PVH Corporation PVH appears encouraging, thanks to the successful execution of its strategic initiatives and strong fundamentals. The company’s multi-year strategy PVH+ Plan to drive sustainable growth is working smoothly while momentum in its international business also continues. Its brand strength, particularly in Calvin Klein and TOMMY HILFIGER, is an added positive.
Buoyed by such endeavors, the clothing designer’s shares have skyrocketed 67.7% in the past three months, surpassing the industry’s 30.7% growth. Impressively, analysts seem optimistic about the stock. The Zacks Consensus Estimate for fiscal 2024 sales and earnings per share (EPS) is currently pegged at $9.2 billion and $11.58, respectively, showing an increase of 0.3% and 10.7% year over year.
Positive Strategic Initiatives Pave the Way
The PVH+ Plan mainly aims at accelerating growth by boosting its core strengths and connecting Calvin Klein and TOMMY HILFIGER brands with the consumers through five major drivers. These drivers are win with product; win with consumer engagement; win in the digitally-led marketplace; develop a demand- and data-driven operating model; and drive efficiencies and invest in growth.
PVH Corp strives to create the best products across its significant growth categories. It expects to strengthen its presence in the global demand spaces where its iconic labels resonate well with consumers.
A Win-Win Situation
Management reinforces the Calvin Klein and TOMMY HILFIGER brands so that these can cater to consumers’ needs in new and engaging ways. PVH is focused on fueling digital growth by developing a holistic distribution strategy for Calvin Klein and TOMMY HILFIGER, driven by digital and direct-to-consumer channels and wholesale partnerships.
The company looks to develop a demand and data-driven operating model with a systematic and repeatable product creation model. This model will put the consumer first, thus leveraging data to offer fresh products. PVH also focuses on boosting efficiencies to be cost-competitive, and in turn, reinvest in strategic plans. In sync with its plans, PVH remains on track to reduce 10% of its workforce in its global offices by the end of fiscal 2023. The move is likely to generate savings of more than $100 million, which will then be reinvested in digital, supply chain and consumer engagement related to the PVH+ Plan.
International Business Gains Momentum
PVH Corp had announced the extension of its license agreements with G-III Apparel Group from 2025 to 2027, as part of the PVH+ plan. The deal will enable the smooth transition of core product categories back to PVH at the end of the extended terms. The transaction mainly includes Calvin Klein and TOMMY HILFIGER brands in the United States and Canada, particularly the women’s North American wholesale business.
PVH Corp’s international business has been witnessing growth for quite some time now. The company witnessed continued momentum in the international unit in the fiscal third quarter. Notably, the international unit’s revenues inched up 1% year over year on a constant-currency basis. Going ahead, management expects international business to further drive growth.
Eyeing a Promising Future
Given all the positives, PVH is well-placed for growth in 2024. A Value Score of B for this current Zacks Rank #3 (Hold) company further speaks volumes.
Solid Picks in the Market
Some better-ranked companies are GIII Apparel GIII, lululemon athletica LULU and Royal Caribbean RCL.
GIII Apparel, an accessories dealer, sports a Zacks Rank #1 (Strong Buy), at present. GIII has a trailing four-quarter earnings surprise of 541.8%, on average.
The Zacks Consensus Estimate for GIII Apparel’s current financial-year EPS suggests growth of 39.3%, respectively, from the year-ago corresponding figure.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy), at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 18.2% and 23.2%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 9.2%, on average.
Royal Caribbean carries a Zacks Rank of 2, at present. RCL has a trailing four-quarter earnings surprise of 28.3%, on average.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates increases of 57.7% and 187.9%, respectively, from the year-ago period’s reported levels.
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