While PVH Corp. projected weaker sales for the fourth-quarter — giving Wall Street some pause at first — investors warmed to the company’s progress under chief executive officer Stefan Larsson and sent shares of the company up 6.9 percent to $97.78 Thursday.
The parent company to Tommy Hilfiger and Calvin Klein released its third-quarter results late on Wednesday, with net income of $161.6 million and adjusted earnings per share of $2.90 — 16 cents ahead of the $2.74 analysts projected.
Revenues rose 4 percent to $2.4 billion.
But for the fourth quarter, revenues were forecast to be down 3 percent to 4 percent, with high-single-digit growth in the direct-to-consumer businesses offset by declines at wholesale, including the sale of the Heritage Brands intimates business. Wall Street was prepped for a fourth-quarter increase.
Ike Boruchow, an analyst at Wells Fargo, also noted that third-quarter revenues and gross margins were weaker than expected and described it as, “a rare miss from PVH, as their turnaround efforts had been fairly flawless since CEO Larsson took over.”
“PVH showed it’s not immune to a weakening macro, particularly within EU, although the company’s strategies around supply chain, distribution and brand elevation combined with increased share buyback should benefit profitability well into next fiscal year,” Boruchow said.
If the initial take was more bearish and pressured the stock in off-hours trading, Larsson won over at least some on Wall Street with what Wedbush’s Tom Nikic a “bullish tone” on a conference call with analysts.
“Given the big run up in the share price — the stock was [approximately] $70 seven weeks ago — as well as some emerging headwinds in Europe … we’re remaining neutral rated for the time being. But we have to admit that we’re impressed with PVH’s execution.”
And Zachary Warring, an analyst at CFRA Research, kept his buy rating on PVH’s shares and lifted his 12-month price target by $25 to $125 a share.
“By focusing on what’s within our control for the full year 2023, we remain well positioned to buy meaningful margin expansion and double-digit EPS growth,” Larsson told analysts on the call. “We just came out of the important Thanksgiving and Black Friday week, one of the key consumer moments during the holiday period. And I’m pleased to share that in both North America and in Europe, we beat our growth plans versus last year and delivered a strong start of the holiday season.”
