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PVH (PVH) Up 7.4% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for PVH (PVH - Free Report) . Shares have added about 7.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PVH due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
PVH Corp.'s Q4 Loss Wider Than Expected, Revenues Down Y/Y
PVH Corporation reported fourth-quarter fiscal 2020 results, with the top and bottom lines falling short of the Zacks Consensus Estimate. Also, the metrics declined year over year. Persistent adverse impacts of COVID-19, which have been causing temporary store closures, put pressure on the quarterly results. Nonetheless, solid e-commerce performance aided growth. Notably, revenues in the digital channels rallied 57% year over year for the quarter under review.
Q4 Highlights
PVH Corp. reported adjusted loss of 38 cents per share. The metric compared unfavorably with adjusted earnings of $1.88 per share reported in the year-ago quarter. Moreover, the figure was wider than the Zacks Consensus Estimate, which was pegged at a loss of 37 cents per share.
On a GAAP basis, the company reported a loss of 81 cents compared with a loss of 93 cents in the prior-year quarter.
For the fourth quarter, revenues declined 20% year over year to $2,089.8 million. On a cc basis, the metric was down 23% from the prior-year quarter. We note that sluggishness in Tommy Hilfiger, Calvin Klein and Heritage Brands businesses dented the top line. Moreover, the metric missed the Zacks Consensus Estimate of $2,111.1 million.
Also, direct-to-consumer revenues declined 20% year over year for the fourth quarter, thanks to temporary store closures amid the pandemic. Nearly 70% and 75% of company-run stores across Europe and Canada, respectively, were shut during the quarter. Nonetheless, it witnessed solid digital sales in the direct-to-consumer channel.
Moving on, wholesale revenues fell 19% for the fourth quarter. Nevertheless, the metric included double-digit growth in the company’s sales to online businesses of traditional and pure play wholesale customers.
Total gross profit declined to $1,126.3 million from $1,397.9 million reported in the year-ago quarter. Further, selling, general and administrative expenses dropped to $1,173.7 million from $1,257.6 million posted in the prior-year quarter.
Adjusted earnings before interest and taxes came in at $28 million, lower than $150 million posted in the year-ago quarter. The downside was caused by dismal top line stemming from COVID-19 impacts.
Segment Analysis
PVH Corp. reports financial results under three segments — Calvin Klein, Tommy Hilfiger and Heritage Brands.
Revenues in Calvin Klein plunged 17% year over year (down 20% at cc), with Calvin Klein North America & Calvin Klein International declining 25% and 10%, respectively. The downside was due to temporary store closures during the majority of the fourth quarter stemming from extensive lockdown across Europe.
Revenues in the Tommy Hilfiger segment declined 16% year over year (down 20% at cc) for the reported quarter. Notably, Tommy Hilfiger North America fell 28% and Tommy Hilfiger International declined 10%.
The Heritage Brands segment’s revenues slumped 41% year over year for the quarter under review. This included 17% fall in the sale of the company’s Speedo North America business.
Financial Details
PVH Corp ended the quarter with cash and cash equivalents of $1,651.4 million, long-term debt of $3,513.7 million, and stockholders’ equity of $4,730.3 million.
Outlook
Management anticipates revenues and earnings for fiscal 2021 to still reflect the adverse impacts of the pandemic, especially during the fiscal first quarter, thanks to the ongoing store closures in Europe. That said, the company projects international businesses to surpass the pre-pandemic revenue level during first-half 2021. However, North America businesses are likely to remain soft in 2021 owing to sluggishness in international tourism. In an attempt to manage cost structure, management expects to cut its workforce in some international markets and reduce real estate footprint in 2021.
During fiscal 2021, the company expects to achieve revenue growth of 22-24% (indicating 19-21% rise at cc) from the prior year’s figure. Further, adjusted earnings are expected to be $6.00 per share. Adjusted loss of $1.97 per share was reported in 2020.
During first-quarter fiscal 2021, revenues are anticipated to grow in the range of 42-44% year over year (up 34-36% at cc). Adjusted earnings per share are expected in the range of 80-83 cents during the quarter. A loss of $3.03 per share was reported in the year-ago quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -6.82% due to these changes.
