Going ahead with its strategy of expanding higher-margin businesses, PVH Corp. (PVH - Analyst Report) entered into a license agreement with Leisure Brands (Pty) Ltd. to market and distribute IZOD and IZOD Golf brand products across South Africa. The agreement will be valid through Dec 2016.
As per the agreement, Leisure Brands has the rights to sell, promote and distribute IZOD-branded products which include men’s headwear, denim pants, men’s belts, shorts in 5-pocket construction, men’s socks and umbrellas. Apart from this, PVH Corp. provides its licensee the authority to sell, promote, distribute and manufacture IZOD Golf-branded products including, sportswear, apparel and accessories.
We believe that PVH Corp.’s recently concluded transaction furthers its plans to concentrate on higher-margin businesses rather than lower-margin products to drive long-term growth and enhance shareholder value.
Consistent with this strategy, on Monday this week, the company entered into a license agreement with TS Commerce Corporation – a leading men’s apparel retailer in South Korea – to expand PVH Corp.’s Van Heusen brand in Korea.
From the beginning of 2014, we have noticed that the company has been aggressively engaged in expanding its roots to become one of the largest global lifestyle apparel retailers. For achieving this, PVH Corp. is focusing on enhancing its brands across North and Latin America, Europe and Asia through e-commerce as well as licensing.
In the beginning of Jan 2014, PVH Corp. entered into a license agreement with Axis Golf Pty. Ltd. to market and distribute IZOD brand products across Australia, New Zealand, Fiji and other South Pacific islands till 2018.
In late March, the company expanded its relationship with India-based Arvind Brands and Retail Limited, a subsidiary of Arvind Limited to market PVH Corp.’s renowned brand Calvin Klein in India and position it as the largest lifestyle brand in the Indian market over the next five years.
PVH Corp is one of the leading global apparel companies and owner of the world’s most popular brands, namely Calvin Klein and Tommy Hilfiger. Apart from owning and marketing these lifestyle brands, the company has some of the largest shirt and neckwear brands to its credit including Van Heusen, IZOD, ARROW, Warner's and Olga.
Additionally, the company markets a variety of goods under its licensed brands which include Speedo, Geoffrey Beene, Kenneth Cole New York, Kenneth Cole Reaction, Michael Kors, Sean John, Chaps, Donald J. Trump Signature Collection, Joseph Abboud, DKNY, Ike Behar and John Varvatos.
Despite possessing a solid portfolio of brands, PVH Corp. remains focused on brand building, asset management, global expansion and effective implementation of business strategies to drive long-term growth. We believe that the company is moving in the right direction, which will help it to exploit opportunities in the lifestyle apparel market. However, lingering macroeconomic factors could dampen its growth in the near term.
Currently, PVH Corp. carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the apparel space include Hanesbrands Inc. (HBI - Analyst Report), V.F. Corp. (VFC - Analyst Report) and Columbia Sportswear Co. (COLM - Snapshot Report), all of which carry a Zacks Rank #2 (Buy).