Challenges Abound and PVH+ Targets Look Aggressive, but No-Moat PVH’s Brands Have Global Appeal

We do not believe PVH's Tommy Hilfiger and Calvin Klein have the pricing power or competitiveness to provide a moat for the company. Moreover, PVH is dealing with a host of issues, including adverse effects of the pandemic, inflation, depreciation of the euro versus the dollar, and higher taxes. Therefore, we do not forecast PVH will reach its targets of 2025 revenue, operating margin, and free cash flow of $12.5 billion, 15%, and $1 billion, respectively, under its new PVH+ plan of greater e-commerce, cost efficiencies, and elevated product. Instead, our estimates are $10.7 billion, 12%, and $900 million, respectively. Even so, we view its key brands as generally healthy, and expect profitability to improve in 2023.