Stylish dress shirt maker Phillips-Van Heusen (NYSE: PVH) won't need any dressing down when it reports fourth-quarter 2006 financial results on Monday, March 26.
What analysts say:
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Buy, sell, or waffle? After undressing the shirt maker, 12 analysts rate it a buy and just one says hold. Ooh la la!
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Revenues. Sales of the stylish statement are expected to push revenues 15% higher, to $530 million.
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Earnings. Profits, meanwhile, will grow a more understated 7%, or $0.44 per share.
What management says:
The haberdasher sells a number of well-known brands including Izod, Calvin Klein, Sean John, and Geoffrey Beane, along with the Hair Master's own line, Donald J. Trump Signature Collection. The Calvin Klein brand, however, has been a primary driver of sales -- which reached $568 million last quarter -- as the designer's outlet stores opened in premium malls. Coupled with an 11% increase in same-store sales at its various other retail operations, PVH has been successfully meeting the needs of the well-dressed man.
Those strong gains allowed management to affirm its own quarterly guidance of $0.43 per share, for which it didn't need to make any adjustments as it has in the past, as well as project at least 15% growth in 2007. It also won a licensing agreement to make and market a men's apparel line for Timberland (NYSE: TBL) in 2008, followed by a women's line in 2009.
What management does:
Although many retailers that cater to a more fickle shopper, like niche retailer Hot Topic (Nasdaq: HOTT), have seen a reversal of fortune lately, those that supply the adult male have found him to be a bit more staid. Jos. A. Bank (Nasdaq: JOSB) and Men's Wearhouse (NYSE: MW) have reported that sales are brisk without the necessity of resorting to margin-killing discounting. The same goes for PVH, which was able to do more full-price selling even at its outlet stores, which carry higher net margins.
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Margin
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10/05
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01/06
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04/06
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07/06
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10/06
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Gross
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46.5%
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46.7%
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47.6%
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48.1%
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48.8%
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Operating
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10.5%
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10.9%
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12%
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12.5%
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13%
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Net
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5.7%
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5.9%
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7%
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7.2%
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7.6%
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All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
While the Phillips-Van Heusen name carries a certain cachet and premium, that doesn't mean investors need to pay a premium for its stock, and right now it trades at a multiple higher than other men's retailers. It might be in line with Polo Ralph Lauren (NYSE: RL), but it's nearly twice as great as Oxford Industries (NYSE: OXM). Having nearly doubled in price over the past year, PVH's stock now trades at all-time highs. The business looks sound, but the stock seems priced for perfection.
Related Foolishness:
Phillips-Van Heusen has earned a four-star rating from Motley Fool CAPS, our new investor intelligence community. You can add your voice to the stock-rating service by joining today. It's free!
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Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.
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