Dj Chmn Baxter Sells 32300 Of Kontoor Brands Inc >Ktb

Inter Parfums, Inc. IPAR reported impressive third-quarter 2024 results, showcasing strong year-over-year growth in the top and bottom lines. While sales matched the Zacks Consensus Estimate, the company outperformed expectations on earnings. Sales benefited from continued momentum in the fragrance market, the strength of legacy and new brands, effective advertising and promotional efforts and an extensive global distribution network.

The quarter’s record-breaking sales were driven by continued demand across global markets, particularly in North America, Western Europe and Asia/Pacific, where sales rose 12%, 25% and 15%, respectively. Central and South America also posted strong growth of 20%, while Eastern Europe rebounded with a 23% increase after a soft start earlier in the year due to supply-chain challenges. Although sales in China remain modest, plans are underway to boost promotional activities next year, with a gradual expansion targeted for 2026.

In addition to regional growth, the inclusion of new brands such as Roberto Cavalli and Lacoste has been a notable success, contributing 10% to quarterly sales. The company is confident that sales from these brands will exceed $100 million in 2024.

Inter Parfums remains optimistic about the final quarter and finishing 2024 on a solid note. Management has reiterated its full-year guidance. The company also informed that distributors and retailers have responded favorably to its 2025 product lineup, which is encouraging as the fragrance market shows signs of moderation.

IPAR Q3 Performance in Detail

Inter Parfums posted earnings of $1.93 per share, up 16% from the year-ago quarter’s figure. The metric surpassed the Zacks Consensus Estimate of $1.83 per share.

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Quarterly net sales reached $424.6 million, reflecting a year-over-year increase of 15%. The growth was fueled by established and newly introduced fragrance brands.

Sales in European-based operations surged 21% to $282 million. This growth was propelled by the exceptional performance of the Jimmy Choo and Montblanc brands, which saw sales increases of 17% and 10%, respectively. Jimmy Choo’s sales acceleration was fueled by the launch of “I Want Choo Le Parfum”, while Montblanc’s sales were boosted by the continued success of the “Explorer and Legend” lines.

Coach, one of the company’s largest brands, maintained sales levels comparable to the third quarter of 2023, a period when Coach sales rose by 32%. This solid sales performance was also complemented by the debut of the “Lacoste Original” line.

IPAR’s U.S. operations sales rose 9% year over year to $146 million in the third quarter. The company’s largest U.S. brand, GUESS, saw a 16% rise in sales during this period, driven by the ongoing popularity of its legacy fragrances and the successful launch of GUESS Iconic.

Sales from the second-largest brand, Donna Karan/DKNY, grew 4%. Now in its third year with the company, the brand has introduced “DKNY 24/7”, which started a global rollout in September after a successful limited release over the summer.

Interparfums, Inc. Price, Consensus and EPS Surprise

Interparfums, Inc. price-consensus-eps-surprise-chart | Interparfums, Inc. Quote

Focus on IPAR’s Margins

IPAR’s consolidated gross profit rose 15.4% year over year to $271.2 million, whereas the gross margin remained flat at 63.9%.

During the quarter, selling, general and administrative expenses (SG&A) increased 11.7% to $165.2 million. As a percentage of sales, SG&A expenses contracted 130 basis points to 38.9%. Advertising and Promotion (A&P) expenses rose 6% and represented 15.7% of net sales. Management foresees a significant increase in A&P spending in the final quarter owing to the holiday season.

The company’s operating income came in at $106 million, up from the $87.2 million reported in the year-ago quarter. The operating margin expanded 130 basis points to 25%.

A Sneak Peek Into IPAR’s Financial Aspects

Inter Parfums ended the quarter with cash and cash equivalents of $78.4 million, long-term debt (excluding the current portion) of $134.6 million and total equity of $985.1 million.

IPAR Maintains 2024 View

With a strategic focus on innovation and product launches, Inter Parfums is well-positioned in the ongoing dynamic. The strength of a diverse brand portfolio, combined with the flexible operating model, should help it gain market share. All said, management reiterated its guidance for 2024.

