Ascend Capital’s New Position in PVH Corp.


Apr. 9 2015, Updated 8:05 p.m. ET

Ascend Capital and PVH Corp.

Ascend Capital started a new position in PVH Corp. (PVH). The fund bought 275,963 shares worth $35 million. According to the latest 13F filings, it accounts for 1.36% of the hedge fund’s total portfolio. Another hedge fund, Glenview Capital, also raised its stake in PVH Corp.

PVH has 0.05% exposure to the SPDR S&P 500 ETF (SPY) as well as the iShares Core S&P 500 ETF (IVV). The ETF tracks the performance of 500 publicly listed companies in the “growth” sector.

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About PVH Corp.

PVH (Phillips-Van Heusen) Corp. is one of the world’s largest branded apparel companies. Its iconic brands include Calvin Klein, Tommy Hilfiger, Van Heusen, IZOD, ARROW, Speedo, Warner’s, and Olga.

Tommy Hilfiger and Calvin Klein drive 3Q14 growth

For 3Q14, PVH’s revenue totaled $2.23 billion. It was up 2% YoY (year-over-year). Foreign exchange negatively affected its revenue by $30 million.

Other companies in the industry also experienced foreign currency headwinds. The appreciation of the US dollar affected VF Corporation’s (VFC) revenue by 3%. Perry Ellis International (PERY) sustained a negative impact of $0.04 on its EPS (earnings per share) due to the spike in the US dollar. In September and October, the company had slow store traffic in Europe and North America due to the “unseasonably warm weather and less promotional activity at…stores in Europe.”

On a constant currency basis, Tommy Hilfiger’s revenue increased by 3%. On a local currency basis, Calvin Klein’s revenue grew 3% due to strong sales in the North American region’s retail and wholesale segments.

PVH’s EPS for 3Q14 was $2.56. It was up 11% YoY. It was $0.06 higher than management’s top end guidance.

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IZOD retail division to close 

In January, PVH announced plans to close IZOD’s retail divsion. The closure won’t affect IZOD’s wholesale business. PVH expects to record pre-tax charges of $40 million in connection with the closure. Nearly half of the charges will be non-cash.

PVH and Gazal target expansion of Australian JV

In December 2014, PVH and Gazal Corporation Ltd. (GZL.AX) announced that “through wholly owned subsidiaries, they had entered into an agreement with their Australian joint venture to add businesses to the joint venture, significantly expanding its scope.”

This JV (joint venture) aims to add Tommy Hilfiger, Nancy Ganz, and Van Heusen in Australia and New Zealand. It will also add Gazal’s shirting, tailored, and other related businesses.

This JV will enable PVH to expand its business in Australia. It will also drive the growth of the brands mentioned above.

In the next part of this series, we’ll discuss Ascend Capital’s position in CDK Global (CDK).


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