3. PVH Corp. (NYSE:PVH)
Average Price Target Upside as of August 5: 55.74%
Number of Hedge Fund Holders: 39
PVH Corp. (NYSE:PVH) is a New York-based apparel company and one of the top luxury stocks according to analysts. The company is engaged in designing and marketing a wide range of products, including dress shirts, neckwear, sportswear, swimwear, handbags, footwear, and more.
Its primary brands are luxury brands, Calvin Klein and Tommy Hilfiger. The company operates through Tommy Hilfiger North America, Tommy Hilfiger International, Calvin Klein North America, Calvin Klein International, and Heritage Brands Wholesale segments. The company’s products reach consumers through various channels, including department stores, chain outlets, and specialty shops, among others.
PVH (NYSE:PVH) has a Buy rating as per the coverage of 18 analysts. The average price target of $144.00 has an upside of 55.74% to the stock’s current price, as of August 5.
PVH (NYSE:PVH) reported earnings per share of $2.45 for the first quarter, which surpassed expectations by $0.26. It was driven by strong performances in key markets with a focus on higher-margin opportunities. Additionally, in North America, the company’s revenue jumped 3%, fueled by growth in direct-to-consumer and wholesale sales. Both Calvin Klein and Tommy Hilfiger segments experienced a 3% rise in revenue because of higher average orders and better conversion rates, along with reduced promotions.
In Asia Pacific, PVH (NYSE:PVH) achieved 3% revenue growth, led by strong direct-to-consumer sales, particularly in China. Despite economic challenges in Europe, the company navigated them by scaling back in low-margin segments and digital marketplaces to preserve sales quality and profit margins.
PVH’s (NYSE:PVH) inventory management was effective as it successfully reduced inventory by 22% year-over-year to $1.35 billion, minimizing excess stock and the need for heavy discounts. The company reported that clearance sales were cut by nearly 50%, which indicates the availability of fresher products and improved use of working capital.
Moreover, under the PVH+ Plan, PVH (NYSE:PVH) prioritizes enhancing shareholder value. The company repurchased $200 million worth of shares in Q1 and plans on further buybacks totaling $400 million for the year. In conclusion, despite economic fluctuations, PVH (NYSE:PVH) is focused on improving sales quality, efficient inventory management, and delivering value to shareholders.
In Q1, 39 hedge funds held stakes in PVH (NYSE:PVH), with positions worth $1.36 billion. As of the first quarter, Pzena Investment Management is the most significant shareholder in the company and has a stake worth $750.778 million.
FPA Queens Road Small Cap Value Fund stated the following regarding PVH Corp. (NYSE:PVH) in its first quarter 2024 investor letter:
“PVH Corp. (NYSE:PVH) is an apparel company that owns the Tommy Hilfiger and Calvin Klein brands globally. Most of PVH’s earnings come from Europe, where the Tommy and Calvin brands are considered “almost luxury” and PVH has generally recorded high single-digit organic growth with demonstrated pricing power during the preceding decade. CEO Stefan Larsson has done an excellent job revitalizing the company and improving margins at PVH’s moribund U.S. operations. Over the past year, PVH and our other apparel companies have performed well as the worst fears for consumer spending didn’t play out. PVH has become a top five holding for us and our apparel holdings (PVH, GIII, LEVI and DECK) now make up almost 10% of the portfolio. On April 2, post quarter end, PVH announced fiscal 23Q4 results where they missed on earnings guidance for the coming year. The stock is down ~20% from its high but now trades at less than ten times forward earnings. We have held our position.”
