Exploring PVH’s Stock Performance Unlocking the Mystery Behind PVH’s Stock Retreat

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Shares of PVH (NYSE: PVH), the parent company of brands like Calvin Klein and Tommy Hilfiger, experienced a minor earthquake in response to its latest unveiling of financial results for the fourth quarter.

After the dust settled, the stock took a wary step back, closing down 22.2% as investors digested the bittersweet numbers.

A rack of women's blouses at a store.

Image source: Getty Images.

PVH Springboards with a Strong Quarter…

In a twist of fate, PVH surprised many by surpassing estimates in the Q4 report, even though its crystal ball forecast for 2024 suggests a potential decline.

During the last quarter, revenue stood stable or slightly dipped by 1% to reach $2.49 billion, outshining the anticipated $2.42 billion. This achievement was partially aided by an extra week in the fiscal calendar.

Despite a 10% dip in wholesale revenue, direct-to-consumer sales showcased resilience with a 9% growth in alignment with its PVH+ strategy. Moreover, inventory revitalized, showcasing a 21% decrease as it rebounded from preceding supply chain hurdles. The gross margin also performed an impressive acrobatics act, leaping from 55.9% to 60.3%.

On the bottom line, adjusted earnings per share (EPS) sprung up from $2.38 to $3.72.

CEO Stefan Larsson’s words echoed a symphony of optimism when he mentioned,

β€œLooking ahead to 2024, we will continue to build momentum with our PVH+ Plan, driving brand desirability for both Calvin and Tommy in product, consumer engagement, and marketplace execution, powered by our demand-driven underlying operating engine.”

The company also hoisted a $2 billion flag in the form of a new share-buyback program.

…Yet Trips Over Future Forecast

Although the echoes of triumph lingered in the Q4 results, PVH’s gazing ball for the future missed its focal point.

Charting its path for the upcoming year, the company anticipates a sobering 6% to 7% revenue decline. Of this, 3% is attributed to the sale of the Heritage Brands intimates business and the absence of the 53rd week in the financial calendar. Moreover, a 5% drop is foreseen as the company disengages from certain third-party digital platforms, opting for a more exclusive relationship with top wholesale collaborators. The projected revenue of $8.57 billion to $8.66 billion fell quite shy of the anticipated $9.06 billion.

In the realm of earnings per share, a future of $10.75 to $11 was painted, edging a bit higher than the $10.68 achieved in 2023 but laying far below the envisioned $12.08.

Despite PVH stock appearing as a budget-friendly purchase with a price-to-earnings ratio of merely 10, the crystal ball forecast whispers that the PVH+ strategy might need more time to bloom than initially envisaged.

Would staking $1,000 on PVH today be a wise choice?

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool maintains a disclosure policy.

The thoughts and reflections depicted in this piece are those of the author alone and may not necessarily mirror the sentiments of Nasdaq, Inc.

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