For the full year, the company continues to anticipate net sales of $1.45 billion and earnings of $5.15 per share. This guidance suggests 10% growth in net sales and an 8% increase in the bottom line from the 2023 levels.

This Zacks Rank #2 (Buy) stock has risen 8.1% in the past six months against the industry’s decline of 13.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks Looking Red Hot

Gildan Activewear Inc. GIL, which manufactures and sells various apparel products, currently carries a Zacks Rank #2. GIL has a trailing four-quarter earnings surprise of 5.4%, on average.

The Zacks Consensus Estimate for Gildan Activewear’s current financial-year sales and earnings implies growth of 1.5% and 15.6% from the year-ago reported numbers.

Kontoor Brands, Inc. KTB, a lifestyle apparel company, currently carries a Zacks Rank #2. KTB has a trailing four-quarter earnings surprise of 12.8%, on average.

The Zacks Consensus Estimate for Kontoor Brands’ current financial-year earnings indicates growth of 13.2% from the year-ago reported numbers.

Ralph Lauren Corporation RL, a global leader in the design, marketing and distribution of luxury lifestyle products, currently carries a Zacks Rank #2. RL has a trailing four-quarter earnings surprise of 10.3%, on average.

The Zacks Consensus Estimate for Ralph Lauren’s current financial year’s sales and earnings implies growth of 1.8% and 9.2%, respectively, from the year-ago reported numbers.

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Hanesbrands Inc. HBI posted third-quarter 2024 results, wherein the top and bottom lines came ahead of the Zacks Consensus Estimate and earnings increased year over year. Management expects to revert to revenue growth in the fourth quarter and raised its full-year profit guidance.

Strategic actions to streamline and focus the business are delivering results, enabling significant changes to the cost structure, boosting operational efficiency, lowering inventory and freeing capital for growth investments. These efforts are expected to drive improvements in margins, cash flow, and debt reduction through 2025.

A Look at HBI’s Quarterly Results

The company posted adjusted earnings from continuing operations of 15 cents per share, surpassing the Zacks Consensus Estimate of 11 cents. The metric increased considerably from the adjusted loss from continuing operations of 2 cents per share reported in the year-ago quarter.

Hanesbrands Inc. Price, Consensus and EPS Surprise

Hanesbrands Inc. price-consensus-eps-surprise-chart | Hanesbrands Inc. Quote

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Net sales from continuing operations declined 2.5% to $937.1 million while exceeding the Zacks Consensus Estimate of $928 million. The metric includes an impact of nearly 180 basis points (bps) from the U.S. Hosiery divestiture and about 75 bps from currency headwinds. On a constant-currency (cc) basis, organic net sales came in line with the year-ago period figure.

Adjusted gross profit came in at $392 million, up 11% year over year. The adjusted gross margin was 41.8%, up nearly 525 bps. The year-over-year improvement can be attributed to reduced input costs, gains from cost-saving measures and its assortment management effort.

Adjusted SG&A expenses stood at $269 million, up 1% year over year. As a percentage of net sales, adjusted SG&A expenses increased by 90 bps to 28.7%. This increase was due to a 150-bps rise in brand marketing investments. However, this was partially mitigated by cost-saving measures and careful expense management.

Adjusted operating profit came in at $122 million, up 46% year over year. Adjusted operating margin stood at 13%, up 435 bps driven by enhanced gross margin.

Decoding HBI’s Segmental Performance

Starting with second-quarter 2024, HBI reorganized its reporting segments into the U.S. and International categories.

The U.S. Segment: The segment’s net sales dropped 1% year over year to $678.3 million. Despite the expected market downturn this quarter, the company’s consumer-centric strategy proved effective. Year to date, the company’s point-of-sale performance has surpassed the overall market, fueled by heightened brand investments and product innovation across its Hanes, Maidenform and Bali lines. This strategy is securing permanent retail placements and increasing market share, especially among younger consumers. The segmental operating margin was 22.1%, up roughly 665 bps.

