How lululemon and PVH Corp Are Placed Post-Q4 Earnings

The Textile – Apparel industry’s graph witnessed a marked improvement in the past week as it saw sturdy performances from two major players — lululemon athletica inc. LULU and PVH Corp. PVH. The industry reflected a 4% upside in the past week while it has been witnessing tremendous growth since the beginning of 2018. Notably, the industry gained 3.8% year to date against the S&P 500’s decline of 1.4%. Also, the industry has outdone its broader Consumer Discretionary sector that lost 1.6% in the same time frame.

Currently, the Textile – Apparel industry is ranked among the top 34% of all Zacks industries (88 of 256). It is gaining from a buoyant U.S. economy highlighted by accelerating wage rate, improving consumer spending, rising government expenditures and unemployment rate still at a 17-year low.

Individually, the lululemon stock has rallied 13.4% year to date, while PVH Corp. advanced 10.4%. Both these Zacks Rank #3 (Hold) companies posted robust fourth-quarter fiscal 2017 results and boast a solid surprise history.

Let’s delve deep to unearth the reasons behind these company’s impressive performance.

What’s Aiding lululemon?

Shares of lululemon gained 13.2% after it posted fourth-quarter fiscal 2017 results on Mar 27. Additionally, lululemon has been progressing well with its 2020 Strategy, based on which the company aims to double revenues to about $4 billion and more than double its earnings. To achieve these targets, management is focusing on product innovation, building store fleet in North America, expanding digital business and international expansion.

Moreover, lululemon remains committed to the enhancement of the e-commerce retailing channel and improvements to its website. Thus, fiscal 2017 has been a transformative year for its digital and e-commerce business, with structural changes and investments in process and technology.

Consequently, e-commerce comps surged 44% (an increase of 42% in constant dollars) in fourth-quarter fiscal 2017. Also, sales topped estimates for the ninth straight time with fourth successive earnings beat.

lululemon athletica inc. Price, Consensus and EPS Surprise

lululemon athletica inc. Price, Consensus and EPS Surprise | lululemon athletica inc. Quote

Meanwhile, lululemon’s focus on ivivva’s remodeling bodes well. These efforts along with improvement in product margins and cost efficiencies, and the introduction of new store formats led management to provide an encouraging outlook for first-quarter and fiscal 2018.

Earnings per share are envisioned in a band of 44-46 cents and $3-$3.08 for first-quarter and fiscal year, respectively. As a result, the Zacks Consensus Estimate of 45 cents for the impending quarter and $3.07 for fiscal 2018 has witnessed an upward revision of 5 cents each, in the last seven days.

What’s Driving PVH Corp.’s Performance?

Shares of PVH Corp. have gained 5.1% after reporting solid fourth-quarter fiscal 2017 results on Mar 28. Markedly, the company delivered 15th consecutive quarter of positive earnings surprise with sixth sales beat. In addition, PVH Corp. has been doing exceedingly well at its premium Calvin Klein and Tommy Hilfiger brands. In fact, currency has also proved conducive to PVH Corp., which aided management to issue an upbeat earnings outlook for first-quarter and fiscal 2018.

Adjusted earnings per share are envisioned in a band of $2.20-$2.25 for the first quarter and $9.00-$9.10 for fiscal 2018. The company expects favorable currency to boost adjusted earnings per share by 20 cents in the quarter and 35 cents in fiscal 2018. Thus, the Zacks Consensus Estimate of $2.03 for the impending quarter and $8.94 for fiscal 2018 moved north by 8 cents and a penny, respectively, in the last seven days.

PVH Corp. Price, Consensus and EPS Surprise

PVH Corp. Price, Consensus and EPS Surprise | PVH Corp. Quote

To Conclude

We believe these companies are well poised for sustainable growth in future driven by their solid strategies, significant international presence and robust brand strength. Also, both these stocks exhibit a Momentum Score of A.

Interested in Consumer Discretionary Stocks, Check These

G-III Apparel Group, Ltd. GIII pulled off an average positive earnings surprise of 41.2% in the trailing four quarters. The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Central Garden & Pet Company CENT, also a Zacks Rank #2 stock, has a long-term earnings growth rate of 10%.

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Central Garden & Pet Company (CENT) : Free Stock Analysis Report

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