What Will Drive PVH’s Top Line in 3Q16?



Evaluating PVH’s 2Q16 sales performance

PVH’s (PVH) total sales rose 3.7% YoY (year-over-year) to $1.9 billion in the third quarter, driven by strength in the Calvin Klein business and Tommy Hilfiger International markets. Later in this series, we’ll provide a view of the past performance and future drivers of these two famous brands of PVH.

The company’s Heritage Brands business continued to report falling sales due to the ongoing rationalization initiatives that PVH implemented in 2015. PVH’s management, however, expects this business to show improvement in 2H16 based on the company’s healthy wholesale orders and reduction in inventories.

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Management’s 3Q16 expectations

Management has predicted a 3% rise in PVH’s 3Q16 top line, on a constant currency basis. Calvin Klein and Tommy Hilfiger revenue is likely to rise 6%, while the Heritage Brands business is likely to fall 6%. For fiscal 2016, management expects a 3% growth in its top line on a constant currency basis. ETF investors seeking to add exposure to PVH can consider the iShares Morningstar Mid-Cap ETF (JKG), which invests 0.52% of its portfolio in PVH.

A look at the recent performance of PVH’s peers

Ralph Lauren (RL), which reported results on November 10, recorded an 8% fall in total revenue for the quarter ending October. The company’s 2% growth in international revenue was offset by a 12% decline in its North America business. VF (VFC), which reported results in October, saw sales fall 3.4%, driven by weakness in the company’s Jeanswear, Imagewear, and Sportswear segments. Hanesbrands (HBI), however, reported a strong third quarter, with sales rising 11%. The company’s top line was in line with Wall Street analyst estimates.


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