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PVH Corp (PVH) Banks On Brand Strength Amid Inflation Woes
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PVH Corp. (PVH - Free Report) looks promising on the back of continued momentum in its core brands — Calvin Klein and Tommy Hilfiger. Strength in the international business also bodes well. This led to the impressive first-quarter fiscal 2022 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate and improved year over year.
In the fiscal first quarter, revenues advanced 2% year over year, driven by strength in the international businesses, particularly in Europe. Adjusted earnings of $1.94 per share increased 1% from the year-ago quarter's figure of $1.92. On a GAAP basis, the company reported earnings of $1.94 per share, reflecting a sharp improvement of 41% from $1.38 in the prior-year quarter.
Speaking of brands, the company's Tommy Hilfiger and Calvin Klein brands continued to perform well in first-quarter fiscal 2022, driven by robust consumer demand. Calvin Klein launched its spring collection in the quarter and 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 its business to succeed amid the ever-changing consumer landscape.
PVH Corp’s international business continued to deliver strong results in the first quarter of fiscal 2022. The company witnessed continued momentum in the international unit in the first quarter of fiscal 2022 on a year-over-year and two-year basis. Notably, the international unit’s revenues jumped 8% year over year on a cc basis. Going ahead, management expects international business to drive growth.
This Zacks Rank #3 (Hold) company’s newly launched PVH+ plan mainly aims at accelerating growth by boosting its core strengths, and connecting Calvin Klein and TOMMY HILFIGER brands with 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. It expects to strengthen its presence in the global demand space, 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.
The company looks to develop a demand- and data-driven operating model with a systematic and repeatable product creation model. The model will put the consumer first, thus, leveraging data to offer fresh products. Also, PVH focuses on boosting efficiencies to be cost-competitive, and, in turn, reinvests in strategic plans.
Headwinds to Overcome
PVH Corp continues to grapple with uncertainties related to the Ukraine war, macroeconomic challenges, inflationary pressure and the pandemic. As a result, fiscal 2022 revenues are anticipated to increase 1-2% year over year (up 6-7% on a cc basis), down from the earlier mentioned 2-3% increase. This is inclusive of a 2% reduction each for the exit of the Heritage Brands Retail business and the war in Ukraine.
The bottom line is expected to be $9.20, suggesting a decline from the prior-year reported figure of $13.25 and $10.15 on a GAAP and non-GAAP basis, respectively. The fiscal 2022 operating margin is likely to be 10%.
For second-quarter fiscal 2022, management expects a year-over-year revenue decline of 4-3%. This is inclusive of a 4% reduction for the exit of the Heritage Brands Retail business and a 2% decline stemming from the war in Ukraine. The bottom line is likely to be $2.20 on a GAAP basis and $2.00 on a non-GAAP basis. Notably, it reported earnings of $2.51 and $2.72 on a GAAP and non-GAAP basis, respectively, in the year-ago quarter.
The company’s North America unit has been performing poorly for a while now. Despite the increased focus on streamlining the North American business, the unit remained well below the pre-pandemic levels due to a lack of international tourism, which 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 throughout fiscal 2022.
Image Source: Zacks Investment Research
Management expects supply-chain and logistic disruptions to result in delivery delays. It also anticipates a lack of inventory availability for stores and digital businesses to act as deterrents in fiscal 2022. Consequently, the PVH stock has plunged 42% year to date compared with the industry’s decline of 36.3%.
Bottom Line
Although rising inflation and freight woes are expected to persist this year, we believe that strength in core brands and the international unit, as well as gains from the PVH+ Plan, is likely to help the stock get back on track. Notably, a long-term earnings growth rate of 9% raises optimism in the stock. Also, PVH’s earnings estimates for fiscal 2022 have moved up 0.4% in the past 60 days.
Stocks to Consider
Some better-ranked stocks from the same industry are Gildan Activewear (GIL - Free Report) , Oxford Industries (OXM - Free Report) and GIII Apparel Group (GIII - Free Report) .
Oxford Industries is an apparel company, which designs, sources, markets and distributes products bearing the trademarks of its owned and licensed brands. It currently flaunts a Zacks Rank #1 (Strong Buy). OXM has a trailing four-quarter earnings surprise of 99.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Oxford Industries’ current financial year’s sales and earnings suggests growth of 10.9% and 7.1%, respectively, from the year-ago period's reported numbers.
Gildan Activewear, a manufacturer of knitwear products, currently sports a Zacks Rank #1. GIL has a trailing four-quarter earnings surprise of 38.7%, on average.
The Zacks Consensus Estimate for Gildan Activewear’s current financial year’s sales and earnings per share suggests growth of 12% and 12.5%, respectively, from the year-ago period's reported numbers.
GIII Apparel, a manufacturer, designer and distributor of apparel and accessories, presently has a Zacks Rank #1. GII has a trailing four-quarter earnings surprise of 160.6%, on average.
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.
