PVH Corporation PVH shares rallied 18.10% on Tuesday, driven by the company’s fourth-quarter fiscal 2024 earnings release on March 31. Despite reporting a year-over-year decline in fourth-quarter sales and earnings, PVH exceeded the Zacks Consensus Estimate on both counts. Investors’ positive reaction was also driven by a strong full-year 2025 outlook. The company projected record profits for fiscal 2025, despite ongoing macroeconomic and geopolitical challenges.
PVH Corp. closed the year on a strong note, leveraging the strength of its iconic global brands, Calvin Klein and TOMMY HILFIGER, along with the disciplined execution of the PVH+ Plan. Despite macroeconomic challenges, it delivered better-than-expected revenues in constant currency in the fiscal fourth quarter, achieved record gross margins and maintained a double-digit non-GAAP EBIT margin.
PVH’s Q4 Performance: Key Takeaways
PVH Corp. reported adjusted earnings per share of $3.27 on revenues of $2.37 billion and exceeded analysts' projections. Despite challenges, the stronger-than-expected performance and an optimistic outlook for fiscal 2025 contributed to positive investor sentiment.
In the fiscal fourth quarter, International revenues fell 6% (down 3% in constant currency). North America revenues for Tommy Hilfiger and Calvin Klein combined inched up 1% year over year, benefiting from a shift in wholesale shipments, offset by the absence of last year's 53rd week.
Direct-to-consumer revenues declined 5% (down 2% in constant currency), impacted by a 4% hit from the prior year’s extra week, while wholesale revenues fell 5% (down 2% in constant currency), primarily due to weaker sales in the Heritage Brands women's intimates business and PVH’s strategic reduction in European sales.
Meanwhile, PVH reported a gross profit of $1.4 billion, reflecting a 6.7% decline year over year. Despite the drop in profit, the gross margin expanded by 210 basis points to 58.2%, driven by a higher promotional backdrop, an unfavorable shift in channel mix and increased freight costs.
What's Next for PVH?
For fiscal 2025, PVH revenues are expected to be flat to up slightly year over year on a constant-currency basis. Adjusted earnings per share are projected to be in the range of $12.40-$12.75, reflecting an increase from last year’s $11.74 per share. The EPS guidance for fiscal 2024 includes a negative impact of around 20 cents per share from currency movements.
This earnings growth will be driven, in part, by an accelerated $500 million stock buyback program, which will reduce the number of outstanding shares and enhance per-share profitability. The combination of better-than-expected results, earnings outlook and strategic capital allocation has fueled investor optimism, contributing to the stock's strong performance following the earnings release.
PVH’s Strategic Initiatives Bode Well
PVH Corp. is advancing its multi-year PVH+ Plan, a strategic initiative aimed at driving sustainable growth by strengthening its core capabilities and deepening consumer connections for its Calvin Klein and TOMMY HILFIGER brands. The plan revolves around five key drivers: winning with product, enhancing consumer engagement, excelling in a digitally-led marketplace, developing a demand- and data-driven operating model, and driving efficiencies to reinvest in growth.
By focusing on key growth categories and expanding its presence in high-demand global markets, PVH is reinforcing its iconic brands to better cater to evolving consumer preferences. Digital growth remains a priority, with the company implementing a holistic distribution strategy that integrates direct-to-consumer channels and wholesale partnerships. The long-term vision is to position Calvin Klein and TOMMY HILFIGER among the most desirable lifestyle brands in the sector.
What is the Best Approach for PVH?
PVH is well-positioned for sustainable growth, provided it continues executing its PVH+ Plan with a focus on brand leadership, operational efficiency and disciplined financial management. However, macroeconomic uncertainties, shifting consumer preferences and geopolitical risks could pose challenges to sustained growth. PVH currently carries a Zacks Rank #4 (Sell).
Key Picks
We have highlighted three top-ranked stocks, namely, V.F. Corporation VFC, Gildan Activewear GIL and G-III Apparel Group, Ltd. GIII.
V.F. Corp engages in the design, procurement, marketing and distribution of branded lifestyle apparel, footwear and accessories for men, women and children in the Americas, Europe and the Asia-Pacific. It carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus estimate for V.F. Corp’s current-quarter EPS indicates growth of 53.1% from the year-ago levels. VFC delivered an earnings surprise of 82.4% in the last reported quarter.
Gildan Activewear, a manufacturer of premium-quality branded basic activewear, carries a Zacks Rank of 2 at present. GIL has a trailing four-quarter earnings surprise of 5.3%, on average.
The consensus estimate for Gildan Activewear’s current financial-year EPS indicates growth of 16% from the year-ago figure.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for GIII’s fiscal 2025 earnings and revenues implies declines of 4.5% and 1.2%, respectively, from the year-ago actuals. GIII delivered a trailing four-quarter average earnings surprise of 117.8%.
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