PVH’s Margins Continue to Improve in the Second Quarter



PVH beats earnings estimates once again

PVH (PVH), which reported second-quarter results on August 29, posted 29% YoY (year-over-year) growth in earnings to $2.18 per share. It was the 17th consecutive earnings beat for the company. Analysts polled by Thomson Reuters, in comparison, had projected a 24.3% YoY increase in EPS to $2.10 for the quarter. The company also exceeded the upper end of its $2.05–$2.10 earnings guidance range.

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A look at margin improvement

Gross profit for the quarter increased 13.1% YoY to $1.3 billion. Gross margin improved 17 basis points to 55.6% of sales, making it the tenth consecutive quarter of gross margin improvement for the company.

Adjusted EBIT (earnings before interest and taxes) increased 19.2% YoY during the quarter to $238 million. Calvin Klein’s EBIT improved 9.4% YoY to $105 million, driven mostly by expansion in the brand’s sales.

Tommy Hilfiger’s EBIT soared 34% YoY to $141 as the brand witnessed gross margin improvement and expense leverage during the quarter in addition to higher sales. Heritage brand operating income, on the other hand, declined 5.7% YoY to $33 million driven by a 3% decline in sales.

Buoyed by the second-quarter performance, the management also raised full-year earnings and revenue guidance. Read the next section to know more.

ETF investors seeking to add exposure to PVH can consider the Guggenheim S&P 500 Equal Weight Consumer Discretionary ETF (RCD), which invests 1.2% of its portfolio in PVH.


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