Stocks

PVH to sell Izod, Van Heusen and other labels to Authentic Brands in $220 million deal

PVH Group Inc. has entered into an agreement to sell brands including Izod and Van Heusen to Authentic Brands in a $220 million deal announced on Wednesday.

The transaction is expected to close in the third quarter.

PVH
PVH,
+3.32%

categorizes the brands included in the deal as the company’s “Heritage Brands.” PVH is exiting this business.

“This was a difficult decision, as we recognize that our Heritage Brands business provided the resources that laid the foundation and gave us the opportunity to build PVH into one of the largest fashion companies in the world today,” said Stefan Larsson, PVH chief executive, in a statement. 

“This transaction reflects our commitment to driving our next chapter of sustainable, profitable growth – focused on the Calvin Klein and Tommy Hilfiger brands, our international markets, driving product strength with increased pricing power and margin expansion, and winning in the marketplace through super-charging e-commerce.”

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Centric Brands and United Legwear & Apparel Company have licenses for some Izod, Van Heusen and Arrow merchandise.

Authentic Brands, a brand licensing, development, marketing and entertainment company, already has a portfolio of brands that includes Forever 21, Lucky Brand and Nine West. It also counts famous celebrity names like Elvis Presley and Marilyn Monroe among its brands.

Authentic was also part of the venture that purchased Brooks Brothers, America’s oldest apparel company, after it filed for bankruptcy last year.

And in 2019, it reached a deal to purchase luxury department store Barneys.

As a result of this most recent transaction, PVH lowered its full-year 2021 revenue guidance to an increase of 22% to 24% from an increase of 24% to 26% previously. The FactSet consensus is for $9.026 billion, which suggests a 26.5% increase.

Also: Adidas launches period-proof tights as athletic companies turn their attention to women

The company maintained its second-quarter revenue guidance for a 34%-to-36% increase. The FactSet consensus is for revenue of $2.141 billion, up 35.4% year-over-year.

PVH raised its full-year earnings guidance to $6.60 from $5.50 previously. The company expects the transaction to be “slightly dilutive” but maintained its full-year adjusted EPS guidance of $6.50.

The FactSet consensus is for $6.72.

PVH also maintained its second-quarter EPS guidance of 79 cents to 82 cents and full-year adjusted EPS guidance of $1.15 to $1.18.

The FactSet consensus is for $1.19.

PVH stock is up 15.7% for the year to date while the benchmark S&P 500 index
SPX,
+0.09%

has gained 13.2% for the period.

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