On March 28, PVH Corp reported fourth quarter and full year results. PVH’s full year revenue grew 8% year-over-year and amounted to $9.66 billion. The company’s full year non-GAAP EPS were $9.6: 21% increase year-over-year. Given that in 2017, PVH projected 7% revenue growth and $9.00 -$9.10 non-GAAP EPS for 2018, these are excellent results.

PVH’s forecast for 2019 is also better than expected. The company projects 4% revenue growth and non-GAAP EPS of $10.30-$10.40 in 2019. Following the earnings call, PVH stock jumped 18.8% and only had a small correction since – a welcoming development for the stock that lost over 30% of its value in 2018.

The company’s woes in 2018 were primarily tied to underperforming in North America Calvin Klein brand. In the wake of a string of negative results, PVH parted ways Raf Simmons, a Belgian fashion designer the company appointed as Chief Creative Officer of Calvin Klein in 2016. PVH has also decided to abandon Calvin Klein’s the 205 West 39th Street Collection and close flagship store on Madison Avenue. Moreover, the company announced that it will close New York City 5th Avenue Tommy Hilfiger store and the Tommy Hilfiger store on Collins Avenue in Miami, Florida.

These closures are part of a larger trend in the fashion industry to focus on direct-to-consumer approach. PVH CEO, Manny Chirico, noted the company’s desire "to focus our marketing efforts on targeting a younger, more digitally savvy consumer in North America." Chirico has also acknowledged that "fundamentally the distribution channels from a sales point of view are really changing and the way to service our consumer is changing." PVH’s efforts to put digital marketing and consumer data at the center of their strategy is a positive development for the company. PVH’s digital revenues increased by more than 20% year-over-year, exceeding $1 billion.

Digital focus seems to pay off particularly well in China where PVH’s e-commerce revenue continued to growth. China is an increasingly important market for the fashion industry. In their The State of Fashion 2019 report, McKinsey projected that this year China will overtake the United States as the biggest fashion market. On March 24, PVH announced agreement to reacquire from Dickson Concepts (International) Limited the license for the Tommy Hilfiger brand in Hong Kong, Macau, Taiwan, Singapore and Malaysia. Daniel Grieder, Tommy Hilfiger Global CEO, stated that the move was motivated by desire to execute "a more fully integrated strategy for the Greater China market in coordination with our directly operated mainland China business."

The international market, overall, continues to be the biggest source of PVH’s revenues (over 50%). Both Tommy Hilfiger and Calvin Klein perform well in Europe. The strong demand for the latter brand there helped Calvin Klein to post 8% revenue growth year-over-year. Tommy Hilfiger posted very strong results: 12% revenue growth, international comparable store sales increase of 13%, and North America comparable store sales increase of 5%. Tommy Hilfiger has also saw its global brand awareness exceed 80%. Overall, PVH seems to be positioned reasonably well for successful 2019. Recommended Strategy: Buy on the Dip.