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Here's What Lies in Store for PVH Corp (PVH) Stock in 2022

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PVH Corp (PVH - Free Report) is on track to deliver growth this year, banking on its robust business strategies and sound fundamentals. The company has been gaining from strength in its Tommy Hilfiger and Calvin Klein brands along with the robust performance in its international business and solid online show. It earlier informed that the holiday season sales started on a solid note.

Driven by the aforementioned catalysts, shares of this Zacks Rank #3 (Hold) stock have gained 5.5% compared with the industry’s growth of 1.4% in a year. PVH’s earnings estimates for fiscal 2021 and 2022 have moved up 7.3% and 4.1%, respectively, in the past 60 days. The Zacks Consensus Estimate for the company’s current financial year’s sales and earnings suggests growth of 27.6% and 571.6%, respectively, from the year-ago period’s reported numbers. The positive trend signifies bullish analyst sentiments.

Strategies Driving the Momentum

PVH Corp has been witnessing an impressive performance in the digital platform as customers retained their preference for online shopping. In third-quarter fiscal 2021, revenues in the digital channel rose 15% year over year, driven by investments in omni-channel capabilities and improved inventory. The company is on track with the expansion of the direct-to-consumer digital business and strengthening its network with third-party digital partners.

The company's Tommy Hilfiger and Calvin Klein brands continue to serve as key growth drivers. Product strength across all brands and regions, particularly Europe, bodes well. Clavin Klein's first global product in collaboration with Heron Preston remained an upside. As a result of this, the brand launched the second collection. Tommy Hilfiger's seasonal products and the 1985 menswear essentials contributed to sales growth. Also, its partnership with Timberland received positive feedback. Management remains confident about the underlying power of Calvin Klein and Tommy Hilfiger brands, which position the company for long-term growth.

PVH Corp's international business, which returned to growth in the first quarter of fiscal 2021, continued to deliver strong results in the fiscal third quarter. It witnessed a continued momentum in the international unit in the fiscal third quarter both on a year-over-year and a two-year basis, respectively. Management expects the international business to outpace the pre-pandemic revenue levels.

Management raised its fiscal 2021 view. For 2021, revenues are anticipated to grow 27-28% year over year (up 25-26% on a cc basis), marking an improvement from the earlier mentioned 26-28% (indicating a 24-26% rise at cc). Adjusted earnings are now expected to be $9.25 per share compared with the prior mentioned $8.50.

For fourth-quarter fiscal 2021, management expects year-over-year revenue growth of 11-14% (up 16-19% on a cc basis). Adjusted earnings are likely to be $1.94 per share, suggesting growth from 38 cents reported in the prior-year quarter. The gross margin is anticipated to improve year over year, driven by full-price selling and a positive sales mix, which more than offset higher freight costs.

 

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Hurdles to Overcome

The company continues to grapple with weakness in its North America business. The unit is likely to remain drab as international tourism is not expected to return to growth in the near term. It is also likely to incur $21 million of costs in fiscal 2021 associated with the exit from the Heritage Brands Retail business.

Alongside these, management, on its last reported quarter’s earnings call, expected elevated freight and logistic costs, continued uncertainty related to the new COVID-19 variant Omicron, and supply-chain disruptions, including transportation shortages, labor shortages and port congestion, to persist in fiscal 2021. This might have led to the production and delivery delays across stores and online.

All said, a VGM Score of B and a long-term earnings growth rate of 37.5% raise optimism in the stock.

Stocks to Consider

Some better-ranked stocks from the Consumer Discretionary sector are Delta Apparel (DLA - Free Report) , Oxford Industries (OXM - Free Report) and Steven Madden (SHOO - Free Report) .

Delta Apparel currently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 95.5% on average. The DLA stock has jumped 50.5% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share suggests growth of 11.9% and 10.1%, respectively, from the year-ago period's reported numbers.

Oxford Industries currently sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 96.7%, on average. Shares of OXM have gained 34.6% in the past year.

The Zacks Consensus Estimate for Oxford Industries’ current financial year’s sales and earnings suggests growth of 51.9% and 523.8%, respectively, from the year-ago period's reported numbers.

Steven Madden presently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 41.9%, on average. Shares of SHOO have rallied 18.3% in a year.

The Zacks Consensus Estimate for Steven Madden’s current financial-year sales and earnings suggests growth of 50.8% and 267.2% from the year-ago period’s reported numbers, respectively.