PVH Raised Outlook for 3Q & FY'12

Zacks

PVH Corporation (PVH) has recently raised its non-GAAP earnings outlook for the upcoming third quarter and fiscal 2012 on the back of strong sales of its iconic brands Calvin Klein and Tommy Hilfiger. Moreover, the company has been taking initiatives to revamp its Heritage Brands wholesale business.

The world’s largest shirt and neckwear company is experiencing strong demand for its Tommy Hilfiger brand, particularly in North America, while its Calvin Klein brand is outperforming everywhere.

For fiscal 2012, the company now anticipates earnings in the range of $6.32–$6.37 per share instead of $6.25–$6.32 projected earlier. It also raised its guidance range for the third-quarter to $2.28–$2.30 per share from the previous guidance range of $2.20–$2.25.

The current Zacks Consensus Estimate for the third quarter and fiscal 2012 are $2.29 and $6.32 per share, respectively.PVH has topped the Zacks Consensus Estimate by 4.0%–8.3% over the trailing four quarters. Going by the current sales trends, we believe that the company will outperform our estimates once again.

In August 2012, PVH reported an outstanding bottom-line performance in the second quarter of fiscal 2012. Driven by a solid segment-wise performance along with a lower tax rate, the company’s earnings per share jumped approximately 17% year over year to $1.25, beating the Zacks Consensus Estimate of $1.19.

However, the company’s total revenue remains almost flat at $1.337 billion compared with $1.334 billion in the previous-year quarter. The year-over-year revenue growth at the company’s Tommy Hilfiger and Calvin Klein segments were offset by the decline at its Heritage Brands segment and unfavorable foreign currency exchange rates. Moreover, quarterly revenue marginally missed the Zacks Consensus Estimate of $1.342 billion.

PVH Corp., which competes with Ralph Lauren Corporation (RL), currently has a Zacks #2 Rank, which translates to a short-term Buy rating. However, we remain slightly cautious on the stock and uphold our long-term ‘Neutral’ recommendation, waiting to see further catalysts before becoming more positive on the stock.

PVH Corp., formerly known as Phillips-Van Heusen Corporation, is headquartered in New York. PVH Corp. designs and markets branded dress shirts, neckwear, sportswear, footwear and other related products. The company markets its products at a wholesale level through department store chains and directly to consumers through retail stores. The company's portfolio of brands includes its owned brands and its licensed brands.

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