2. PVH Corp. (NYSE:PVH)
Analyst Upside Potential as of September 12, 2024: 38.39%
No. of Hedge Funds as of Q2 2024: 32
PVH Corp (NYSE:PVH) is a luxury fashion company that operates brands like Calvin Klein and Tommy Hilfiger. It specializes in designing and marketing casual apparel, sportswear, performance apparel, intimate apparel, accessories, handbags, footwear, and other related products. All of the company’s operations run through its operating divisions, which include Tommy Hilfiger North American, Tommy Hilfiger International, Calvin Klein International, Calvin Klein North America, and Heritage Brands Wholesale. PVH Corp (NYSE:PVH) sells its Tommy Hilfiger and Calvin Klein items through a number of distribution channels, including retail, wholesale, and licensing.
Due to the execution of its PVH+ Plan, the company is on track to deliver financial results according to expectations. It is leveraging its omnichannel execution to deliver its top-line guidance and has exceeded its EPS guidance, primarily because of the favorable settlement of a tax matter. The PVH+ Plan also focuses on enhancing shareholder value. The company repurchased $200 million worth of shares in Q1 and plans on further buybacks totaling $400 million for the year.
Revenue for the Tommy Hilfiger and Calvin Klein brands combined increased 1% last year, with modest wholesale sales growth. Under the PVH+ initiative, PVH Corp (NYSE:PVH) is continuously undertaking initiatives to boost sales, such as the recent transition of Tommy Hilfiger North America e-commerce distribution from outsourced to in-house. This transition has allowed the company to leverage open capacity, increasing service levels to its e-commerce consumers and delivering efficiencies.
PVH Corp (NYSE:PVH) has growth plans set in place for both Tommy and Calvin this fall. It is increasing consumer engagement with stronger campaigns featuring locally and globally relevant mega talents, such as collaborations with supermodel Kendal Jenner, actor Greta Lee, and K-pop talent Mingyu. Fall 2024 is also set to be the first product season where the company entirely influences product execution for both brands globally, offering strong transitional and innovative products and leaning into key growth categories. All these plans will be supported by continued enhancements in the company’s data and demand-driven supply chain. Such improvements are expected to increase stock freshness, lower AUC, and improve product quality.
Investors are bullish on PVH Corp (NYSE:PVH) due to its long-term growth objectives and profitability. It supports a consensus Buy rating from analysts, with Barclays maintaining a Buy rating on the stock. PVH Corp (NYSE:PVH) is currently trading at a forward P/E of 7.98 at a 49.08% discount to its sector. Its median price target of $93.95 implies an upside of 38.39% from current levels. It takes the second spot on our list of the top luxury clothing stocks to invest in now.
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.”
