Fashion conglomerate PVH (NYSE:PVH) reported Q4 CY2023 results exceeding Wall Street analysts' expectations, with revenue flat year on year at $2.49 billion. It made a GAAP profit of $4.55 per share, improving from its profit of $2.18 per share in the same quarter last year.
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PVH (PVH) Q4 CY2023 Highlights:
- Revenue: $2.49 billion vs analyst estimates of $2.42 billion (2.9% beat)
- EPS (non-GAAP): $3.72 vs analyst estimates of $3.52 (5.7% beat)
- Full year 2024 EPS (non-GAAP) guidance: $10.88 vs analyst estimates of $12.04 (9,7% miss)
- Gross Margin (GAAP): 60.3%, up from 55.9% in the same quarter last year
- Market Capitalization: $8.39 billion
Founded in 1881 by a husband and wife duo, PVH (NYSE:PVH) is a global fashion conglomerate with iconic brands like Calvin Klein and Tommy Hilfiger.
Apparel, Accessories and Luxury GoodsWithin apparel and accessories, not only do styles change more frequently today than decades past as fads travel through social media and the internet but consumers are also shifting the way they buy their goods, favoring omnichannel and e-commerce experiences. Some apparel, accessories, and luxury goods companies have made concerted efforts to adapt while those who are slower to move may fall behind.
Sales GrowthA company’s long-term performance can give signals about its business quality. Any business can put up a good quarter or two, but many enduring ones muster years of growth. PVH's revenue was flat over the last five years. Within consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. Just like its five-year revenue trend, PVH's revenue over the last two years has been flat, suggesting the company is in a slump.
PVH also reports sales performance excluding currency movements, which are outside the company’s control and not indicative of demand. Over the last two years, its constant currency sales averaged 3.5% year-on-year growth. Because this number is higher than its revenue growth during the same period, we can see that foreign exchange rates have been a headwind for PVH.
This quarter, PVH's $2.49 billion of revenue was flat year on year but beat Wall Street's estimates by 2.9%. Looking ahead, Wall Street expects revenue to decline 2.1% over the next 12 months, a deceleration from this quarter.
Operating MarginOperating margin is an important measure of profitability. It’s the portion of revenue left after accounting for all core expenses–everything from the cost of goods sold to advertising and wages. Operating margin is also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
PVH was profitable over the last two years but held back by its large expense base. It's demonstrated mediocre profitability for a consumer discretionary business, producing an average operating margin of 7.7%. In Q4, PVH generated an operating profit margin of 14.3%, up 2.4 percentage points year on year.
Over the next 12 months, Wall Street expects PVH to maintain its LTM operating margin of 10.1%.Key Takeaways from PVH's Q4 Results We were impressed by how significantly PVH blew past analysts' constant currency revenue expectations this quarter. We were also excited its operating margin outperformed Wall Street's estimates. On the other hand, its full-year earnings forecast was underwhelming, and this is heavily pressuring the stock. Specifically, the stock is down 17.7% after reporting, trading at $115 per share.