International Segment: International net sales grew 1.3% to $259.1 million. This includes a $7 million impact from unfavorable foreign exchange rates. At cc, international sales rose 4% year over year, fueled by growth in the Americas and Asia. Sales in Australia remained in line with the year-ago period. The operating margin improved to 14.2%, up nearly 465 bps and is backed by reduced input costs and the advantages of cost-saving measures.

Hanesbrands’ Financial Health Snapshot

The company ended the quarter with cash and cash equivalents of $317.3 million, long-term debt of $3,211.2 million and total stockholders’ equity of $149.3 million. HBI had roughly $1.1 billion of available capacity under its credit facility at the end of the quarter.

At the end of the quarter, year-to-date cash flow from operations amounted to $197 million. Free cash flow was $165 million in the same time frame.

After the end of the third quarter of 2024, the company concluded the sale of its global Champion business to Authentic Brands Group.

What to Expect From HBI in 2024

For 2024, net sales from continuing operations are anticipated to be around $3.61 billion, including anticipated headwinds of nearly $50 million from the U.S. Hosiery divestiture and a currency headwind of about $42 million. This guidance suggests a roughly 4% year-over-year decline on a reported basis and an approximately 2% decline on an organic basis at cc. Earlier, net sales from continuing operations were anticipated to be $3.59-$3.63 billion.

Adjusted operating profit from continuing operations is likely to be $417 million now, including a currency headwind expectation of approximately $8 million. The metric was expected to be in the range of $395-$415 million.

Adjusted earnings per share (EPS) from continuing operations are envisioned to be approximately 39 cents compared with 31-37 cents expected earlier.

Cash flow from operations is forecasted to be nearly $250 million, while capital investments are estimated to be around $50 million. Free cash flow is expected to be approximately $210 million in 2024.

Hanesbrands’ Guidance for Q4

For fourth-quarter 2024, net sales from continuing operations are expected to be around $900 million, including anticipated headwinds of roughly $4 million from currency headwinds. The guidance suggests a nearly 2% year-over-year growth on a reported basis and an approximately 3% increase on an organic basis at cc.

Adjusted operating profit from continuing operations is likely to be around $115 million, including an expected currency headwind of about $1 million. Adjusted earnings from continuing operations are envisioned to be about 14 cents per share in the quarter.

HBI’s shares have gained 15.6% in the past three months compared with the industry’s 16.8% growth. The company currently carries a Zacks Rank #4 (Sell).

Top Three Picks

Ralph Lauren Corporation RL, which designs, markets and distributes lifestyle products, currently carries a Zacks Rank #2 (Buy). RL has a trailing four-quarter average earnings surprise of 10.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The consensus estimate for Ralph Lauren’s current financial year sales and earnings indicates advancements of 1.8% and 9.9%, respectively, from the prior-year figures.

Gildan Activewear Inc. GIL, which manufactures and sells various apparel products, carries a Zacks Rank of 2. GIL has a trailing four-quarter earnings surprise of 5.4%, on average.

The consensus estimate for Gildan Activewear’s current financial year sales and earnings indicates advancements of 1.5% and 15.6%, respectively, from the prior-year figures.

Kontoor Brands, Inc. KTB, a lifestyle apparel company, currently carries a Zacks Rank #2. KTB has a trailing four-quarter average earnings surprise of 12.8%.

The Zacks Consensus Estimate for Kontoor Brands’ current fiscal year earnings indicates growth of 13.2% from the year-ago actuals.

Zacks Investment Research

Have you been paying attention to shares of Ralph Lauren (RL)? Shares have been on the move with the stock up 6.3% over the past month. The stock hit a new 52-week high of $208.48 in the previous session. Ralph Lauren has gained 44.3% since the start of the year compared to the 7.9% move for the Zacks Consumer Discretionary sector and the -15.4% return for the Zacks Textile - Apparel industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 7, 2024, Ralph Lauren reported EPS of $2.7 versus consensus estimate of $2.45.

