PVH Corporation ( PVH Quick Quote PVH - Free Report) continues to grapple with uncertainty due to the war in Ukraine and other macroeconomic challenges, including inflation, continued impacts of the COVID-19 pandemic, supply-chain and logistic disruptions resulting in delivery delays, and a lack of inventory availability for stores and digital businesses. Also, higher freight and logistic costs remain concerning. As a result, management expects fiscal 2022 revenues to increase 2-3% year over year (up 6-7% on a cc basis). This compares unfavorably with 25% growth (up 26% on a cc basis) reported in the prior year. The outlook also includes a 2% reduction each for the exit of the Heritage Brands Retail business, temporary store closures and a halt of commercial activities in Russia and Belarus, and lower wholesale shipments to Ukraine. The bottom line is expected to be $9.00 per share, whereas it reported $13.25 and $10.15 on a GAAP and non-GAAP basis, respectively, in the prior year. For first-quarter fiscal 2022, management expects flat year-over-year revenues (up 4% on a cc basis). This compares unfavorably with 55% growth (up 46% on a cc basis) reported in the prior year. The outlook also includes a 5% reduction each for the exit of the Heritage Brands Retail business, a 1% reduction stemming from temporary store closures and the halt of commercial activities in Russia and Belarus, and lower wholesale shipments to Ukraine. The bottom line is likely to be $1.55-$1.60 per share, whereas it reported $1.92 on a non-GAAP basis in the year-ago quarter. PVH Corp's North America unit has been performing poorly for a while now. Despite the increased focus on streamlining the North American business, the unit is likely to remain drab as international tourism is not expected to return to growth in fiscal 2022. This, along with the ongoing supply-chain pressures and logistic delays, is expected to continue to hurt the North America business. For fiscal 2022, management expects 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. These might lead to production and delivery delays across stores and online.
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Consequently, the stock slumped 37.6% in the past year compared with the
industry’s decline of 28.5%. Efforts to Counter Hurdles
PVH Corp has been long gaining from strength in Calvin Klein and Tommy Hilfiger, as well as solid online show and improved customer engagement. Its recently announced multi-year strategy, PVH+ Plan, to drive sustainable growth bodes well.
The company's Tommy Hilfiger and Calvin Klein brands continued to perform well in fourth-quarter fiscal 2021, driven by robust consumer demand. Calvin Klein launched its spring collection in the quarter and the all-together campaign, featuring an international cast, including Jennie Kim, and Euphoria star Dominic Fike. The Tommy Hilfiger brand benefitted from a solid performance in its global Tommy Jeans AAPE by A Bathing Ape collaboration, along with a higher sell-through rate and AURs. The brand also ventured into the metaverse via a partnership with the online game platform Roblox. Going forward, management remains confident about the underlying power of Calvin Klein and Tommy Hilfiger brands, which position it for success amid the ever-changing consumer landscape. The Zacks Rank #3 (Hold) company has been witnessing an impressive performance in the digital platform as customers have shifted to online purchases. Revenues in the digital channel rose 10% year over year in the quarter under review, accounting for nearly 25% of the total revenues. Investments in omni-channel capabilities and improved inventory bode well. The company is on track with the expansion of the direct-to-consumer digital business and strengthening its network with third-party digital partners. Also, its newly launched PVH+ plan mainly aims at accelerating growth via boosting its core strengths, and connecting Calvin Klein and TOMMY HILFIGER brands with the consumers through five major drivers. These drivers are — win with product, win with consumer engagement, win in the digitally-led marketplace, develop a demand and data-driven operating model, and drive efficiencies and invest in growth. The company expects to strengthen its presence in the global demand spaces, wherein its iconic labels resonate well with consumers. Management reinforces the Calvin Klein and Tommy Hilfiger brands so that these can cater to consumers’ needs in new and engaging ways. PVH is focused on fueling digital growth by developing a holistic distribution strategy for Calvin Klein and TOMMY HILFIGER, driven by digital and direct-to-consumer channels and wholesale partnerships. Moreover, PVH Corp looks to develop a demand and data-driven operating model, with a systematic and repeatable product creation model. The model will put consumers first, thus leveraging data to offer fresh products. Also, PVH focuses on boosting efficiencies to be cost-competitive, and, in turn, reinvest in strategic plans. All said, a VGM Score of B and a long-term earnings growth rate of 6% raise optimism in the stock. Stocks to Consider
Some better-ranked stocks from the same industry are
Delta Apparel ( DLA Quick Quote DLA - Free Report) , Oxford Industries ( OXM Quick Quote OXM - Free Report) and GIII Apparel Group ( GIII Quick Quote GIII - Free Report) . GIII Apparel, a manufacturer, designer and distributor of apparel and accessories, presently sports a Zacks Rank #1 (Strong Buy). GIL has a trailing four-quarter earnings surprise of 160.6%, on average. You can see . the complete list of today’s Zacks #1 Rank stocks here The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales and earnings suggests growth of 8.7% and 5.2% from the year-ago period’s reported numbers, respectively. Oxford Industries, which is involved in designing, sourcing, marketing and distributing products bearing the trademarks of its owned and licensed brands, currently flaunts a Zacks Rank #1. OXM has a trailing four-quarter earnings surprise of 96.7%, on average. 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. Delta Apparel, a manufacturer of knitwear products, currently has a Zacks Rank #2 (Buy). DLA has a trailing four-quarter earnings surprise of 95.5%, on average. 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.