PVH Corporation PVH touched a new 52-week low of $79.05 yesterday. Investors appear to be gradually losing confidence in the stock as shares of the company have declined 13.8% since its third-quarter fiscal 2015 earnings announcement on Dec 2, while year-to-date, the stock has plunged 36.2%.
This designer and marketer of branded dress shirts, neckwear, sportswear, footwear and other related products disappointed investors with its lower-than-expected sales for the third straight quarter in fiscal 2015. The company also issued a mixed outlook for fiscal 2015.
We note that PVH Corp.’s significant international presence as well as outlets in various tourist destinations in the U.S. exposes it to foreign currency risks in the current scenario, where the U.S. dollar is gaining strength against other currencies. This is quite evident from the company’s third-quarter fiscal 2015 earnings, which included 44 cents per share impact from adverse forex rates.
Though the company maintained its earnings outlook for fiscal 2015, it expects the currency headwinds to persist throughout the fiscal year and have a greater impact on the top and bottom lines. This is evident from the company’s lowered sales outlook and the fact that its earnings guidance now includes an expected $1.35 per share negative impact from currency headwinds and pressure from its Russian businesses, up from $1.30 per share projected earlier. Alongside, the company expects changing spending patterns of international tourists in the U.S. and volatility in global economic environment to weigh on results.
Moreover, PVH Corp. operates in a highly fragmented market and competes with a number of well-established players. The company primarily competes on the basis of fashion, quality and service. Failure to offer high-quality distinguished products at a competitive price may hamper PVH Corp.’s market share, consequently resulting in reduced top and bottom lines.
Currently, PVH Corp. carries a Zacks Rank #3 (Hold).
Stocks to Consider
A couple of better-ranked stocks in the same industry include Hanesbrands Inc. HBI and Ralph Lauren Corporation RL. Both stocks carry a Zacks Rank #2 (Buy). Another stock worth considering in the related industry is American Eagle Outfitters Inc. AEO, holding a Zacks Rank #1 (Strong Buy).
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