For the current fiscal year, Ralph Lauren is expected to post earnings of $11.33 per share on $6.75 billion in revenues. This represents a 9.89% change in EPS on a 1.77% change in revenues. For the next fiscal year, the company is expected to earn $12.66 per share on $7.03 billion in revenues. This represents a year-over-year change of 11.78% and 4.2%, respectively.

Valuation Metrics

Ralph Lauren may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Ralph Lauren has a Value Score of B. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 18.4X current fiscal year EPS estimates, which is not in-line with the peer industry average of 21X. On a trailing cash flow basis, the stock currently trades at 15.1X versus its peer group's average of 8.6X. Additionally, the stock has a PEG ratio of 1.65. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Ralph Lauren currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Ralph Lauren fits the bill. Thus, it seems as though Ralph Lauren shares could have potential in the weeks and months to come.

How Does RL Stack Up to the Competition?

Shares of RL have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Kontoor Brands, Inc. (KTB). KTB has a Zacks Rank of # 2 (Buy) and a Value Score of C, a Growth Score of B, and a Momentum Score of D.

Earnings were strong last quarter. Kontoor Brands, Inc. beat our consensus estimate by 9.60%, and for the current fiscal year, KTB is expected to post earnings of $5.28 per share on revenue of $2.6 billion.

Shares of Kontoor Brands, Inc. have gained 8.4% over the past month, and currently trade at a forward P/E of 17.96X and a P/CF of 16.68X.

The Textile - Apparel industry may rank in the bottom 59% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for RL and KTB, even beyond their own solid fundamental situation.

Zacks Investment Research

PVH Corp. PVH is currently trading at a notably low price-to-earnings (P/E) multiple, which is below the Zacks Textile - Apparel industry and broader Consumer Discretionary averages. PVH's forward 12-month P/E ratio is 8.09, lower than the industry average of 13.59x and the sector average of 18.62x. A lower P/E ratio often signals that a stock may be priced attractively relative to its earnings potential, which can be appealing to value-focused investors.

The stock is undervalued compared with its industry peers, offering compelling value to investors looking for exposure to the retail apparel sector. Furthermore, PVH's Value Score of A underscores its appeal as a potential investment.

PVH has gained 33.9% compared with the industry’s growth of 2.3% in the past year. This success reflects the company's strategic focus on brand management, effective marketing, financial control and operating leverage. These initiatives have enabled PVH to outpace the Consumer Discretionary sector, which rose by 14.4%, and the S&P 500, which increased by 32.2% in the same period.

PVH’s emphasis on operational efficiency and brand development positions it favorably, not just for short-term gains but as a strong player in the apparel industry with the potential for sustained long-term growth.

PVH Capitalizes on Brand Strength & Strategic Expansion

PVH Corp.’s robust brand portfolio, particularly with Calvin Klein and TOMMY HILFIGER, enables it to maintain competitive strength and drive growth despite the challenging retail environment. The company’s brand-focused strategy, alongside a diversified distribution approach, underscores its long-term growth potential.

PVH Corp. has been making constant efforts to expand its international business. The company has also been experiencing robust growth in the Asia-Pacific region. Additionally, it has been strategically reducing sales in Europe to improve overall sales quality in the region. The company is on track to position its Europe business for brand-accretive profitable growth in the long term. The company’s PVH+ Plan is an ambitious multi-year strategy focused on sustainable growth, leveraging its key brands to drive consumer connection through five pillars: product innovation, consumer engagement, a digitally-led market approach, data-driven operations and enhanced efficiency.

Each pillar is designed to reinforce PVH's core strengths, adapt to evolving consumer preferences, and position PVH to thrive in a more digital, data-centered marketplace. The PVH+ Plan’s strategic emphasis on efficiency and targeted investments is aligned with operational stability and growth initiatives, solidifying PVH’s path to long-term value creation in the global retail landscape.

What Could Derail PVH Stock’s Momentum?

Despite the positive factors, PVH has been grappling with a tough operating landscape, including inflationary pressures and foreign currency translations. Its Wholesale unit also remains weak due to lower sales of the Heritage Brands women's intimates business and ongoing efforts to reduce wholesale revenues in Europe.

