December 05, 2024 09:09 GMT
CONSUMER CYCLICALS: PVH; 3Q results
CONSUMER CYCLICALS
(Baa3, BBB-; Double Pos) (-7% in US after-market)
- 3Q revenue at $2.3b down net -5%yoy, ex. fx -6%
- -2% of that includes sale of a small brand (i.e. organic -4%)
- Direct-to-Consumer was flat vs. wholesale -8% (-4% of which was from brand sale)
- Remaining wholesale weakness it ties to a purposeful pullback in Europe wholesale
- Latter helped gross margin to 58.4% (+170bps)
- GAAP/reported EBIT fell -20%yoy, margin contracting from 9.7% to 8.1% (-162bps)
- adjusted was flat at 10.5% - it's adjusting out investments into cost-saving programs and $51m from a "buy-out of a portion of future payments" to namesake Tommy Hilfiger founder
- BS looks little changed
- FY revenue outlook kept at -6-7% (net and ex. fx) and includes 4Q guidance for -6-7% net fall (-2% of that from FX, -1% from sale of brand and -3% from calendar effects - i.e. organic near flat).
- GAAP/reported EBIT margin outlook lowered from 9.8% to 9.2% (-90bps yoy)
- Adjusted kept unch at 10.1% (unch yoy)
We see leverage similar on above revisions (gross/net 3.2x/2.7x). We do think raters are tad optimistic sitting on positive outlook. €29s look fair here, €27s showing some value at Z+100/B+125 - but even there we see better risk in the new Coty27s who gives +20bps over it.
Earnings call at 2pm London, we will circle back if anything significant.
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