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Clothing retailer PVH Corp shares spike in after-hours trading

By Robert Davis

21:52, 31 August 2021

Tommy Hilfiger, part of PVH Corp
Tommy Hilfiger, part of PVH Corp. Photo: Shutterstock

Shares of retail giant PVH Corporation jumped 7% to $112.92 during after-hours trading on Tuesday after the company crushed its fiscal Q2 2021 earnings expectations and raised its outlook for the rest of the fiscal year.

PVH reported revenues of $2.3bn for the quarter, translating to EPS of $2.72 per share. The company’s reported EPS are $1.52 above the consensus estimates of $1.16 per share.  

At the same time, the company raised annual EPS forecast for Q3 to $8.50, up from the $6.60 it forecasted last quarter.

Earlier Tuesday, shares of PVH traded lower, finishing the day’s session down 1.96% at $104.63 per share.

Earnings details

Ahead of the earnings release, some analysts were concerned about whether PVH could continue its torrid growth despite increasing concerns about the COVID-19 delta variant.

Nineteen analysts at MarketWatch rate the share as “overweight” even though they set their target price at just over $120 per share.

However, the company showed it has adapted well to the pandemic by increasing its total revenue for Q2 by 46% and its e-commerce sales by 35% year-over-year.

The company’s two flagship brands – Tommy Hilfiger and Calvin Klein – saw considerable year-over-year sales growth. Tommy Hilfiger brought in 41% more revenue than Q2 2020, while sales of Calvin Klein items increased by 56%.

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Shedding weight

PVH owns one of the world’s largest apparel portfolios. The company brought in more than $7.1bn in revenue in 2020, with more than 85% of its revenues coming from its two flagship brands.

Since 2000, the company has shifted its revenue base from North America to Europe, Asia Pacific, and Latin America. Now, more than 60% of PVH’s revenues come from these areas, according to the company’s website.

More recently, the company decided to shed weight when it offloaded its Heritage Brands portfolio in July 2021 for $223 million. Following the move, the company increased its revenue forecasts by up to 24%. Its GAAP EPS estimates also increased to $6.60 per share.

Future potential

Despite the short-term benefit of offloading the Heritage Brands portfolio, PVH anticipates the move will result in a 2% decrease in annual revenues when compared to 2020.

Meanwhile, the company is also projecting modest growth as it looks ahead to Q3. PVH expects Q3 EPS to be between $3.00 and $3.05 on top of a revenue increase between 11% and 13%.

PVH also anticipates that the COVID-19 delta variant will continue to impact its revenues as its North American market remains “challenged,” the company said in a press release.

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