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PVH Corporation PVH is likely to post a year-over-year decline in its top and bottom lines when it reports fourth-quarter fiscal 2024 results on March 31, after market close. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.3 billion, indicating a drop of 6.1% from the prior-year number.
The consensus estimate for earnings is pegged at $3.19 per share, which indicates a decline of 14.3% year over year. The consensus mark has remained stable in the past 30 days.
In the last reported quarter, the company delivered an earnings surprise of 16.1%. It has a trailing four-quarter earnings surprise of 17.3%, on average.
PVH Corp. Price, Consensus and EPS Surprise
PVH Corp. price-consensus-eps-surprise-chart | PVH Corp. Quote
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Factors to Consider Ahead of PVH Q4 Results
PVH Corp’s fourth-quarter fiscal 2024 results are expected to reflect the impacts of a challenging operating backdrop due to the calendar shift, which includes the loss of the 53rd week. The company has been witnessing sluggishness in its Heritage Brands segment for quite some time now, owing to the decline in the sale of the Heritage Brands women's intimates business. Higher raw material costs and currency headwinds are likely to have been concerning.
In addition, the wholesale channel remains under pressure, with anticipated softness in orders from retail partners. The company is also dealing with a more promotional retail environment, which is expected to weigh on profitability in the to-be-reported quarter. Elevated freight costs, due to disruptions in key sourcing locations, further add to the margin pressures.
On its last earnings call, management anticipated revenues to decline 6-7% (down 4-5% on a constant currency basis) year over year for the fiscal fourth quarter. This included a 1% reduction related to the Heritage Intimate business sale. The fourth-quarter operating margin is expected to contract 200 basis points to 10%.
Gross margin is forecasted to decline nearly 200 basis points, thanks to a moderately higher promotional backdrop, elevated freight costs owing to the disruptions in its major sourcing locations and the mix of wholesale shipments within the second half of the fiscal year. PVH envisioned adjusted earnings per share (EPS) to be $3.05-$3.20 compared with $3.72 in the year-ago quarter, including an unfavorable currency impact of 9 cents a share.
Management further anticipated a mid-single-digit revenue decrease in the wholesale business, including a 2% decline from the sale of the Heritage Intimates business. On a reported basis, including the 53rd week, wholesale revenues are anticipated to be down in the high-single digits. In Europe, the company foresees a high-single-digit revenue decline in euros, reflecting ongoing macroeconomic challenges. The Zacks Consensus Estimate for Tommy Hilfiger and Calvin Klein sales is currently pegged at $1.3 billion and $1.02 billion, respectively, indicating a year-over-year drop of 1.4% and 3.2%.
While these factors raise concern about the outcome, PVH Corp’s PVH+ Plan appears encouraging. The plan mainly aims at accelerating growth by boosting its core strengths and connecting Calvin Klein and TOMMY HILFIGER brands with the consumers. PVH strives to create the best products across its significant growth categories. It expects to strengthen its presence in the global demand spaces where its iconic labels resonate well with consumers. Gains from these efforts are likely to have provided some cushion to the quarterly performance.