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Will Inflationary Costs Mar PVH Corp's (PVH) Earnings in Q2?
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PVH Corporation (PVH - Free Report) is expected to register year-over-year top-line growth when it reports second-quarter fiscal 2023 results on Aug 29. The consensus mark for quarterly revenues is pegged at $2.2 billion, indicating growth of 2.5% from the prior-year reported number.
The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at $1.75 per share, suggesting a decline of 15.9% from the year-ago quarter’s reported figure. The consensus mark for earnings has been unchanged in the past 30 days.
In the last reported quarter, the company delivered an earnings surprise of 10.9%. Its bottom line surpassed estimates by 20.4%, on average, over the trailing four quarters.
PVH Corp has been gaining from the continued momentum in its core brands, Calvin Klein and Tommy Hilfiger, along with pricing actions and strong consumer engagement. The company's Tommy Hilfiger and Calvin Klein brands are anticipated to have performed well in the quarter under review, driven by robust consumer demand.
On the last reported quarter’s earnings call, management was confident about the underlying power of the Calvin Klein and Tommy Hilfiger brands, which position the company’s business to succeed in the ever-changing consumer landscape.
Our model predicts the Tommy Hilfiger brand to register sales growth of 5% in the fiscal second quarter. Sales for Calvin Klein are anticipated to be almost flat year over year, while Heritage Brands is expected to deliver a sales decline of 4.6%.
Also, the continued momentum in PVH Corp's international unit is likely to have aided the company’s performance in the fiscal second quarter. Management has been on track with its PVH+ Plan, which is likely to result in substantial cost efficiencies and better productivity. PVH expected the business momentum to be positive throughout 2023. These factors are likely to get reflected in the company’s top-line performance in the fiscal second quarter.
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. It looks to develop a demand and data-driven operating model with a systematic and repeatable product creation model. PVH also focuses on boosting efficiencies to be cost-competitive and, in turn, reinvest in strategic plans. Gains from these efforts are likely to get reflected in the company’s top and bottom lines in the to-be-reported quarter.
However, inflation-led high costs remain near-term headwinds for PVH Corp. High raw material costs and currency headwinds have been taking a toll on the company’s margins. The gross margin for the fiscal second quarter is expected to reflect higher product costs, the negative impacts of foreign exchange and abnormally high raw material costs.
Additionally, the company has been witnessing an elevated SG&A expense rate from increased investment-related costs for the DTC and international businesses for the past few quarters. This is likely to have dented the operating margin in the to-be-reported quarter.
On the last reported earnings call, management anticipated a soft second-quarter fiscal 2023 performance due to global inflationary pressures. It expects revenue growth in the low-single digits on both reported and constant-currency basis. 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.
We expect SG&A expenses to increase 8.6% year over year to $1,107.9 million in the fiscal second quarter. Meanwhile, SG&A expenses, as a percentage of sales, are expected to increase 290 basis points (bps). Our model predicts an adjusted operating margin of 8%, suggesting a 190-bps contraction from the year-ago quarter’s actual. In dollar terms, adjusted operating income is likely to decline 17.3% year over year.
Zacks Model
Our proven model does not conclusively predict an earnings beat for PVH Corp this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
PVH Corp has an Earnings ESP of -0.10% and a Zacks Rank #4 (Sell).
Stocks Poised to Beat Earnings Estimates
Here are some stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Five Below (FIVE - Free Report) currently has an Earnings ESP of +1.21% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023 results. The consensus mark for FIVE’s quarterly revenues is pegged at $760.2 million, which suggests growth of 13.6% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for FIVE’s earnings has been unchanged at 83 cents per share in the past 30 days. The consensus estimate indicates 12.2% growth from the year-ago quarter’s reported figure.
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +8.52% and a Zacks Rank #2. The company is likely to register growth in the bottom line when it reports second-quarter fiscal 2023 numbers. The consensus mark for AEO’s quarterly earnings has moved up 25% to 15 cents per share in the past 30 days. The consensus estimate suggests significant growth of 275% from the year-ago quarter’s reported EPS of 4 cents.
The Zacks Consensus Estimate for American Eagle’s quarterly revenues is pegged at $1.2 billion, which suggests a decline of 0.9% from the figure reported in the prior-year quarter.
lululemon athletica (LULU - Free Report) currently has an Earnings ESP of +1.05% and a Zacks Rank of 3. The company is likely to register increases in the top and bottom lines when it reports second-quarter fiscal 2023 numbers. The consensus mark for LULU’s quarterly earnings has moved up by a penny in the past 30 days to $2.53 per share. The consensus estimate suggests 15% growth from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for lululemon’s quarterly revenues is pegged at $2.2 billion, which suggests an increase of 16.1% from the figure reported in the prior-year quarter.
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Will Inflationary Costs Mar PVH Corp's (PVH) Earnings in Q2?
