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Why Is PVH (PVH) Down 5.7% Since Last Earnings Report?
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A month has gone by since the last earnings report for PVH (PVH - Free Report) . Shares have lost about 5.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is PVH due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
PVH Corp Q4 Earnings & Revenues Beat on Brand Strength
PVH Corp posted fourth-quarter fiscal 2022 results, wherein the bottom and top lines surpassed the Zacks Consensus Estimate. Despite macroeconomic challenges, results gained from the continued momentum in its core brands — Calvin Klein and Tommy Hilfiger — along with pricing actions and strong consumer engagement.
Management has been on track with its PVH+ Plan, which is likely to result in substantial cost efficiencies and better productivity. Per PVH, the business momentum has been positive in 2023.
Q4 Highlights
PVH Corp reported adjusted earnings of $2.38 per share, down 16.2% from the year-ago quarter's $2.84. However, the bottom line beat the Zacks Consensus Estimate of $1.64 and our estimate of $1.63. On a GAAP basis, the company reported earnings of $2.18 per share compared with $5.53 in the prior-year quarter.
In the fiscal fourth quarter, revenues rose 2% year over year (up 8% on a constant currency or cc basis) to $2,489 million. This is mainly due to the impacts of the Ukraine war, such as Russia store closures, the cessation of wholesale shipments to Russia and Belarus, and a reduction in wholesale shipments to Ukraine. Also, the top line surpassed the Zacks Consensus Estimate of $2,336 million and our estimate of $2,324 million.
On the flip side, the company witnessed growth across Europe and North America, particularly in the direct-to-consumer business, along with continued strength in its Tommy Hilfiger and Calvin Klein brand businesses. However, the company continues to witness negative impacts from the COVID-19 pandemic in China.
Direct-to-consumer revenues grew 4% year over year in the quarter, whereas Wholesale revenues remained flat year over year. Revenues in the digital channel declined roughly 8% in the quarter under review.
The company's gross profit amounted to $1,390.5 million, down 1.8% year over year. The gross margin contracted 240 bps to 55.9% due to higher costs and increased promotions, which more than offset gains from price increases and a favorable shift in regional and channel mix.
Adjusted selling, general and administrative expenses decreased 2% year over year to $1,186.6 million. Adjusted earnings before interest and taxes totaled $215 million compared with $174.6 million in the prior-year quarter. This mainly resulted from reduced expenses and revenue growth on a cc basis, which somewhat offset dismal gross margins. The metric also included $21 million of adverse foreign currency impacts.
Segmental Analysis
PVH Corp reports financial results under three segments — Calvin Klein, Tommy Hilfiger and Heritage Brands.
Revenues from the Calvin Klein segment moved up 3% year over year. Sales from Calvin Klein North America advanced 4%, while the same for Calvin Klein International rose 1%.
Revenues from the Tommy Hilfiger segment rose 3% year over year in the reported quarter. Revenues were up 5% at Tommy Hilfiger North America, while the metric grew 3% at Tommy Hilfiger International.
The Heritage Brands segment's revenues plunged 10% year over year in the quarter under review.
Financial Details
PVH Corp ended the quarter with cash and cash equivalents of $550.7 million, long-term debt of $2,177 million, and stockholders' equity of $5,012.7 million. The company also bought back $400 million of shares under its existing $3-billion share repurchase program in the quarter under review. Capital expenditure is likely to be $350 million. It also intends to repurchase at least $200 million of shares.
Outlook
Management issued its first quarter and fiscal 2023 view. For fiscal 2023, revenues are anticipated to grow 3-4% (up 2-3% on a cc basis). This is inclusive of less than 1% benefit from an additional week in 2023. The bottom line is expected to be $10 for the year, whereas it reported $3.03 on a GAAP basis and $8.97 on an adjusted basis last year. The view includes a positive impact of 15 cents from favorable currency. Also, the operating margin is estimated to be 10%. Interest expenses are likely to be $100 million, suggesting a decline from the prior year’s reported figure of $83 million, due to higher interest rates. Also, the effective tax rate is expected to be 24%.
For first-quarter fiscal 2023, management expects revenues to remain flat year over year (up 3% on a cc basis). The bottom line is likely to be $1.90, whereas it reported $1.94 in the year-ago quarter. This includes unfavorable currency impacts of 10 cents. Interest expenses for the fiscal first quarter are likely to be $23 million, whereas it posted $22 million in the year-ago period. The effective tax rate is expected to be 24%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, PVH has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise PVH has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
PVH belongs to the Zacks Textile - Apparel industry. Another stock from the same industry, G-III Apparel Group (GIII - Free Report) , has gained 2.9% over the past month. More than a month has passed since the company reported results for the quarter ended January 2023.
G-III Apparel reported revenues of $854.43 million in the last reported quarter, representing a year-over-year change of +14.2%. EPS of $0.41 for the same period compares with $0.98 a year ago.
For the current quarter, G-III Apparel is expected to post a loss of $0.09 per share, indicating a change of -112.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.8% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for G-III Apparel. Also, the stock has a VGM Score of A.
