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PVH (Baa3, BBB-; Double Pos) 1Q24 Results

CONSUMER CYCLICALS

PVH has reported small beat & kept FY guidance (ending Jan) unch outside small upward revision to EPS and adding explicit 2Q guidance. It is still our cheapest deal of the year in primary. More recently we told investors to stay on side-lines heading into earnings - we take that caution off and add back a cheap view at Z+135/B+165/4.2%. It is our most value pick among retailers. We expect both raters to stay on pos. outlook.

  • 1Q (3m ending April) sales fell -10% (constant currency -9%) to $1.95b better than guidance for -11% (cc-10%) which consensus was also at. Sale of Heritage Brands women's intimates business took 3% off and its drag is included in above/reported figures.
  • DTC was up cc3% with +5% growth in owned & operated stores, while online declined -5% which is says was on planned reduction in Europe. Wholesale decreased -17% (cc), -6% from Heritage sale & rest on the "strategic reduction" in Europe - the latter led to FY guidance cuts earlier this year, is part of broader PVH+ strategy & has been cleared by raters (both on Pos. outlook) & has had positive takes from ER analysts we've seen.
  • Gross margin up +350bps yoy at 61.4% (c60.5%) the above shift away from wholesale & favourable channel mix driving that. EBIT was $205m at a 10.5% margin & is a beat on consensus $181m.
  • Buybacks totalled $200m during the 1Q and its now explicitly added $400m total in FY24 expected (down from $550m last yr). We don't see any drastic changes in BS (unch to lower on gross debt yoy) - which would leave it in upgrade territory.
  • FY guidance is reaffirmed; -6-7% fall in headline & constant currency revenue & includes a -2% reduction from Heritage brand sale & -1% from calendar effect (i.e. net of both -3-4% fall). EBIT margin still expected flat yoy at 10.1%. Small upward revision to adj & GAAP EPS from $10.75-11 to $11-11.25 (adj) & 11.15-$11.4 (GAAP). Explicit 2Q guidance given for a -6-7% fall in headline revenue (cc-5-6%) including a -3% headwind from Heritage sale.

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PVH has reported small beat & kept FY guidance (ending Jan) unch outside small upward revision to EPS and adding explicit 2Q guidance. It is still our cheapest deal of the year in primary. More recently we told investors to stay on side-lines heading into earnings - we take that caution off and add back a cheap view at Z+135/B+165/4.2%. It is our most value pick among retailers. We expect both raters to stay on pos. outlook.

  • 1Q (3m ending April) sales fell -10% (constant currency -9%) to $1.95b better than guidance for -11% (cc-10%) which consensus was also at. Sale of Heritage Brands women's intimates business took 3% off and its drag is included in above/reported figures.
  • DTC was up cc3% with +5% growth in owned & operated stores, while online declined -5% which is says was on planned reduction in Europe. Wholesale decreased -17% (cc), -6% from Heritage sale & rest on the "strategic reduction" in Europe - the latter led to FY guidance cuts earlier this year, is part of broader PVH+ strategy & has been cleared by raters (both on Pos. outlook) & has had positive takes from ER analysts we've seen.
  • Gross margin up +350bps yoy at 61.4% (c60.5%) the above shift away from wholesale & favourable channel mix driving that. EBIT was $205m at a 10.5% margin & is a beat on consensus $181m.
  • Buybacks totalled $200m during the 1Q and its now explicitly added $400m total in FY24 expected (down from $550m last yr). We don't see any drastic changes in BS (unch to lower on gross debt yoy) - which would leave it in upgrade territory.
  • FY guidance is reaffirmed; -6-7% fall in headline & constant currency revenue & includes a -2% reduction from Heritage brand sale & -1% from calendar effect (i.e. net of both -3-4% fall). EBIT margin still expected flat yoy at 10.1%. Small upward revision to adj & GAAP EPS from $10.75-11 to $11-11.25 (adj) & 11.15-$11.4 (GAAP). Explicit 2Q guidance given for a -6-7% fall in headline revenue (cc-5-6%) including a -3% headwind from Heritage sale.

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