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Here's Why PVH Corp (PVH) is Rallying Ahead of the Industry

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PVH Corporation (PVH - Free Report) looks well placed for growth, thanks to its robust strategic initiatives and strong fundamentals. The company’s multi-year strategy PVH+ Plan to drive sustainable growth is working smoothly while momentum in the international business also continues. Its brand strength, particularly in Calvin Klein and TOMMY HILFIGER, is an added positive. Buoyed by such endeavors, the clothing designer’s shares have skyrocketed 48.3% in the past three months compared with the industry’s 3.5% drop.

Let’s Delve Deeper

The PVH+ Plan aims to accelerate growth by boosting 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.  

PVH Corp strives to create the best products across its significant growth categories. It expects to strengthen its presence in the global demand spaces where 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.

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The company looks to develop a demand and data-driven operating model with a systematic and repeatable product creation model. This model will put the consumer first, thus leveraging data to offer fresh products. PVH also focuses on boosting efficiencies to be cost-competitive and, in turn, reinvest in strategic plans. In sync with its plans, PVH is on track to reduce 10% of its workforce in its global offices by the end of the fiscal 2023. The move is likely to generate savings of more than $100 million, which will then be reinvested in digital, supply chain and consumer engagement related to the PVH+ Plan.

PVH Corp had announced the extension of its license agreements with G-III Apparel Group from 2025 to 2027, as part of the PVH+ plan. The deal will enable the smooth transition of core product categories back to PVH at the end of the extended terms. The transaction mainly includes Calvin Klein and TOMMY HILFIGER brands in the United States and Canada, particularly the women’s North American wholesale business.

PVH Corp's international business has been witnessing growth for quite some time now. The company witnessed continued momentum in the international unit in the fiscal third quarter. The international unit’s revenues inched up 1% year over year on a constant-currency basis. Going ahead, management expects international business to drive growth further.

Impressively, analysts seem optimistic about the stock. The Zacks Consensus Estimate for fiscal 2024 earnings per share (EPS) is currently pegged at $10.96, suggesting an increase of 2.6% year over year. Given all the positives, PVH stock seems to be doing well on the bourses. A VGM Score of B for this current Zacks Rank #3 (Hold) company speaks volumes.

Key Picks

Some better-ranked companies are GIII Apparel (GIII - Free Report) , lululemon athletica (LULU - Free Report) and Royal Caribbean (RCL - Free Report) .

GIII Apparel, an accessories dealer, sports a Zacks Rank #1 (Strong Buy), at present. GIII has a trailing four-quarter earnings surprise of 541.8%, 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 EPS suggests growth of 39.3% from the year-ago figure.

lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy), at present.

The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 18.4% and 23.7%, respectively, from the year-ago figures. LULU has a trailing four-quarter earnings surprise of 9.2%, on average.

Royal Caribbean carries a Zacks Rank of 2 at present. RCL has a trailing four-quarter earnings surprise of 28.3%, on average.

The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates an increase of 13.7% and 38.1%, respectively, from the year-ago reported levels.

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