Currency Headwinds Could Weigh on PVH’s Fiscal 2016 Performance
Calvin Klein Helped PVH Close Fiscal 2015 in Style
Company guidance for fiscal 2016
PVH (PVH) is expecting a modest rise of about 1% in its revenues in fiscal 2016. On a constant currency basis, this would mean a 2% rise in sales. As per the company’s guidance, key sales drivers for the next year will be as follows:
a ~6% rise in the Calvin Klein business, approximately 4% on a GAAP (generally accepted accounting principles) basis
a ~3% rise in the Tommy Hilfiger business, approximately 2% on a GAAP basis
a ~7% fall in the Heritage Brands business on a GAAP basis, mainly due to the continued rationalization of the business, including the loss of revenue from Izod
EPS likely to be negatively impacted by foreign currency exchange rate
The company has projected a 12%–15% rise in earnings per share (or EPS) on a constant currency basis. However, after including approximately $1.60 per share of foreign currency exchange rate impact, EPS is likely to fall from the current year’s $7.05 per share and land in the range of $6.30–$6.50 per share.
Management’s comments
While talking about the next fiscal year, Emanuel Chirico, chairman and CEO of PVH, said, “While the global retail landscape continues to be uncertain with major foreign currencies largely weakening against the U.S. dollar and unpredictable and volatile global consumer spending, we believe that we can successfully navigate this environment and have taken a prudent approach to our 2016 plan.”
Chirico also said, “We are committed to delivering stockholder value and our recent announcements demonstrate our belief in taking strategic actions and making investments to support the long-term growth potential of PVH and our businesses.”
“More specifically,” he added, “we announced that we will acquire the remaining 55% stake in our Tommy Hilfiger China joint venture, providing us with the opportunity to further strengthen our market position in China, and that we will leverage G-III Apparel Group’s womenswear expertise by licensing them our Tommy Hilfiger womenswear North America wholesale business, which will help drive the business beginning with the 2016 holiday season.”
Investors seeking to add exposure to PVH along with other apparel companies such as Coach (COH), Hanesbrands (HBI), Michael Kors (KORS), and Ralph Lauren (RL) can consider the SPDR S&P 500 ETF (SPY), which invests 0.25% of its portfolio in these companies.
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