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PVH Corp Down More Than 56% in 6 Months on Coronavirus Woes

Zacks Equity Research
·3 min read

PVH Corp. PVH has been witnessing a dismal performance due to temporary store closures for about six weeks stemming from the coronavirus outbreak. Apart from the loss of millions of lives, this resulted in many companies filing for bankruptcy, huge sales losses, employee furloughs, pay cuts and headcount reductions.

PVH Corp. has been one of the numerous companies affected by store closures since the onset of the coronavirus. It witnessed dismal results for first-quarter fiscal 2020, wherein both top and bottom lines declined year over year. Further, weak traffic even before the ongoing pandemic along with store closures hurt retail store sales to the tune of roughly 50-65% year over year. Also, sluggish performance in all its segments weighed on the top line.

Moreover, softness across its Heritage Brands segment for quite some time now remains a concern. In first-quarter fiscal 2020, the Heritage Brands segment’s revenues fell 47% year over year due to a rise in accounts receivable write-offs and inventory reserves, and deleveraging of expenses. In a bid to improve the segment’s performance, management in April concluded the sale of the Speedo North America business (which was one of the underperforming businesses belonging to this unit) to Pentland Group PLC.

Moving on, fiscal first-quarter margins were dampened by a dismal top-line performance stemming from COVID-19 impacts and adverse impacts of accounts receivable write-offs and inventory reserves to the tune of $97 million. Any further decline in margins may hurt the company’s bottom line in the near term. In fact, the company’s expected earnings growth rate for the current quarter indicates a decline of 232.9%.

Wrapping Up

Despite stores reopening in a phased manner and an impressive performance in the digital platform, management predicts the ongoing pandemic to weigh on the second quarter and fiscal 2020 results. It also anticipates second-quarter revenues to witness a more pronounced impact of the pandemic on a sequential basis. As a result, the company refrained from providing fiscal 2020 guidance.

We note that the Zacks Rank #4 (Sell) stock plunged 56.3% in the past six months compared with the industry’s decline of 24.8%.

3 Stocks to Consider

BJs Wholesale Club Holdings BJ has an impressive long-term earnings growth rate of 13.6% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Kroger Co. KR has an impressive long-term earnings growth rate of 5.5% and a Zacks Rank #1.

Crocs CROX has an impressive long-term earnings growth rate of 15% and a Zacks Rank #2 (Buy).

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From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, SherazMian hand-picks one to have the most explosive upside of all.

This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.

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