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PVH Corp (PVH) Banks On Brand Strength Amid Inflation Woes
PVH Corp. (PVH - Free Report) looks promising on the back of continued momentum in its core brands — Calvin Klein and Tommy Hilfiger. Strength in the international business also bodes well. This led to the impressive first-quarter fiscal 2022 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate and improved year over year.
In the fiscal first quarter, revenues advanced 2% year over year, driven by strength in the international businesses, particularly in Europe. Adjusted earnings of $1.94 per share increased 1% from the year-ago quarter's figure of $1.92. On a GAAP basis, the company reported earnings of $1.94 per share, reflecting a sharp improvement of 41% from $1.38 in the prior-year quarter.
Speaking of brands, the company's Tommy Hilfiger and Calvin Klein brands continued to perform well in first-quarter fiscal 2022, driven by robust consumer demand. Calvin Klein launched its spring collection in the quarter and 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 its business to succeed amid the ever-changing consumer landscape.
PVH Corp’s international business continued to deliver strong results in the first quarter of fiscal 2022. The company witnessed continued momentum in the international unit in the first quarter of fiscal 2022 on a year-over-year and two-year basis. Notably, the international unit’s revenues jumped 8% year over year on a cc basis. Going ahead, management expects international business to drive growth.
This Zacks Rank #3 (Hold) company’s newly launched PVH+ plan mainly aims at accelerating growth by boosting its core strengths, and connecting Calvin Klein and TOMMY HILFIGER brands with 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. It expects to strengthen its presence in the global demand space, 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.
The company looks to develop a demand- and data-driven operating model with a systematic and repeatable product creation model. The model will put the consumer first, thus, leveraging data to offer fresh products. Also, PVH focuses on boosting efficiencies to be cost-competitive, and, in turn, reinvests in strategic plans.
Headwinds to Overcome
PVH Corp continues to grapple with uncertainties related to the Ukraine war, macroeconomic challenges, inflationary pressure and the pandemic. As a result, fiscal 2022 revenues are anticipated to increase 1-2% year over year (up 6-7% on a cc basis), down from the earlier mentioned 2-3% increase. This is inclusive of a 2% reduction each for the exit of the Heritage Brands Retail business and the war in Ukraine.
The bottom line is expected to be $9.20, suggesting a decline from the prior-year reported figure of $13.25 and $10.15 on a GAAP and non-GAAP basis, respectively. The fiscal 2022 operating margin is likely to be 10%.
For second-quarter fiscal 2022, management expects a year-over-year revenue decline of 4-3%. This is inclusive of a 4% reduction for the exit of the Heritage Brands Retail business and a 2% decline stemming from the war in Ukraine. The bottom line is likely to be $2.20 on a GAAP basis and $2.00 on a non-GAAP basis. Notably, it reported earnings of $2.51 and $2.72 on a GAAP and non-GAAP basis, respectively, in the year-ago quarter.
The company’s North America unit has been performing poorly for a while now. Despite the increased focus on streamlining the North American business, the unit remained well below the pre-pandemic levels due to a lack of international tourism, which 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 throughout fiscal 2022.
Image Source: Zacks Investment Research
Management expects supply-chain and logistic disruptions to result in delivery delays. It also anticipates a lack of inventory availability for stores and digital businesses to act as deterrents in fiscal 2022. Consequently, the PVH stock has plunged 42% year to date compared with the industry’s decline of 36.3%.
Bottom Line
Although rising inflation and freight woes are expected to persist this year, we believe that strength in core brands and the international unit, as well as gains from the PVH+ Plan, is likely to help the stock get back on track. Notably, a long-term earnings growth rate of 9% raises optimism in the stock. Also, PVH’s earnings estimates for fiscal 2022 have moved up 0.4% in the past 60 days.
Stocks to Consider
Some better-ranked stocks from the same industry are Gildan Activewear (GIL - Free Report) , Oxford Industries (OXM - Free Report) and GIII Apparel Group (GIII - Free Report) .
Oxford Industries is an apparel company, which designs, sources, markets and distributes products bearing the trademarks of its owned and licensed brands. It currently flaunts a Zacks Rank #1 (Strong Buy). OXM has a trailing four-quarter earnings surprise of 99.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Oxford Industries’ current financial year’s sales and earnings suggests growth of 10.9% and 7.1%, respectively, from the year-ago period's reported numbers.
Gildan Activewear, a manufacturer of knitwear products, currently sports a Zacks Rank #1. GIL has a trailing four-quarter earnings surprise of 38.7%, on average.
The Zacks Consensus Estimate for Gildan Activewear’s current financial year’s sales and earnings per share suggests growth of 12% and 12.5%, respectively, from the year-ago period's reported numbers.
GIII Apparel, a manufacturer, designer and distributor of apparel and accessories, presently has a Zacks Rank #1. GII has a trailing four-quarter earnings surprise of 160.6%, on average.
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.