It has been about a month since the last earnings report for PVH (PVH Quick QuotePVH - Free Report) . Shares have added about 7.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is PVH due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

PVH Corp Q1 Earnings & Revenues Beat on PVH+ Plan

PVH Corporation posted solid first-quarter fiscal 2023 results, wherein the bottom and top lines surpassed the Zacks Consensus Estimate and grew year over year. Results gained from strong execution of the PVH+ Plan and continued momentum in its core brands — Calvin Klein and Tommy Hilfiger. The company continues to manage expenses, driving cost efficiencies.

Q1 Highlights

PVH Corp reported adjusted earnings of $2.14 per share, up 10% from the year-ago quarter's $1.94. Also, the bottom line beat the Zacks Consensus Estimate of $1.93.

In the fiscal first quarter, revenues rose 2% year over year (up 5% on a constant-currency or cc basis) to $2,158 million and surpassed the consensus mark of $2,129 million. This is mainly driven by the solid performance in its international businesses, particularly in the Asia Pacific region, continued growth in Europe and the North America direct-to-consumer business.

Direct-to-consumer revenues grew 8% year over year in the quarter, whereas Wholesale revenues fell 2% year over year. Revenues in the digital channel declined roughly 3% in the quarter under review.

The company's gross profit amounted to $1,250.3 million, up 0.9% year over year and surpassed our estimate of $1,240.8 million. The gross margin contracted 50 bps to 57.9% due to higher product costs, negative impact of foreign exchange and abnormally high raw material costs which more than offse. price increases, lower freight costs and a favorable shift in regional and channel mix.

Selling, general and administrative expenses increased 2.4% year over year to $1,064 million. Earnings before interest and taxes totaled $199 million compared with $210 million in the prior-year quarter and our estimate of $252 million. This is mainly due to lower gross margins stemming from inventory costs. The metric also included $9 million of adverse foreign currency impacts.

Segmental Analysis

PVH Corp reports financial results under three segments — Calvin Klein, Tommy Hilfiger and Heritage Brands.

Revenues from the Calvin Klein segment remained flat year over year. Sales from Calvin Klein North America advanced 12%, while the same for Calvin Klein International rose 7%.

Revenues from the Tommy Hilfiger segment grew 5% year over year in the reported quarter. Revenues were up 11% at Tommy Hilfiger North America and the same rose 3% at Tommy Hilfiger International.

The Heritage Brands segment's revenues plunged 12% year over year in the quarter under review.

Financial Details

PVH Corp ended the quarter with cash and cash equivalents of $373.8 million, long-term debt of $2,193 million, and stockholders' equity of $5,126.4 million.

Outlook

Management issued its second-quarter and fiscal 2023 views. For fiscal 2023, revenues are anticipated to grow 3-4% (up 2-3% on a cc basis). This is in sync with our estimate.

The bottom line is expected to be $10 for the year, whereas it reported $3.03 on a GAAP basis and $8.97 on an adjusted basis last year. The view includes a positive impact of 15 cents from favorable currency.

The operating margin is estimated to be 10%. Interest expenses are likely to be $100 million, suggesting an increase from the prior year’s reported figure of $83 million due to higher interest rates. Also, the effective tax rate is expected to be 24%.

For second-quarter fiscal 2023, management expects revenue growth in the low-single digits. The bottom line is likely to be $1.70, whereas it reported $1.72 in the year-ago quarter on a GAAP basis and $2.08 on an adjusted basis. This includes favorable currency impacts of 5 cents. Interest expenses for the fiscal first quarter are likely to be $25 million, whereas it posted $20 million in the year-ago period. The effective tax rate is expected to be 26%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -19.87% due to these changes.

VGM Scores

At this time, PVH has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, PVH has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

PVH belongs to the Zacks Textile - Apparel industry. Another stock from the same industry, V.F. (VFC Quick QuoteVFC - Free Report) , has gained 12.8% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.

V.F. reported revenues of $2.74 billion in the last reported quarter, representing a year-over-year change of -3%. EPS of $0.17 for the same period compares with $0.45 a year ago.

For the current quarter, V.F. is expected to post a loss of $0.14 per share, indicating a change of -255.6% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

V.F. has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.