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Bear of the Day: PVH (PVH)

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PVH Corporation (PVH - Free Report) is just trying to get through 2020 as retail shutdowns around the world hurt. This Zacks Rank #5 (Strong Sell) is expected to see a 63% decline in earnings this year.

PVH is a global apparel company which operates in the wholesale, retail, digital commerce and licensing channels. It's led by its two largest brands, Calvin Klein and Tommy Hilfiger, which represent 85% of the companies revenue.

It's a global business, with nearly 60% of its revenue generated outside of the United States, and includes a significant presence in China.

A Beat in the Fourth Quarter

On Apr 1, PVH reported its fourth quarter and fiscal 2020 full year results and beat on the Zacks Consensus by $0.08. Earnings were $1.88 versus the consensus of $1.80.

PVH had momentum across both of its brands during the holiday quarter but COVID-19 struck in China in January and then spread worldwide by March.

The company said it could not provide fiscal 2021 guidance given the uncertainty across the global economy.

Cutting Costs

On Apr 7, PVH announced it was taking steps to shore up its finances including furloughing employees in the United States.

The Board was foregoing compensation while the crisis continued.

Additionally, the CEO, Manny Chirico, who actually had COVID-19 himself, would forego his salary during the crisis and 250 top level executives would see salary cuts up to 50%.

Preserving Liquidity

PVH also announced that it drew down $750 million from its $1 billion revolving credit facility.

It sold its Speedo North American business for $170 million in cash.

And it also suspended share repurchases and its cash dividend, beginning with the second quarter of 2020.

Estimates Cut for Fiscal 2021 and 2022

There's no doubt that the apparel retailers are going to take it on the chin this year.

Over the last 90 days, the Zacks Consensus Estimate for fiscal 2021 has fallen off a cliff.



It fell to just $3.46 from $9.94 just 3 months ago.

PVH made $9.54 last year, so that's an earnings decline of 63.7%.

Are Shares Cheap?

PVH shares have fallen 51.8% year-to-date but are off their March lows.



They've actually rallied 33% in the last month on the belief that the worst is already priced into the shares.

Even with the estimate cuts, they're still trading with a value P/E of just 13.8.

It's competitor, and sometime partner, G-III Apparel Group (GIII - Free Report) , is seeing similar cuts to its full year estimates and is also a Zacks Rank #5 (Strong Sell).

It's also cheap with a forward P/E of just 9.9.

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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.

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