PVH Corp. (PVH) seems to be well on track to exploit opportunities in the lifestyle apparel market. The company has been riding on its strong brand portfolio, expansion plans, solid financial position and better-than-expected earnings.
PVH Corp.’s diversified brand portfolio positions it well above its peers to generate above-average industry growth and sustain itself in the current challenging environment. Based on the strength of many of its brands, particularly Tommy Hilfiger and Calvin Klein, coupled with opportunities with regard to distribution, we believe that the company is poised for long-term growth.
Further, the company is focusing on increasing its worldwide presence as evident from the way in which it is strengthening its brands across Australia, New Zealand, North and Latin America, Europe and Asia through eCommerce as well as licensing. This becomes even more evident from the company’s recent move of extending the operations of its Australian joint venture with Gazal, along with the announcement of the expansion strategy of its Calvin Klein brand’s website.
Moreover, the company enjoys a healthy financial status, which provides it with financial flexibility to drive future growth. The company’s ability to generate a strong operating cash flow has helped in the execution of its long-term strategies such as global expansion, product enhancement and brand offerings, and building of operational infrastructure.
Moving to its recent quarterly performance, PVH Corp.’s third-quarter fiscal 2014 adjusted earnings of $2.56 per share not only came ahead of its own guidance range of $2.45–$2.50 but also beat the Zacks Consensus Estimate of $2.48 per share. Moreover, the company’s adjusted earnings were nearly 11% higher than the year-ago comparable period figure of $2.30 per share.
Despite a difficult global retail environment and intense promotional scenario, the company’s bottom-line results improved year over year on strong performance at its Tommy Hilfiger and Calvin Klein brands.
Despite the positive factors, the company lowered its earnings outlook for fiscal 2014, owing to the prevalent foreign currency headwinds which are expected to linger, going forward. Also, the company remains susceptible to macroeconomic factors including increase in fuel and energy costs, credit availability, high unemployment levels and high household debt levels, which may negatively affect the disposable income of consumers.
Additionally, PVH Corp. competes with various well-established players like V.F. Corporation (VFC) and Ralph Lauren Corporation (RL) among others. Failure to offer high-quality distinguished products at competitive prices may hamper PVH Corp.’s market share, consequently resulting in reduced top and bottom lines.
PVH Corp. currently carries a Zacks Rank #3 (Hold).
Key Pick from the Sector
A better-ranked retail stock is G-III Apparel Group, Ltd. (GIII) with a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment