade war, sending its shares down 10% on Wednesday.

The escalating trade tensions between China and the United States have emerged as a new headache for U.S. retailers, with a clutch of them warning that additional tariffs would impact their earnings and margins.

"Looking ahead, the volatile and challenging macroeconomic backdrop has continued into the second quarter, with particular softness across the U.S. and China retail landscape," Chief Executive Officer Emanuel Chirico said in a statement.

Tariffs on Chinese imports are a concern, as PVH sources a majority of its apparel, footwear and accessories from the Asian country. In 2018, the company imported about $400 million of inventory from China.

Earlier this month, U.S. President Donald Trump escalated the trade war by raising tariffs on $200 billion worth of Chinese goods to 25% from 10%. This was in addition to the 25% tariff on $50 billion worth of Chinese imports already in place.

"Of course the CEO's comment is making investors nervous. And he didn't really mince words, beyond avoiding the tariff subject," Paula Rosenblum, co-founder of retail research firm RSR Research said.

PVH projected a 10 cent impact on its full-year adjusted profit per share due to a strong dollar. It now expects 2019 adjusted profit between $10.20 and $10.30 per share.

The forecast includes the impact of the latest round of tariffs, the company said.

For the second quarter, PVH said it expects adjusted profit between $1.85 per share and $1.90 per share. Analysts are projecting earnings of $2.42 per share, according to Refinitiv IBES data.

PVH's first-quarter revenue rose 1.8% to $2.36 billion, but fell short of analysts' estimate of $2.37 billion.

Excluding items, the company earned $2.46 per share, a cent above the average estimate.

Net income attributable to the company fell to $82 million, or $1.08 per share, in the three months ended May 5, from $179.4 million, or $2.29 per share, a year earlier.

The company incurred charges of $131 million in the quarter related to restructuring of its Calvin Klein business and closure of Tommy Hilfiger stores in the United States.

Investors will wait for more comments from Chirico on the analysts call on Thursday.

"We expect the focus for the conference call will be on the cadence of earnings in the remainder of the year," Bernstein analyst Jamie Merriman said. (Reporting by Nivedita Balu in Bengaluru; Editing by Shailesh Kuber)