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PVH Corp (PVH) Sells Heritage Brands to Streamline Business
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PVH Corp. (PVH - Free Report) concluded the sale of certain intellectual property and other assets of its Heritage Brands business, including IZOD, Van Heusen, ARROW and Geoffrey Beene brands, to Authentic Brands Group for $223 million. The move is part of its recovery strategy and efforts to focus on core brands such as Calvin Klein and TOMMY HILFIGER. However, the company will retain the Warner’s brand, which sells intimates and underwear, along with its dress shirt and neckwear businesses.
Initially, the definitive agreement was announced this June and the net proceeds from the sale were earlier expected to be utilized to repurchase shares. PVH Corp is likely to incur pre-tax expenses of $21 million due to the sale of the Heritage Brands Retail business, of which $8 million have already been incurred in the fiscal first quarter, with $13 million remaining to be incurred in the second quarter of fiscal 2021.
In relation to the deal, management revised its fiscal 2021 view. For fiscal 2021, the company now expects year-over-year revenue growth of 22-24% on a reported basis and 19-21% at constant currency (cc). This compares unfavorably with the earlier mentioned 24-26% year-over-year sales growth (21-23% on a cc basis). Also, the sales view includes a 3% positive impact of foreign currency.
Fiscal 2021 earnings per share on a GAAP basis are now envisioned to be $6.60, up from the previously mentioned $5.50. This includes a pre-tax gain of almost $100 million related to the sale of the Heritage Brands business. Adjusted earnings are still projected to be $6.50 per share for the said period.
What Else Should You Know?
PVH Corp has been gaining from solid performances across all regions and channels, particularly in Calvin Klein and Tommy Hilfiger. Clavin Klein, in collaboration with Heron Preston, launched its first global product, which aims at reinventing essentials in the fiscal first quarter. Tommy Hilfiger joined hands with Stevie Gee to introduce the third installment of Tommy's DROP SHOP, which offers limited-edition hoodies and tees. Management remains confident about the underlying power of Calvin Klein and Tommy Hilfiger brands, which position it for long-term growth.
The company also remains on track with the expansion of the direct-to-consumer digital business and has been strengthening its network with third-party digital partners. Robust growth across all regions and brands, driven by omni-channel capabilities and improved inventory, bodes well. Driven by the factors, management expects online sales to represent 20% of total sales over the next few years.
The company has been witnessing an impressive performance in its international business, with growth returning to the 2019 pre-pandemic levels. Notably, Asia and China regions are accelerating its recovery process, with China in the lead. Store traffic in China has been on the rise, with robust digital growth. The international unit is anticipated to exceed the pre-pandemic sales level through the rest of 2021.
Shares of this Zacks Rank #2 (Buy) stock gained 16.5% year to date compared with the industry’s growth of 15.5%.
Image: Bigstock
PVH Corp (PVH) Sells Heritage Brands to Streamline Business
PVH Corp. (PVH - Free Report) concluded the sale of certain intellectual property and other assets of its Heritage Brands business, including IZOD, Van Heusen, ARROW and Geoffrey Beene brands, to Authentic Brands Group for $223 million. The move is part of its recovery strategy and efforts to focus on core brands such as Calvin Klein and TOMMY HILFIGER. However, the company will retain the Warner’s brand, which sells intimates and underwear, along with its dress shirt and neckwear businesses.
Initially, the definitive agreement was announced this June and the net proceeds from the sale were earlier expected to be utilized to repurchase shares. PVH Corp is likely to incur pre-tax expenses of $21 million due to the sale of the Heritage Brands Retail business, of which $8 million have already been incurred in the fiscal first quarter, with $13 million remaining to be incurred in the second quarter of fiscal 2021.
In relation to the deal, management revised its fiscal 2021 view. For fiscal 2021, the company now expects year-over-year revenue growth of 22-24% on a reported basis and 19-21% at constant currency (cc). This compares unfavorably with the earlier mentioned 24-26% year-over-year sales growth (21-23% on a cc basis). Also, the sales view includes a 3% positive impact of foreign currency.
Fiscal 2021 earnings per share on a GAAP basis are now envisioned to be $6.60, up from the previously mentioned $5.50. This includes a pre-tax gain of almost $100 million related to the sale of the Heritage Brands business. Adjusted earnings are still projected to be $6.50 per share for the said period.
What Else Should You Know?
PVH Corp has been gaining from solid performances across all regions and channels, particularly in Calvin Klein and Tommy Hilfiger. Clavin Klein, in collaboration with Heron Preston, launched its first global product, which aims at reinventing essentials in the fiscal first quarter. Tommy Hilfiger joined hands with Stevie Gee to introduce the third installment of Tommy's DROP SHOP, which offers limited-edition hoodies and tees. Management remains confident about the underlying power of Calvin Klein and Tommy Hilfiger brands, which position it for long-term growth.
The company also remains on track with the expansion of the direct-to-consumer digital business and has been strengthening its network with third-party digital partners. Robust growth across all regions and brands, driven by omni-channel capabilities and improved inventory, bodes well. Driven by the factors, management expects online sales to represent 20% of total sales over the next few years.
The company has been witnessing an impressive performance in its international business, with growth returning to the 2019 pre-pandemic levels. Notably, Asia and China regions are accelerating its recovery process, with China in the lead. Store traffic in China has been on the rise, with robust digital growth. The international unit is anticipated to exceed the pre-pandemic sales level through the rest of 2021.
Shares of this Zacks Rank #2 (Buy) stock gained 16.5% year to date compared with the industry’s growth of 15.5%.
Image Source: Zacks Investment Research
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