PVH Corporation (PVH - Free Report) is expected to register year-over-year top-line growth when it reports second-quarter fiscal 2023 results on Aug 29. The consensus mark for quarterly revenues is pegged at $2.2 billion, indicating growth of 2.5% from the prior-year reported number.
The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at $1.75 per share, suggesting a decline of 15.9% from the year-ago quarter’s reported figure. The consensus mark for earnings has been unchanged in the past 30 days.
In the last reported quarter, the company delivered an earnings surprise of 10.9%. Its bottom line surpassed estimates by 20.4%, on average, over the trailing four quarters.
PVH Corp. Price and EPS Surprise
PVH Corp. price-eps-surprise | PVH Corp. Quote
Factors to Note
PVH Corp has been gaining from the continued momentum in its core brands, Calvin Klein and Tommy Hilfiger, along with pricing actions and strong consumer engagement. The company's Tommy Hilfiger and Calvin Klein brands are anticipated to have performed well in the quarter under review, driven by robust consumer demand.
On the last reported quarter’s earnings call, management was confident about the underlying power of the Calvin Klein and Tommy Hilfiger brands, which position the company’s business to succeed in the ever-changing consumer landscape.
Our model predicts the Tommy Hilfiger brand to register sales growth of 5% in the fiscal second quarter. Sales for Calvin Klein are anticipated to be almost flat year over year, while Heritage Brands is expected to deliver a sales decline of 4.6%.
Also, the continued momentum in PVH Corp's international unit is likely to have aided the company’s performance in the fiscal second quarter. Management has been on track with its PVH+ Plan, which is likely to result in substantial cost efficiencies and better productivity. PVH expected the business momentum to be positive throughout 2023. These factors are likely to get reflected in the company’s top-line performance in the fiscal second quarter.
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. It looks to develop a demand and data-driven operating model with a systematic and repeatable product creation model. PVH also focuses on boosting efficiencies to be cost-competitive and, in turn, reinvest in strategic plans. Gains from these efforts are likely to get reflected in the company’s top and bottom lines in the to-be-reported quarter.
However, inflation-led high costs remain near-term headwinds for PVH Corp. High raw material costs and currency headwinds have been taking a toll on the company’s margins. The gross margin for the fiscal second quarter is expected to reflect higher product costs, the negative impacts of foreign exchange and abnormally high raw material costs.
Additionally, the company has been witnessing an elevated SG&A expense rate from increased investment-related costs for the DTC and international businesses for the past few quarters. This is likely to have dented the operating margin in the to-be-reported quarter.
On the last reported earnings call, management anticipated a soft second-quarter fiscal 2023 performance due to global inflationary pressures. It expects revenue growth in the low-single digits on both reported and constant-currency basis. 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.
We expect SG&A expenses to increase 8.6% year over year to $1,107.9 million in the fiscal second quarter. Meanwhile, SG&A expenses, as a percentage of sales, are expected to increase 290 basis points (bps). Our model predicts an adjusted operating margin of 8%, suggesting a 190-bps contraction from the year-ago quarter’s actual. In dollar terms, adjusted operating income is likely to decline 17.3% year over year.
Zacks Model
Our proven model does not conclusively predict an earnings beat for PVH Corp this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
PVH Corp has an Earnings ESP of -0.10% and a Zacks Rank #4 (Sell).
Stocks Poised to Beat Earnings Estimates
Here are some stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Five Below (FIVE - Free Report) currently has an Earnings ESP of +1.21% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023 results. The consensus mark for FIVE’s quarterly revenues is pegged at $760.2 million, which suggests growth of 13.6% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FIVE’s earnings has been unchanged at 83 cents per share in the past 30 days. The consensus estimate indicates 12.2% growth from the year-ago quarter’s reported figure.
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +8.52% and a Zacks Rank #2. The company is likely to register growth in the bottom line when it reports second-quarter fiscal 2023 numbers. The consensus mark for AEO’s quarterly earnings has moved up 25% to 15 cents per share in the past 30 days. The consensus estimate suggests significant growth of 275% from the year-ago quarter’s reported EPS of 4 cents.
The Zacks Consensus Estimate for American Eagle’s quarterly revenues is pegged at $1.2 billion, which suggests a decline of 0.9% from the figure reported in the prior-year quarter.
lululemon athletica (LULU - Free Report) currently has an Earnings ESP of +1.05% and a Zacks Rank of 3. The company is likely to register increases in the top and bottom lines when it reports second-quarter fiscal 2023 numbers. The consensus mark for LULU’s quarterly earnings has moved up by a penny in the past 30 days to $2.53 per share. The consensus estimate suggests 15% growth from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for lululemon’s quarterly revenues is pegged at $2.2 billion, which suggests an increase of 16.1% from the figure reported in the prior-year quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.