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CEO Stefan Larsson said the Tommy Hilfiger and Calvin Klein parent topped EPS expectations as his PVH+ plan started paying dividends. Dress Vendor
Stefan Larsson’s plan is coming together at PVH Corp. — prompting both better results and big changes.
The chief executive officer told WWD that his PVH+ strategic framework helped the company top third-quarter projections and raise its EPS outlook for the year. It is also prompting PVH to transition away from its long-standing licensing relationship arrangement with G-III Apparel Group.
PVH has extended most of its licensing deals with G-III for Calvin Klein and Tommy Hilfiger wholesale women’s apparel in the U.S. and Canada in order to bring the businesses in house in an orderly fashion. The licensing deals now expire by 2027. Related Galleries Fashion Trends Spring 2023 Trends: Utility Street Style They Are Wearing: Paris Fashion Week Spring 2023
Larsson said the businesses make up about one third of global licensing revenues, which last year tallied $340 million, but less than 10 percent of the company’s earnings before interest and taxes.
The CEO said he was grateful for G-III’s work on the brands, but wanted his hands on the reins to get the most out of the full scope of both Tommy Hilfiger and Calvin Klein.
“Over time, being in complete control and leveraging the best of our brand — in product design, assortment, building pricing, channel mix, supply chain — it’s a critical component to deliver on the PVH+ commitment,” Larsson said.
Taking the businesses in house would also strengthen PVH’s relationship with retailers who sell the company’s men’s apparel or underwear.
“Wholesale is very important to us; it’s very important to the consumer,” Larsson said. “We have very strong relationships with Macy’s and other key partners and it’s about getting close and unlocking the full power of your brand.”
Larsson laid out his PVH+ plan in April, targeting the company for $12.5 billion in revenues by 2025, up from $9.2 billion last year.
It’s a brand-centric, digitally led approach that has PVH focusing on hero products, consumer engagement, online, a demand- and data-driven operating model and driving efficiencies.
The CEO said that approach has left the brand in good stead so far and that the demand-driven model would get another boost this week when H&M veteran David Savman joins as executive vice president and chief supply chain officer.
Larsson is refashioning PVH at a time of intense upheaval in fashion — not only did he take charge from his predecessor Manny Chirico during the pandemic, he has been pushing his plan through supply chain disruptions, inflation, a spike in interest rates and the threat of recession.
That general turmoil in the market was certainly reflected in the company’s third-quarter net results.
PVH’s bottom line took a $417 million pretax non-cash hit from a writedown in goodwill tied to a significant increase in discount rates, which are used in accounting to determine the present value of future cash flows. That led to a net loss of $186.7 million in the quarter, down from earnings of $279.7 million a year earlier.
But adjusted earnings per share — the number Wall Street obsesses over — came in at $2.60, 45 cents ahead of the $2.15 analysts had penciled in.
Revenues for the quarter ended Oct. 30 fell 2.2 percent to $2.28 billion from $2.33 billion a year earlier, which would have been an increase of 7 percent in constant currencies. Tommy Hilfiger’s revenues decreased 4 percent on a reported basis and rose 7 percent in constant currencies, while Calvin Klein was up 1 percent on a reported basis and 9 percent in constant currencies.
“We delivered a strong quarter despite the challenging macro [environment],” Larsson said, adding the business grew in all regions and both brands, adjusting for currency. “The way we drive the quarter, I feel really good about. We just focused intently on what’s within our control and executing the PVH+ growth drivers and the consumer responded. So we’re gaining traction.”
Larsson said PVH had a strong August and September and then, like other fashion companies, saw consumers weaken in October — and he expects that weakness to continue into the fourth quarter.
“Just like in Q3, we anticipate the consumer sentiment, the macro backdrop to be challenging, but we showed in Q3 that we could compete in and win in spite of that,” he said.
PVH boosted its full-year earnings outlook to $8.25 a share, up from the $8 previously forecast, reflecting strength in the third quarter.
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