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Why Is PVH (PVH) Down 5.7% Since Last Earnings Report?
A month has gone by since the last earnings report for PVH (PVH - Free Report) . Shares have lost about 5.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is PVH due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
PVH Corp Q4 Earnings & Revenues Beat on Brand Strength
PVH Corp posted fourth-quarter fiscal 2022 results, wherein the bottom and top lines surpassed the Zacks Consensus Estimate. Despite macroeconomic challenges, results gained from the continued momentum in its core brands — Calvin Klein and Tommy Hilfiger — along with pricing actions and strong consumer engagement.
Management has been on track with its PVH+ Plan, which is likely to result in substantial cost efficiencies and better productivity. Per PVH, the business momentum has been positive in 2023.
Q4 Highlights
PVH Corp reported adjusted earnings of $2.38 per share, down 16.2% from the year-ago quarter's $2.84. However, the bottom line beat the Zacks Consensus Estimate of $1.64 and our estimate of $1.63. On a GAAP basis, the company reported earnings of $2.18 per share compared with $5.53 in the prior-year quarter.
In the fiscal fourth quarter, revenues rose 2% year over year (up 8% on a constant currency or cc basis) to $2,489 million. This is mainly due to the impacts of the Ukraine war, such as Russia store closures, the cessation of wholesale shipments to Russia and Belarus, and a reduction in wholesale shipments to Ukraine. Also, the top line surpassed the Zacks Consensus Estimate of $2,336 million and our estimate of $2,324 million.
On the flip side, the company witnessed growth across Europe and North America, particularly in the direct-to-consumer business, along with continued strength in its Tommy Hilfiger and Calvin Klein brand businesses. However, the company continues to witness negative impacts from the COVID-19 pandemic in China.
Direct-to-consumer revenues grew 4% year over year in the quarter, whereas Wholesale revenues remained flat year over year. Revenues in the digital channel declined roughly 8% in the quarter under review.
The company's gross profit amounted to $1,390.5 million, down 1.8% year over year. The gross margin contracted 240 bps to 55.9% due to higher costs and increased promotions, which more than offset gains from price increases and a favorable shift in regional and channel mix.
Adjusted selling, general and administrative expenses decreased 2% year over year to $1,186.6 million. Adjusted earnings before interest and taxes totaled $215 million compared with $174.6 million in the prior-year quarter. This mainly resulted from reduced expenses and revenue growth on a cc basis, which somewhat offset dismal gross margins. The metric also included $21 million of adverse foreign currency impacts.
Segmental Analysis
PVH Corp reports financial results under three segments — Calvin Klein, Tommy Hilfiger and Heritage Brands.
Revenues from the Calvin Klein segment moved up 3% year over year. Sales from Calvin Klein North America advanced 4%, while the same for Calvin Klein International rose 1%.
Revenues from the Tommy Hilfiger segment rose 3% year over year in the reported quarter. Revenues were up 5% at Tommy Hilfiger North America, while the metric grew 3% at Tommy Hilfiger International.
The Heritage Brands segment's revenues plunged 10% year over year in the quarter under review.
Financial Details
PVH Corp ended the quarter with cash and cash equivalents of $550.7 million, long-term debt of $2,177 million, and stockholders' equity of $5,012.7 million. The company also bought back $400 million of shares under its existing $3-billion share repurchase program in the quarter under review. Capital expenditure is likely to be $350 million. It also intends to repurchase at least $200 million of shares.
Outlook
Management issued its first quarter and fiscal 2023 view. For fiscal 2023, revenues are anticipated to grow 3-4% (up 2-3% on a cc basis). This is inclusive of less than 1% benefit from an additional week in 2023. The bottom line is expected to be $10 for the year, whereas it reported $3.03 on a GAAP basis and $8.97 on an adjusted basis last year. The view includes a positive impact of 15 cents from favorable currency. Also, the operating margin is estimated to be 10%. Interest expenses are likely to be $100 million, suggesting a decline from the prior year’s reported figure of $83 million, due to higher interest rates. Also, the effective tax rate is expected to be 24%.
For first-quarter fiscal 2023, management expects revenues to remain flat year over year (up 3% on a cc basis). The bottom line is likely to be $1.90, whereas it reported $1.94 in the year-ago quarter. This includes unfavorable currency impacts of 10 cents. Interest expenses for the fiscal first quarter are likely to be $23 million, whereas it posted $22 million in the year-ago period. The effective tax rate is expected to be 24%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, PVH has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise PVH has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
PVH belongs to the Zacks Textile - Apparel industry. Another stock from the same industry, G-III Apparel Group (GIII - Free Report) , has gained 2.9% over the past month. More than a month has passed since the company reported results for the quarter ended January 2023.
G-III Apparel reported revenues of $854.43 million in the last reported quarter, representing a year-over-year change of +14.2%. EPS of $0.41 for the same period compares with $0.98 a year ago.
For the current quarter, G-III Apparel is expected to post a loss of $0.09 per share, indicating a change of -112.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.8% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for G-III Apparel. Also, the stock has a VGM Score of A.