PVH's Q1 Might Be 'Obscured' By FX Issues

PVH Corp (NYSE: PVH) is scheduled to report its 1QFY17 results after market close on May 24. Wunderlich’s Eric Beder maintained a Buy rating on the company, with a price target of $125.

FX Headwinds

“While the domestic department store business remains difficult, we view our projections as still very much driven by FX – both in translation and in terms of international sales,” Beder mentioned

The analyst believes that both Tommy Hilfiger and Calvin Klein continued to be robust luxury brands outside the U.S., with meaningful growth potential, while the Calvin Klein ad campaign could prove to be a strong growth driver.

“PVH has been one of the most frustrating stories in our universe, as FX has occluded material progress on a number of fronts – we see no reason why that will change in 1Q,” Beder stated.

1Q Expectations

Beder said he was “cautiously optimistic” PVH Corp. would be able to meet the consensus EPS expectations, which lies at the midpoint of the guidance range.

Although the domestic business is likely to have declined, the analyst believes that the performance might be better than the overall decline in the sector, driven by market share gains and demand driven by advertising.

In addition, Beder expects the international markets to “continue to deliver strong constant currency growth to offset the domestic weakness.”

The initial guidance for 2Q was likely to be more cautious than the consensus forecasts, given that the post-Easter decline in the domestic apparel markets has been “vexing to key players.”