U.S. markets closed
  • S&P Futures

    3,940.50
    -31.25 (-0.79%)
     
  • Dow Futures

    31,702.00
    -137.00 (-0.43%)
     
  • Nasdaq Futures

    11,869.25
    -166.00 (-1.38%)
     
  • Russell 2000 Futures

    1,781.90
    -9.90 (-0.55%)
     
  • Crude Oil

    109.77
    -0.52 (-0.47%)
     
  • Gold

    1,850.00
    +2.20 (+0.12%)
     
  • Silver

    21.73
    +0.00 (+0.01%)
     
  • EUR/USD

    1.0673
    -0.0023 (-0.21%)
     
  • 10-Yr Bond

    2.8590
    +0.0720 (+2.58%)
     
  • Vix

    28.48
    -0.95 (-3.23%)
     
  • GBP/USD

    1.2563
    -0.0025 (-0.20%)
     
  • USD/JPY

    127.6780
    -0.2100 (-0.16%)
     
  • BTC-USD

    29,269.80
    -894.02 (-2.96%)
     
  • CMC Crypto 200

    655.88
    -19.00 (-2.81%)
     
  • FTSE 100

    7,513.44
    +123.46 (+1.67%)
     
  • Nikkei 225

    26,863.33
    -138.19 (-0.51%)
     

PVH Corp (PVH) Looks Robust on Digital & Brand Strength

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·5 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

PVH Corp. PVH displays a remarkable upside story despite the looming uncertainty related to the new COVID-19 variant Omicron and supply-chain disruptions. The company has been gaining from brand strength, particularly in Calvin Klein and Tommy Hilfiger, as well as a solid performance in its international business. Holiday season sales are also off to a solid start.

Driven by these factors, PVH delivered third-quarter fiscal 2021 results, wherein both the top and bottom lines improved year over year. In the fiscal third quarter, revenues advanced 10% year over year. Gross profit rose 22.1% year over year and the gross margin expanded 570 bps, owing to full-price selling and a positive sales mix, which offset higher freight costs. This led to more than two-fold growth in adjusted earnings to $2.67 per share in the quarter.

This Zacks Rank #2 (Buy) stock has gained 2.6% year to date compared with the industry’s growth of 13.6%. It also compares favorably against the Consumer Discretionary sector’s decline of 13.2%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

In the past 30 days, the company’s estimates for fiscal 2021 earnings per share have moved up 7.3% to $9.29. For fiscal 2021, its earnings estimates suggest 571.6% growth from the year-ago period.

PVH’s Growth Drivers

The company’s Tommy Hilfiger and Calvin Klein brands continued to perform well in third-quarter fiscal 2021. Product strength across all brands and regions, particularly Europe, pricing power and a gross margin expansion contributed to quarterly growth. Clavin Klein’s first global product in collaboration with Heron Preston remained a key growth driver and the brand launched the second collection. Tommy Hilfiger’s seasonal products and the 1985 menswear essentials remained upsides. Also, its partnership with Timberland received positive feedback.

PVH Corp’s international business, which returned to growth in the first quarter of fiscal 2021, continued to deliver strong results in the third quarter. The company witnessed a continued momentum in the international unit in the fiscal third quarter on a year-over-year and a two-year basis.

The impressive performance in the digital platform also bodes well. Revenues in the digital channel rose 15% year over year in the fiscal third quarter, accounting for nearly 21% of total revenues. This can be attributable to investments in omni-channel capabilities and improved inventory. The company is on track with the expansion of direct-to-consumer digital business and strengthening its network with third-party digital partners.

Management raised its fiscal 2021 view. For 2021, revenues are anticipated to grow 27-28% year over year (up 25-26% on a cc basis), suggesting an improvement from the earlier mentioned 26-28% (indicating a 24-26% rise at cc). Adjusted earnings are now expected to be $9.25 per share compared with the prior mentioned $8.50. Notably, it reported an adjusted loss of $1.97 in fiscal 2020.

For fourth-quarter fiscal 2021, management expects year-over-year revenue growth of 11-14% (up 16-19% on a cc basis). Adjusted earnings are likely to be $1.94 per share, up from 38 cents reported in the prior-year quarter. The gross margin is anticipated to improve year over year, driven by full-price selling and a positive sales mix, which more than offset higher freight costs. The international business is likely to outpace the pre-pandemic revenue levels.

Also, a VGM Score of B and a long-term earnings growth rate of 37.5 % raise optimism in the stock.

Here’s How Other Stocks Fared

We have highlighted some other top-ranked stocks from the broader Consumer Discretionary space, namely Steven Madden SHOO, Gildan Activewear GIL and Under Armour UAA.

Gildan Activewear currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 85%, on average. Shares of GIL have gained 44.6% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Gildan’s current financial-year sales and earnings per share suggests growth of 4.5% and 24.4%, respectively, from the year-ago period’s reported numbers. The Zacks Consensus Estimate for GIL’s 2021 earnings is pegged at $2.38 per share, which has increased 12.3% in the past 30 days.

Steven Madden presently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 41.9%, on average. Shares of SHOO have rallied 29.3% year to date.

The Zacks Consensus Estimate for Steven Madden’s current financial-year sales and earnings suggests growth of 50% and 170.4% from the year-ago period’s reported numbers, respectively. The Zacks Consensus Estimate for SHOO’s 2021 earnings is pegged at $2.35 per share, which has increased 11.9% in the past 30 days.

Under Armour currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 244.5%, on average. Shares of UAA have gained 28.4% in the past year.

The Zacks Consensus Estimate for Under Armour’s current financial-year sales and earnings per share suggests growth of 25% and 396.2%, respectively, from the year-ago period’s reported figures. UAA has an expected long-term earnings growth rate of 25%.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

PVH Corp. (PVH) : Free Stock Analysis Report

Gildan Activewear, Inc. (GIL) : Free Stock Analysis Report

Steven Madden, Ltd. (SHOO) : Free Stock Analysis Report

Under Armour, Inc. (UAA) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research