VGM Scores
At this time, PVH has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise PVH has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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PVH (PVH) Up 7.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for PVH (PVH - Free Report) . Shares have added about 7.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PVH due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
PVH Corp.'s Q4 Loss Wider Than Expected, Revenues Down Y/Y
PVH Corporation reported fourth-quarter fiscal 2020 results, with the top and bottom lines falling short of the Zacks Consensus Estimate. Also, the metrics declined year over year. Persistent adverse impacts of COVID-19, which have been causing temporary store closures, put pressure on the quarterly results. Nonetheless, solid e-commerce performance aided growth. Notably, revenues in the digital channels rallied 57% year over year for the quarter under review.
Q4 Highlights
PVH Corp. reported adjusted loss of 38 cents per share. The metric compared unfavorably with adjusted earnings of $1.88 per share reported in the year-ago quarter. Moreover, the figure was wider than the Zacks Consensus Estimate, which was pegged at a loss of 37 cents per share.
On a GAAP basis, the company reported a loss of 81 cents compared with a loss of 93 cents in the prior-year quarter.
For the fourth quarter, revenues declined 20% year over year to $2,089.8 million. On a cc basis, the metric was down 23% from the prior-year quarter. We note that sluggishness in Tommy Hilfiger, Calvin Klein and Heritage Brands businesses dented the top line. Moreover, the metric missed the Zacks Consensus Estimate of $2,111.1 million.
Also, direct-to-consumer revenues declined 20% year over year for the fourth quarter, thanks to temporary store closures amid the pandemic. Nearly 70% and 75% of company-run stores across Europe and Canada, respectively, were shut during the quarter. Nonetheless, it witnessed solid digital sales in the direct-to-consumer channel.
Moving on, wholesale revenues fell 19% for the fourth quarter. Nevertheless, the metric included double-digit growth in the company’s sales to online businesses of traditional and pure play wholesale customers.
Total gross profit declined to $1,126.3 million from $1,397.9 million reported in the year-ago quarter. Further, selling, general and administrative expenses dropped to $1,173.7 million from $1,257.6 million posted in the prior-year quarter.
Adjusted earnings before interest and taxes came in at $28 million, lower than $150 million posted in the year-ago quarter. The downside was caused by dismal top line stemming from COVID-19 impacts.
Segment Analysis
PVH Corp. reports financial results under three segments — Calvin Klein, Tommy Hilfiger and Heritage Brands.
Revenues in Calvin Klein plunged 17% year over year (down 20% at cc), with Calvin Klein North America & Calvin Klein International declining 25% and 10%, respectively. The downside was due to temporary store closures during the majority of the fourth quarter stemming from extensive lockdown across Europe.
Revenues in the Tommy Hilfiger segment declined 16% year over year (down 20% at cc) for the reported quarter. Notably, Tommy Hilfiger North America fell 28% and Tommy Hilfiger International declined 10%.
The Heritage Brands segment’s revenues slumped 41% year over year for the quarter under review. This included 17% fall in the sale of the company’s Speedo North America business.
Financial Details
PVH Corp ended the quarter with cash and cash equivalents of $1,651.4 million, long-term debt of $3,513.7 million, and stockholders’ equity of $4,730.3 million.
Outlook
Management anticipates revenues and earnings for fiscal 2021 to still reflect the adverse impacts of the pandemic, especially during the fiscal first quarter, thanks to the ongoing store closures in Europe. That said, the company projects international businesses to surpass the pre-pandemic revenue level during first-half 2021. However, North America businesses are likely to remain soft in 2021 owing to sluggishness in international tourism. In an attempt to manage cost structure, management expects to cut its workforce in some international markets and reduce real estate footprint in 2021.
During fiscal 2021, the company expects to achieve revenue growth of 22-24% (indicating 19-21% rise at cc) from the prior year’s figure. Further, adjusted earnings are expected to be $6.00 per share. Adjusted loss of $1.97 per share was reported in 2020.
During first-quarter fiscal 2021, revenues are anticipated to grow in the range of 42-44% year over year (up 34-36% at cc). Adjusted earnings per share are expected in the range of 80-83 cents during the quarter. A loss of $3.03 per share was reported in the year-ago quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -6.82% due to these changes.
VGM Scores
At this time, PVH has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise PVH has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.