PVH Corp Has Recouped Most Of Its Brexit Loss, BlueFin Sees It As An Attractive Stock

The downturn in PVH Corp (NYSE: PVH) shares on Brexit concerns were overblown. Although the shares having recovered since, the stock is “an attractive idea,” given the current business trends, BlueFin’s Rebecca Duval said in a report. She added that there was potential earnings upside to the FY16 and FY17 expectations, due to brand positioning and cost saving opportunities.

Brands Doing Well

The Calvin Klein business, which contributed 38 percent of total F1Q16 revenues, continues to be strong. Channel checks indicated very positive customer response in both the US and EU, analyst Rebecca Duval noted.

Tommy Hilfiger continues to improve. “Our checks remain positive and complimentary about product in the pipeline even into early FY17 for both CK and Tommy. We’re also hearing that the Heritage Brands (21% of FYQ1:16 revenue) is seeing a slight uptick in business trends this quarter,” Duval wrote.

Potential Earnings Upside

Sources have indicated that PVH is making operational changes, including streamlining in-house operations and personnel as well as identifying more shared services opportunities. The company is trimming its in-house operations more than was originally planned.

The analyst added that PVH could be moving the entire CK and Tommy denim development and production team to Amsterdam, which would be responsible for US and European denim operations.

“This should go a long way in providing a cohesive brand message for both CK and Tommy and support cost saving opportunities from shared service consolidation of raw materials, development and manufacturing leverage. PVH is aiming for this denim consolidation to be operational in FYQ1:17 and initial testing to start shipping in FYQ4:16,” Duval commented.

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