PVH Corporation, the parent company of brands like Calvin Klein and Tommy Hilfiger, is expected to report a year-over-year decline in its top line when it releases its second-quarter fiscal 2024 results on August 27th. The Zacks Consensus Estimate for quarterly revenues is set at $2.1 billion, indicating a 6.3% drop compared to the previous year. Despite this expected revenue dip, the consensus estimate for earnings is pegged at $2.27 per share, suggesting a 14.7% increase year-over-year. This forecast reflects the company’s ongoing efforts to improve profitability.
PVH Corp.’s performance during the quarter is likely to be influenced by the strength of its core brands and the success of its strategic initiatives. The company’s PVH+ Plan, aimed at improving cost efficiencies and productivity, is expected to have contributed positively. The company has focused on digital growth, developing a comprehensive distribution strategy for Calvin Klein and Tommy Hilfiger, leveraging direct-to-consumer (DTC) channels and wholesale partnerships. Additionally, PVH Corp. has been actively expanding its international presence, which is expected to contribute to its quarterly results.
However, the company faces some headwinds. Increased investments in DTC and international operations, coupled with high raw material costs and currency headwinds, could impact its performance. On the previous earnings call, management had projected adjusted revenue to decline in the range of 5-6% year-over-year for the second quarter, factoring in a 3% reduction associated with the sale of Heritage Brands. The earnings outlook also included unfavorable currency impacts of 5 cents per share. Analysts predict a 6.7% sales decline for Tommy Hilfiger in the second quarter, while Calvin Klein sales are anticipated to decrease by 2.9% year-over-year. Heritage Brands is expected to experience a 23% sales drop.
While PVH Corp. has a positive track record of exceeding earnings expectations, the Zacks Model does not conclusively predict an earnings beat for this quarter. The combination of a positive Earnings ESP and a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) typically increases the odds of an earnings beat. However, PVH Corp. currently has an Earnings ESP of 0.00% and a Zacks Rank of 3, suggesting that a surprise might not be likely.
Investors looking for companies with a higher probability of exceeding earnings expectations in their upcoming reports might consider Abercrombie & Fitch (ANF), American Eagle Outfitters (AEO), and lululemon athletica (LULU). These companies have favorable Earnings ESP scores and Zacks Ranks, indicating a strong likelihood of positive surprises.
