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Why Did PVH Stock Fall ~15%?


May. 31 2019, Published 9:06 a.m. ET


PVH (PVH) shares fell ~15% on May 30 following the company’s first-quarter sales miss and fiscal guidance cut on the earnings front. Several analysts lowered their target price on PVH stock, which dragged the stock down.

PVH posted mixed first-quarter results on May 29. The company’s top line improved on a YoY (year-over-year) basis. However, PVH fell short of analysts’ expectation due to currency volatility and weakness in China. PVH posted total revenues of $2.4 billion, which increased 1.8% on a YoY basis. However, the company’s revenues missed analysts’ estimate.

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PVH’s bottom line beat analysts’ expectation. PVH’s adjusted EPS benefited from higher operating income in the Tommy Hilfiger and Calvin Klein businesses. Share repurchases cushioned PVH’s first-quarter EPS. However, the higher adjusted effective tax rate and increased interest expenses remained a drag.

PVH posted an adjusted EPS of $2.46, which beat analysts’ estimate of $2.45 and increased 4.2% on a YoY basis.

Weak guidance

Citing macroeconomic challenges, weakness in the US and China, and currency volatility, PVH’s management lowered its fiscal adjusted EPS guidance. PVH’s bottom line is expected to be $10.20–$10.30. Earlier, PVH expected the bottom line to be $10.30–$10.40. Persisting challenges are expected to hurt PVH’s sales and earnings in the second quarter.

PVH’s second-quarter revenues are expected to stay flat. The benefits from an increase in Tommy Hilfiger will likely be offset by declines in Calvin Klein and Heritage Brands. PVH’s second-quarter earnings are expected to be $1.85–$1.90, which indicates a YoY decline of 13%–15%.


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