PVH Corp. (PVH - Free Report) continues to struggle as apparel retail gets hit hard by the coronavirus pandemic. This Zacks Rank #5 (Strong Sell) just announced it was shutting North American stores.
PVH owns several iconic fashion brands including Calvin Klein, Tommy Hilfiger, Van Heusen, IZOD, Arrow, Warner's, Olga and Geoffrey Beene. It has over 40,000 associates in 40 countries.
Closing North American Stores and Lay Offs
On July 14, PVH announced it was closing its 162 outlet stores in its Heritage Brands Retail business. Van Heusen, alone, has 160 outlet stores.
The stores will continue to operate through mid-2021. The Heritage Brands Retail business is the company's oldest retail business but it was no longer meeting appropriate return metrics.
It's also reducing its corporate office workforce by about 450 positions, or 12%.
The North American streamlining moves are expected to save $80 million.
Full Year Estimates Were Slashed
Earnings estimates continue to get cut with one analyst even cutting in the last week.
The fiscal 2020 Zacks Consensus Estimate has fallen to a loss of $3.01 from $3.46 just 60 days ago.
That's an earnings decline of 131.5% as the company made $9.54 last year.
On June 11, the company reported its fiscal Q1 results and said that by mid-June, 85% of its global stores were expected to be re-opened.
But sales were down 25% year-over-year at that point in the second quarter.
This was before some states started reversing their openings.
Shares Remain Depressed This Year
Although they're off their March coronavirus sell-off lows, shares of PVH are still down 51.7% year-to-date.
They've only gained 5.8% in the last 3 months.
But is all the negative news finally priced in?
Shares were up on the news that it was shutting its Heritage Brands retail stores.
All apparel retailers and department stores are facing similar challenges. But peer G-III Apparel Group (GIII - Free Report) is a Zacks Rank #3 (Hold) right now.
Uncertainty is high in this area of retail. Investors may want to keep a watch list for buying opportunities as things shake out.
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