PVH Misses 4Q Estimates, Pandemic-Led Shutdowns To Blame

PVH Corporation reported weaker-than-expected 4Q results as temporary store closures due to COVID-19 pandemic-led lockdowns in Europe and Canada weighed on its financials. Shares of the premium apparel retailer closed 1.1% lower in Tuesday’s extended trading session.

PVH Corporation (PVH) reported a loss of $0.38 per share for the quarter, which was wider than Street estimates of $0.35. The bottom-line result also compared unfavorably with the year-ago quarter’s earnings of $1.88 per share.

4Q revenues of $2.09 billion missed analysts’ expectations of $2.12 billion and declined 20% on a year-over-year basis. PVH said that about 70% of its stores across Europe and Canada were closed due to the pandemic.

While company-operated stores were negatively impacted, PVH recorded robust growth in its digital sales. Revenues through digital channels grew 57% during the quarter. Moreover, it noted a 68% increase in sales through its directly operated digital commerce businesses. (See PVH stock analysis on TipRanks)

For 2021, PVH projects revenues to grow between 22% and 24% year-on-year. The company anticipates generating non-GAAP earnings of $6 per share during the period.

Following the earnings release, Guggenheim analyst Robert Drbul reiterated his Buy rating and price target of $120 (19.9% upside potential) on the stock.

In a note to investors, Drbul wrote, “Given the company’s actions to streamline its organization in recent months, coupled with a potentially normalizing retail environment in 2021 (including improving levels of store traffic, a return of tourism travel & spend, and an increase in discretionary spend on more formal apparel, all of which PVH stands to benefit from), we believe PVH will be emerging from the pandemic a stronger, leaner, and more profitable company with some favorable YoY tailwinds in 2021.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 4 Buys and 3 Holds. The average analyst price target of $109.86 implies 9.7% upside potential to current levels. Shares have rallied about 162% in one year.

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