FINANCIAL ANALYSIS – Q4

Q4 Represents the period ended Dec, Nov and Jan 2021

CONTENTS
1. EXCUTIVE SUMMARY...............................................................................................................................3
2. FINANCIAL ANALYSIS...............................................................................................................................3
2.1. RATIOS....................................................................................................................................................3
2.2. SHARE PRICE.........................................................................................................................................4
2.3. OUR EXPOSURE....................................................................................................................................4
3. CREDIT REPORT.........................................................................................................................................4
4. CONCLUSION................................................................................................................................................4
5. KEY COMPANY INSIGHTS........................................................................................................................5
6. ANNEXURE....................................................................................................................................................5
6.1. PROFIT AND LOSS STATEMENT.......................................................................................................6
6.2. BALANCE SHEET STATEMENT.........................................................................................................6
6.3. D&B REPORT.........................................................................................................................................7

Q4 Represents the period ended Dec, Nov and Jan 2021

EXCUTIVE SUMMARY
 The Covid-19 pandemic severely crimped fourth quarter and yearly revenue and earnings, with the impact varied
by region and channel of PVH Corp.
 Despite the challenges brought on by global shut downs, PVH Corp managed to reduce its inventory by 12% YoY
(31st Jan 2020 to 31st Jan 2021)
 The firm’s prudent management of inventory levels helped lower invested capital, which drove free cash flow
(FCF) higher in a challenging operating environment.
 PVH expects its 2021 revenue and earnings will continue to be negatively impacted by the pandemic, particularly
in the first quarter due to ongoing store closures, predominantly in Europe.

FINANCIAL ANALYSIS

RATIOS

 Revenue dropped by 20% to $2.09 billion YoY (2019Q4 vs 2020Q4). Sales were down in the company’s tommy
Hilfiger, Calvin Klein and Heritage brand divisions by 16%, 17% and 41% respectively.
 Sales drop was raised from the temporary store closures for much of the quarter as a result of the extensive
lockdowns throughout Europe.
 Despite the sales drop the company has managed to maintained their gross margin same as past performances by
tightly managing its inventory.
 Operating and net profit margin fell due to $59mn of noncash store asset impairments for COVID and the impact
of a shift in consumer buying trends from brick and mortar stores to digital channels, $8mn in connection with the
planned exit from the Heritage Brands Retail business.

 Company seems to be able to meet its short term obligations with the current assets including inventory.
 PVH ended the quarter with liquidity over $3 billion as of year-end, including $1.7bn of cash on hand.
 The company continued to tightly manage its inventory, which decreased 12% as of the end of 2020 compared to
the prior year.

 The Asset Turnover ratio declines from $1.12 (2018) to $0. 76(2020) which shows that newly added assets are not
generating enough sales.
 Compared to previous years PVH has significantly higher payable days which can be adversely affect Hela since
PVH is one of our customer.

Q4 Represents the period ended Dec, Nov and Jan 2021

  Inventory days seems to be consistent over the year which shows that the stocks are moving as usual due to their
successful inventory management.

 The gearing has gone up this year by 30% YoY due to increase in long-term debt. (The Debt includes both short
term and long term debt)

SHARE PRICE
 The share price of the PVH plunged during 2020 due to COVID impact ($31 in March), however there is a
positive recovery in January increasing to approx.$100 which is similar to pre covid levels. There was a loss per
share of 81 cents for the fourth quarter of 2020 compared to a loss per share of 93 cents in the year-earlier period.

OUR EXPOSURE
 PVH consist of approximately 55% of Hela Group’s revenue in the FY 2021/22
 Our exposure towards MK, would be as following as at 31st March

Number of Days 0-30 31-60 61-90 Over 90 Total $

Debtors Outstanding 6,880,831 2,690,827 323,511 19,417 9,924,555
RM in Stock 4,079,998 1,224,736 207,901 142,870 5,655,505
FG in Stock 3,995,320 12,269 1,572 1,631 4,010,792
RM-Goods in Transit 25,775,441

CREDIT REPORT
 D&B Rating – 5A3 (Above average risk – proceed with transaction but monitor closely)
 D&B Paydex – 61 (Anticipating – Company pays bills an average of 22 days beyond the agreed terms)
 Credit recommendation - $7,000,000

CONCLUSION
 There’s no denying that the COVID-19 pandemic, has, and will, alter the apparel industry. PVH Corp, along with
everyone else in the industry has certainly suffering some pain.
 This analysis reveals that despite the challenges PVH is in a strong liquidity position ending the year with $1.7bn
cash in hand
 PVH will continue to comply with its obligations on time based on the D&B paydex rating.
 Even though PVH share price dropped during the year to a historically low price we are seeing a healthy grow in
the share price towards the year end.

KEY COMPANY INSIGHTS

Additional Information found in Q4 Investor call

Q4 Represents the period ended Dec, Nov and Jan 2021

PVH is satisfied with the performance in the market where D2C sales trends continue to be positive with double-digit growth
as a result of lack of traveling and tourism which continues to benefit local spending in the market.

Further PVH plans to accelerate their performance with supercharged e-commerce, synced online and offline initiatives,
driving conversion of sales growth in full price stores when online key events were taking place. PVH believes they were
successful in casual categories and hero products for both Tommy and Calvin better matching inventory with demand, which
drove higher full price sell-throughs and lower markdowns.

The 2021 outlook does not contemplate any new store closures, new lockdowns or extensions of current lockdowns beyond
what is already known.

In addition, the 2021 does not contemplate further supply chain disruptions, including any greater impact beyond the
minimal impact currently expected from the shipping disruption occurring as a result of the temporary blockage of the Suez
Canal.

Trish Donnelly, has recently joined the PVH team in the newly created role of CEO of PVH Americas. Trish joined PVH
following nearly seven years with Urban Outfitters. As a Global CEO for Urban Outfitters, Trish successfully led the
business to win with the younger consumers, rapidly scaled e-commerce to an industry-leading penetration while driving
very strong connected retail and consumer engagement.

Source: Q4 Investors Call

Despite a 42% YoY decline in domestic sales in fiscal 2020, international sales performed much better and only fell 17%
YoY. The international segment accounted for 66% of PVH Corp’s fiscal 2020 revenue.

The absence of international tourism and bankruptcies at some of its wholesale customers such as J.C. Penney, which was a
top 10 customer in fiscal 2019, negatively impacted PVH Corp’s North America business.

Additionally, the rise of WFH drive a the shift in consumer interest to more casual and athletic styles that negatively
impacted the firm’s more traditional heritage business (everything except Tommy Hilfiger and Calvin Klein). Heritage
business net sales fell 44% YoY and accounted for 12% of the firm’s net sales in fiscal 2020.

Source: Forbes.com

ANNEXURE
PROFIT AND LOSS STATEMENT

Q4 Represents the period ended Dec, Nov and Jan 2021

BALANCE SHEET STATEMENT

D&B REPORT

Q4 Represents the period ended Dec, Nov and Jan 2021

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Q4 Represents the period ended Dec, Nov and Jan 2021