PVH Corp.’s swift action plan following recent departure of Raf Simon from Calvin Klein may have reassured the investors but some uncertainties in the form of clear facts and figures have also emerged of late.
An analysis report rolled out by investment bank Cowen & Co. on Tuesday showed downgraded stocks from outperform to market perform for the first time in the last eight financial years, which has lowered its price target from US $142 to US $119.
This move placed the share price of PVH on a downhill as it closed down US $5.13, or 4.66 percent, to US $105.05. The number has seen a 30% fall in the 12 months gone by. “Our view is that there is a high potential that either top-line or margin profile could disappoint as Calvin begins a period of restructuring,” John Kernan, an analyst at Cowen, stated in a note to clients.
He also admitted that his comments go against the convention as PVH is 85 percent net buy rated, one of the highest in its coverage segment, signifying that the consensus view regarding growth and margins over the coming years will remain elevated.
On the contrary, the bank deems those expectations as “too high”, as they foresee “a lower growth and higher risk environment” keeping in mind the number of challenges PVH is facing. These challenges are in addition to the ones related to the CK business such as extremely competitive presence of ither apparel vendors, potential setbacks in the supply chain and a problematic wholesale channel in North America.
The recent months have been difficult for PVH that also owns Tommy Hilfiger, starting off with chairman and chief executive officer Emanuel Chirico unveiling a poor third-quarter performance for Calvin Klein while acknowledging the fact that hiring of design-star Simons was not as fruitful as they had believed.
First the dramatic Raf Simons exit, then the shocking statement of Steve Shiffman, chief executive officer of Calvin Klein Inc., stating the shuttering of New York CK Flagship as well as staff trims, it would shutter Calvin Klein’s New York flagship on Madison Avenue and trim staff as part of its “go forward” restructuring plan.