For the third quarter of fiscal 2024, revenues are projected to decline 6-7% (down 7-8% in constant currency) from the year-ago quarter, including a 2% reduction related to the Heritage intimates business sale.

For fiscal 2024, the company anticipates a year-over-year revenue decline of 6-7%, which is consistent on a constant currency basis. This includes a 2% reduction due to the divestiture of the Heritage Brands women’s intimate business and a 1% impact from the 53rd week in fiscal 2023.

How to Play PVH Stock

Investors may find PVH Corp. attractive due to its compelling valuation and strong growth prospects. PVH is well-positioned to benefit from its targeted PVH+ Plan. This targeted strategy is expected to support the company in navigating current market pressures, including inflation and currency headwinds, while bolstering long-term growth, making it an appealing option for investors interested in the Consumer Discretionary sector. PVH’s current Zacks Rank #3 (Hold) reinforces its appeal as a solid investment opportunity.

Three Picks You Can’t Miss

A few better-ranked stocks are Under Armour, Inc. UAA, Kontoor Brands Inc. KTB and Skechers U.S.A., Inc. SKX.

Under Armour is one of the leading designers, marketers and distributors of authentic athletic footwear, apparel and accessories. It has a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Under Armour’s fiscal 2025 sales indicates a decline of 10.6% from the year-ago period’s reported figure. UAA has a trailing four-quarter average earnings surprise of 64.2%.

Kontoor Brands is an apparel company. It currently has a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for KTB’s 2024 earnings and sales indicates growth of 13.2% from the 2023 reported figures. KTB has a trailing four-quarter average earnings surprise of 12.8%.

Skechers designs, develops, markets and distributes footwear. The company has a Zacks Rank of 2 at present.

The consensus estimate for Skechers’ 2024 earnings and sales indicates growth of 20.6% and 12.1%, respectively, from the 2023 reported figures. SKX has a trailing four-quarter average earnings surprise of 8.8%.

Zacks Investment Research

For those looking to find strong Consumer Discretionary stocks, it is prudent to search for companies in the group that are outperforming their peers. Is Adidas AG (ADDYY) one of those stocks right now? By taking a look at the stock's year-to-date performance in comparison to its Consumer Discretionary peers, we might be able to answer that question.

Adidas AG is a member of our Consumer Discretionary group, which includes 270 different companies and currently sits at #10 in the Zacks Sector Rank. The Zacks Sector Rank considers 16 different groups, measuring the average Zacks Rank of the individual stocks within the sector to gauge the strength of each group.

The Zacks Rank emphasizes earnings estimates and estimate revisions to find stocks with improving earnings outlooks. This system has a long record of success, and these stocks tend to be on track to beat the market over the next one to three months. Adidas AG is currently sporting a Zacks Rank of #1 (Strong Buy).

Within the past quarter, the Zacks Consensus Estimate for ADDYY's full-year earnings has moved 8.7% higher. This is a sign of improving analyst sentiment and a positive earnings outlook trend.

Based on the most recent data, ADDYY has returned 17.9% so far this year. At the same time, Consumer Discretionary stocks have gained an average of 5.6%. This means that Adidas AG is outperforming the sector as a whole this year.

Another Consumer Discretionary stock, which has outperformed the sector so far this year, is Kontoor Brands (KTB). The stock has returned 35% year-to-date.

In Kontoor Brands' case, the consensus EPS estimate for the current year increased 0.6% over the past three months. The stock currently has a Zacks Rank #2 (Buy).

To break things down more, Adidas AG belongs to the Shoes and Retail Apparel industry, a group that includes 11 individual companies and currently sits at #161 in the Zacks Industry Rank. This group has lost an average of 17.5% so far this year, so ADDYY is performing better in this area.

On the other hand, Kontoor Brands belongs to the Textile - Apparel industry. This 20-stock industry is currently ranked #97. The industry has moved -16% year to date.

Adidas AG and Kontoor Brands could continue their solid performance, so investors interested in Consumer Discretionary stocks should continue to pay close attention to these stocks.

Zacks Investment Research