China Probes Calvin Klein's Parent Company Over Xinjiang Cotton Allegations Impacting Muslim Communities

PVH Corp. (NYSE:PVH) shares are trading relatively flat on Wednesday.

On Tuesday, China’s Ministry of Commerce announced it will investigate PVH Corp. under the unreliable entity list framework for alleged discriminatory practices and other violations of market trading principles related to Xinjiang products.

Such practices have “seriously undermined the legitimate rights and interests of relevant Chinese enterprises, and jeopardized China’s sovereignty, security and development interests,” said a spokesperson with the ministry.

This action represents Beijing’s latest attempt to counter claims from Western officials and human rights advocates that cotton and other products from the region are made with forced labor involving the Uyghur ethnic group, the BBC reported.

The ministry’s announcement represents a new escalation in Beijing’s efforts to combat bans and consumer boycotts of goods from Xinjiang, reported The New York Times.

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In response to widespread arrests and reports of forced labor among the region’s mainly Muslim ethnic groups, especially the Uyghurs, many Western governments have started imposing restrictions or outright bans on products from Xinjiang.

Researchers have highlighted evidence indicating that cotton production in the region is associated with coercive practices, the report added.

“For both Calvin Klein and Tommy Hilfiger, we drove strong consumer engagement and continued to increase product strength and improve newness in our assortment, leading to more full-priced selling and less end-of-season clearance sales, which fueled significant gross margin expansion,” said Stefan Larsson, CEO of PVH in a press release dated Aug. 27.

The company reaffirmed the fiscal year 2024 revenue decrease of 6% to 7% and raised its earnings outlook from between $11.00 and $11.25 per share to between $11.55 and $11.80 per share.

According to Benzinga Pro, PVH stock has gained over 25% in the past year. Investors can gain exposure to the stock via the Dimensional ETF Trust Dimensional US Small Cap Value ETF (NYSE:DFSV).

Price Action: PVH shares are trading higher by 0.5% to $96.61at last check Wednesday.

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