PVH (Baa3, BBB-; Double Pos)

27s another +4 today & are slowly reversing recent gains heading into 1Q earnings on the 31st of May.

• Bloomberg second measure - US Card data which is a proxy lead for the ~30% of sales PVH generates from Calvin Klein & Tommy Hilfiger domestically - is in-line with analyst consensus for a rough 1Q earnings with double digit net revenue falls - guidance from this quarter remains a key uncertainty & holds us back from the 29s (screens well cheap at Z+133/4.2%).
• Unfortunately recent card data is not pointing to a recovery - April was down -25%yoy despite cycling over falls from last year. Some of that looks to be industry wide weakness but we are seeing some retailers buck that (Ralph Lauren was up +15%, Capri +2%). Second measure has its limitations & tracking error with PVH in particular is quiet poor (though useful for turning points).
• Flatteners are the more hedged expression for the 29s screening cheap - but upside may be limited - we see about ~15bps in it.
• Reminder our cheapest screen in the sector was on the H&M 29s & 31s (till PVH came to primary wide) - the H&M's have come in 15bps since with 29s spread a sizeable 45bps to PVH.