PVH Shares Plunge as Weak Demand Dampens 2024 Outlook

LOCAL MARKET COMMENTARY

Shares on the Johannesburg Stock Exchange experienced a decline, with the blue-chip Top 40 index as well as the broader All Share index closing approximately 0.1% lower, ending at 68,275 and 74,429 points, respectively. Despite disappointing domestic data showing a decrease in South African manufacturing activity and a notable 11.7% year-on-year drop in vehicle sales for March, the rand remained relatively unaffected. South Africa's preliminary tax collection surpassed expectations, reaching R1.741 trillion for the fiscal year ending on March 31, as announced by Commissioner Edward Kieswetter in Pretoria on Tuesday. This figure exceeded the February budget projection by approximately R10 billion, reflecting a 3.2% increase from the previous fiscal year, despite challenges such as logistics constraints, power outages, and a decline in commodity prices.

EUROPEAN MARKET COMMENTARY

European stocks experienced a downward shift on Tuesday as major markets resumed trading after the Easter weekend, with investors focusing on the start of a new trading quarter. Despite European markets closing the first quarter of 2024 approximately 6.8% higher, driven by easing inflation pressures, concerns lingered. Fresh data for March on euro zone manufacturing, German inflation, and UK house prices was digested by investors. The pan-European Stoxx 600 index closed provisionally 0.76% lower, reversing earlier gains, with most sectors trading in negative territory. Retail stocks were down 2.1%, while mining stocks saw a 1.9% increase.

US MARKET COMMENTARY

On Tuesday, U.S. stocks experienced a decline as investors considered the possibility of the Federal Reserve postponing interest rate cuts, particularly following Tesla's announcement of fewer quarterly deliveries for the first time in nearly four years. Recent strong economic indicators in the United States have led to doubts regarding the Fed's ability to implement the three rate cuts projected in its latest forecast. Data released on Tuesday revealed that new orders for U.S.-manufactured goods rebounded more than anticipated in February, while job openings remained stable at elevated levels.

ASIA MARKET COMMENTARY

This morning, Asia-Pacific stocks faced a decline following a mixed session. Investors remained watchful of data concerning China's service sector. Taiwan's shares experienced a notable 0.8% drop after a strong earthquake with a magnitude of 7.2 struck Taipei, prompting a tsunami warning for the southern islands of Japan and the Philippines. Shares of Taiwan Semiconductor Manufacturing fell by 1.4% after the company evacuated some facilities due to the quake.

CURRENCY MARKET COMMENTARY

On Tuesday, the South African rand gained strength as the dollar weakened following a report indicating that U.S. job openings remained at elevated levels. However, the dollar rebounded this morning, keeping the Japanese yen near historic lows, although concerns about potential currency intervention by Tokyo limited further depreciation of the yen. Bitcoin experienced a decline of 5.36%, dropping to $66,027 after earlier falling to as low as $64,550.

COMMODITY MARKET COMMENTARY

On Tuesday, gold reached another record high as traders sought refuge in the safe-haven asset amidst escalating tensions in the Middle East, despite a stronger dollar and reduced expectations for U.S. interest rate cuts. Meanwhile, oil prices surged to their highest level since October as investors monitored potential disruptions to the global supply chain amid escalating conflicts in the Middle East and a Ukrainian drone strike on a significant Russian oil refinery.

Gold Fields Limited (GFI) 1.36%

The annual group production and cost guidance for 2024 remains unchanged, as announced on February 22, 2024. Attributable gold equivalent production (excluding Asanko) is projected to range between 2.33 million ounces and 2.43 million ounces. The 2024 all-in sustaining cost (AISC) is anticipated to fall between US$1,410 per ounce and US$1,460 per ounce, with all-in costs (AIC) expected to range from US$1,600 per ounce to US$1,650 per ounce. The sustaining capital expenditure for 2024 includes A$200 million (US$132 million) allocated for the St Ives renewable power project. Excluding this project, which contributes approximately US$60 per ounce, the AISC ranges from US$1,350 per ounce to US$1,400 per ounce, and AIC ranges from US$1,540 per ounce to US$1,590 per ounce.

Lighthouse Properties PLC (LTE) -1.49%

The Scrip Distribution Reference Price is set at 753,01474 ZAR cents per share, offering a 3.00% discount to Lighthouse shares' closing spot price on the JSE as of March 28, 2024. This price is adjusted after deducting the Cash Dividend and converting it from EUR to ZAR at an exchange rate of ZAR 20.51566 to EUR 1. Shareholders on the South African register receiving the Cash Dividend will get it in South African Rands, also converted from Euro at the same exchange rate. The gross Cash Dividend amounts to 1.35 EUR cents per share or 27.69614 ZAR cents per share for South African shareholders exempt from South African dividends tax. The net Cash Dividend is 22.15691 ZAR cents per share for South African shareholders subject to a 20.00% dividends tax rate. Shareholders opting for the Scrip Distribution will receive 3.67803 new Lighthouse shares for every 100 Lighthouse shares held on the record date, April 12, 2024, in proportion to the Scrip Distribution Reference Price.

PVH Corporation (PVH) -22.22%

PVH Corp, the company behind Calvin Klein and Tommy Hilfiger, saw its shares plummet by up to 25% on Tuesday following its projection of a more significant decline in annual revenue than anticipated, driven by weakening demand in Europe. The apparel maker expects a fiscal 2024 revenue decrease between 6% and 7%, contrasting with the 2.3% drop predicted by analysts. CEO Stefan Larsson announced plans to significantly reduce online platforms in Europe by mid-2024, expecting a 5% reduction in total European sales this year. The company's forecasted annual earnings per share range from $10.75 to $11.00, falling short of analysts' expectations of $11.89. PVH's wholesale revenue dropped by 10% in the fourth quarter due to cautious approaches by wholesale customers across North America and Europe.

Tesla Inc. (TSLA) -4.90%

On Tuesday, Tesla reported a decline in quarterly deliveries for the first time in nearly four years, falling short of Wall Street estimates and prompting concerns in the market. Despite price cuts, demand remained subdued in a fiercely competitive environment. Shares of the Elon Musk-led company dropped 5.3% to $165.98, resulting in a loss of approximately $30 billion in market value, marking a 33% decline for the year. Following years of rapid growth, Tesla is now anticipating a slowdown in 2024. Deliveries decreased by 8.5% in the first quarter to 386,810 vehicles, with production totalling 433,371 vehicles during the same period, both figures missing analyst expectations.

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