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PVH Corp (PVH) Surpasses Earnings Expectations and Raises Full-Year Outlook

  • PVH Corp (NYSE:PVH) reports third-quarter earnings above guidance, with a 4% revenue increase to $2.363 billion.

  • EPS on a GAAP basis reached $2.66, surpassing the estimated $2.43, while non-GAAP EPS hit $2.90, exceeding the forecasted $2.70.

  • Full-year EPS outlook raised on both GAAP and non-GAAP bases, with share repurchase plans expanded to approximately $550 million.

On November 29, 2023, PVH Corp (NYSE:PVH) released its 8-K filing, announcing third-quarter earnings that exceeded guidance and an optimistic revision of its full-year earnings per share (EPS) outlook. The company's revenue saw a 4% increase to $2.363 billion compared to the same period last year, aligning with the mid-single-digit growth guidance.

Financial Highlights and Management Commentary

PVH Corp's GAAP EPS for the quarter was $2.66, outperforming the anticipated $2.43. On a non-GAAP basis, EPS was even stronger at $2.90, exceeding the guidance of approximately $2.70. The company's full-year revenue projection has been adjusted to an approximate 1% increase, reflecting the sale of the Heritage Brands intimate apparel business. The GAAP basis EPS outlook for the full year has been raised to approximately $9.75 from $9.60, and on a non-GAAP basis, to approximately $10.45 from $10.35.

"We delivered another strong quarter, with high single-digit revenue growth for our direct-to-consumer businesses across Calvin Klein and TOMMY HILFIGER, with growth in all regions, and we exceeded our EPS guidance," said Stefan Larsson, Chief Executive Officer of PVH Corp. He also highlighted the "outperformance in North America" and the company's progress towards "unlocking our full potential."

Chief Financial Officer Zac Coughlin noted, "Our disciplined execution of the PVH+ Plan drove strong gross margin expansion and double-digit non-GAAP EPS growth in the third quarter."

Operational and Segment Performance

The company's direct-to-consumer revenue increased by 8%, with digital revenue surging by 13%. Gross margin improved to 56.7% from 55.9% in the prior year, benefiting from lower freight costs and a favorable shift in regional and channel mix. Inventory levels were managed proactively, decreasing by 19% in line with the company's goal of a 25% reduction in inventory as a percentage of sales.

Tommy Hilfiger and Calvin Klein, PVH Corp's flagship brands, saw revenue increases of 4% and 6%, respectively. The Heritage Brands segment experienced an 11% decrease in revenue, which was anticipated due to the divestiture of the intimate apparel business.

Strategic Moves and Future Outlook

The sale of the Heritage Brands intimate apparel business was completed in November 2023, with net proceeds of approximately $150 million earmarked for share repurchases. PVH Corp has increased its planned share repurchases for 2023 to approximately $550 million, up from the previous $400 million.

For the full year of 2023, PVH Corp expects revenue to grow by approximately 1%, with a projected GAAP EPS of about $9.75 and non-GAAP EPS of approximately $10.45. The fourth quarter revenue is anticipated to decrease by 3% to 4%, with GAAP EPS projected at approximately $3.48 and non-GAAP EPS at approximately $3.45.

With a solid performance in the third quarter and strategic initiatives in place, PVH Corp (NYSE:PVH) is poised for continued growth despite a challenging macroeconomic environment. The company's focus on its iconic brands and disciplined financial management underpins its optimistic outlook for the remainder of the year.

Explore the complete 8-K earnings release (here) from PVH Corp for further details.

This article first appeared on GuruFocus.