PVH (Baa3, BBB-; Double Pos) weaker after being dragged into trade war
Pressure on the €29s this morning (+4) - we assume after yesterday's headlines. Equities looked past it finishing -1% (SPX +0.3%). That might reflect the relatively diversified supply chain - Bangladesh, Brazil, Cambodia, Egypt, India, Indonesia, Portugal, Sri Lanka, Tunisia, Turkey, Vietnam - all have a number of suppliers and some similar scale to China. PVH has dealt with issues in the country before so hard to see it not being prepared for this.
As far as sales exposure, APAC at 18% is at the low end of any apparel company but excludes Chinese spend overseas (we imagine less than the lux for Tommy Hilfiger and Calvin Klein and unclear if that spend will be impacted).
€29s have generally been our value screen in IG apparel retailers. 2Q results were a bit lacklustre as is FY guidance - though most of that is self-inflected on a rotation out of lower margin wholesale. We will circle back but we do sympathise with the caution after yesterday's developments.