Apparel Manufacturer Stocks Gain on PVH (PVH) Outlook

Apparel manufacturer stocks gained Wednesday after PVH Corp. (PVH) jumped 15% on the back of a better-than-expected quarterly report and an improved outlook for fiscal 2021.

PVH, which is the clothing holding company behind Tommy Hilfiger and Calvin Klein, posted second quarter (Q2) adjusted earnings of $2.72 per share, with the figure coming in more than double analysts’ consensus forecast of $1.19 per share and improving from the profit of 13 cents per share reported in the corresponding quarter last year. Sales of $2.31 billion also topped Wall Street expectations and grew 46% from a year earlier. The clothing maker’s top line benefited from revenue climbing 56% and 41% in its Calvin Klein and Tommy Hilfiger segments, as well as a 35% jump in digital channels revenue.

Looking ahead, management now expects full-year (FY) earnings of $8.50 per share, up from its earlier forecast of $6.50 per share. Meanwhile, it expects revenue growth between 26% and 28%, higher than its prior forecast of 24% to 26%. Additionally, the company told investors that it sees its international business driving growth beyond pre-pandemic levels of fiscal 2019. Through Wednesday’s close, PVH stock has a market value of $8.61 billion and is trading nearly 30% higher on the year.

PVH shares broke above a symmetrical triangle on above-average volume Wednesday in a move that could trigger further bullish price action over the coming days. Those who buy the breakout should look for a possible retest of the June 2018 swing high at $169.22. Think about protecting trading capital with a stop-loss order placed either under yesterday’s low at $117.46 or beneath the symmetrical triangle’s top trendline at $111, depending on personal risk tolerance.

PVH competitor Hanesbrands Inc. (HBI) also posted solid gains yesterday after its rival’s optimistic FY outlook. Let’s take a closer look at Hanesbrands’ most recent earnings.

Hanesbrands Inc. (HBI)

The 120-year-old North Carolina-based apparel manufacturer reported a Q2 profit of 47 cents per share on revenues of $1.75 billion versus analysts’ calls for 39 cents per share on sales of $1.58 billion. Moreover, the top and bottom line grew 13% and 2% from the year-ago quarter. Management cited ongoing healthy demand for global innerwear and activewear for the solid result. Revenues in the company’s U.S. activewear segment surged 140%, driven by sales of Champion and Hanes brands, pent-up consumer demand, and government stimulus. Furthermore, robust sales in Australia, the Americas, Europe, and Asia-Pacific helped grow international revenues 91% year over year.

Looking ahead, Hanesbrands raised its FY 2021 earnings guidance range from $1.68 to $1.76, up from $1.51 to $1.59. It now anticipates net sales for the year of $6.75 billion to $6.85 billion, above its prior forecast of between $6.2 billion and $6.3 billion. Trading at $19.23, with a market capitalization of $6.71 billion and offering an attractive 3.21% dividend yield, the stock has added 31.89% since the start of the year as of Sept. 2, 2021.

The Hanesbrands share price rallied 2.94% Thursday from the support of a multi-month uptrend line and the 200-day simple moving average (SMA), suggesting that the stock may be on the verge of regaining its upward momentum. Active traders who enter at these levels should consider booking profits on a move up to the May high at $22.82. However, be prepared to exit with a small loss if the price fails to hold above the blue trendline at $18.50.

Disclosure: The author held no positions in the aforementioned securities at the time of publication.