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Strong International Sales Lift No-Moat PVH in Q2; Shares Fairly Valued

David Swartz Equity Analyst

Analyst Note

| David Swartz |

Like others in the apparel industry, no-moat PVH reported stellar sales and profit margins in 2021’s second quarter. Unlike most others, however, its European operations outperformed its North American business, which continues to be negatively affected by low international tourism (typically 30%-40% of North America sales). We think this bodes well for PVH in the long term as its earnings potential should improve when its North America sales recover and its strategic initiatives (including a faster supply chain, fewer products, and higher pricing) take hold. For now, we intend to lift our 2021 adjusted EPS estimate of $6.84 by roughly 25% to reflect the results and company guidance of $8.50. This change should result in a mid-single-digit percentage increase in our $117 fair value estimate, which is close to the current share price after today’s low-teens percentage move.

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Company Profile

Business Description

PVH designs and markets branded apparel in more than 40 countries. Its key fashion categories include men’s dress shirts, ties, sportswear, underwear, and jeans. PVH’s leading designer brands, Calvin Klein and Tommy Hilfiger, generate nearly 90% of its revenue. PVH also owns several smaller brands, including Izod, Van Heusen, and Arrow, and licenses brands from third parties. PVH distributes its clothing wholesale to retailers and through company-owned stores. The company traces its history to 1881 and is based in New York City.

200 Madison Avenue
New York, NY, 10016
T +1 212 381-3500
Sector Consumer Cyclical
Industry Apparel Manufacturing
Most Recent Earnings Jul 31, 2021
Fiscal Year End Jan 30, 2022
Stock Type Cyclical
Employees 40,000


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