PVH CORP. YEAR IN REVIEW
2023
A Note from Stefan
Stefan Larsson
Chief Executive Officer, PVH Corp.
We continue to gain important traction with our PVH+ Plan and our long-term vision to build Calvin Klein and TOMMY HILFIGER into the most desirable lifestyle brands in the world and make PVH one of the highest performing brand groups in our sector. Looking back on the first two years of PVH+ Plan execution, you will see a clear trend in that where we lean in to execute, we deliver.
In 20231, we delivered strong financial performance across both brands and all regions, exceeding our guidance for both the top and bottom line, despite a choppy macro environment. At the same time, we continued to build strong momentum in both the consumer-facing growth drivers of our PVH+ Plan-driving brand desirability in product, marketing and marketplace-and in building out our data and demand-driven supply chain, all while driving efficiencies to invest in growth.
We delivered $9.2 billion in revenue, up
2% on a reported basis and up 1% in constant currency*, including high-single digit direct-to- consumer (DTC) growth, while expanding our gross margins-a testament to the strength of our global brands in the marketplace. We drove strong EBIT (earnings before interest and taxes) growth, expanded our EBIT margin to 10.1%, and delivered a significant EPS increase.
In Europe, we continued to drive growth, with our business today larger than it was in 2019 and driving higher profits. We have started to successfully unlock North America, producing significant margin expansion, and we are taking back our licenses of core women's product categories as part of a multi-year transition that began in January 2024. We have also turned Asia into a growth engine, where we are now taking share on a consistent basis, with double-digit constant currency revenue growth in both 2022 and 2023.
Across Calvin Klein and TOMMY HILFIGER, we created new levels of brand heat fueled by our iconic products and unforgettable cut-through campaigns. Calvin Klein generated more consumer engagement than at any other time in the history of the brand, featuring mega talent such as Jennie Kim, Jung Kook, Kendall Jenner, Michael B Jordan, Idris Elba and Jeremy Allen White. We continued to drive relevance for TOMMY HILFIGER by connecting the brand's unique DNA of Classic American Cool with a network of the most influential talent and the world's biggest cultural events-from New York Fashion Week to F1TM Grand Prix races. We have so much more to come in 2024.
As I traveled around the world spending time with our teams and in the marketplace, what stood out to me is that no matter where in the world I go, there is incredible strength and untapped growth potential for both Calvin Klein and TOMMY HILFIGER. It is exciting to see our associates around the world embrace the clarity of direction from our PVH+ Plan and translate it to systematic and repeatable progress that has further come to life during the last year.
I would like to thank all our associates around the world for being on this brand-building growth journey with us: your passion, your creativity and your hard work make all
the difference.
1 The financial information referenced in this letter generally consists of non-GAAP financial measures, as defined under SEC rules. Reconciliation of these measures to GAAP performance appears in Exhibit A. The discussion herein contains certain forward-looking statements
that reflect PVH's view of future events and financial performance as of Tuesday, June 4, 2024. All such forward-looking statements are subject to risks and uncertainties indicated from time to time in the Company's SEC filings. Therefore, the Company's future results of operations could differ materially from historical results or current expectations, as more fully discussed in its SEC filings. The Company does not undertake any obligation to update publicly any forward-looking statement.
* Reconciliations to GAAP amounts appear on Exhibit A.
PVH CORP. YEAR IN REVIEW 2023 / 2
Unlocking our Full Potential through the PVH+ Plan
The PVH+ Plan is our multi-year, strategic growth plan to build Calvin Klein and TOMMY HILFIGER into the most desirable lifestyle brands in the world and make PVH one of the highest performing brand groups in our sector.
The PVH+ Plan is executed through five key growth drivers:
- Win with the best product by advancing our category offense with the best hero products and most relevant newness in the market.
-
Win with the best consumer engagement, connecting our hero products with culturally relevant, aspirational talent by developing cut-through brand campaigns, igniting
the power of our influencer engine and elevating the consumer experience at every touchpoint. - Win in the digitally-led marketplace by growing our direct-to-consumer channels and key wholesale partnerships.
- Develop a demand- and data-driven operating model by connecting the planning, buying and selling of inventory closer to demand.
- Drive efficiencies and invest in growth while improving our cost competitiveness.
Each of the five key growth drivers of our PVH+ Plan plays an important role on its own, and when we make them play all together, which we increasingly do, we create something really powerful. Leveraging the full power of Calvin Klein and TOMMY HILFIGER, we are building on our market-leading position in Europe, accelerating growth in Asia Pacific, and unlocking the full potential of our brands
in North America. In two years of PVH+ Plan execution, our global progress is tangible- and significant:
- We have put 100% of our focus on our globally beloved iconic brands, Calvin Klein and TOMMY HILFIGER, and divested all other regionally focused brands.
- We're building a very strong leadership team with the experience to move PVH from a brand acquirer to a leading brand builder.
- We're driving strong DTC growth across both brands and all regions through strength in product, marketing and marketplace execution.
- In the wholesale channel we have deepened our relationships with our key partners and applied a strong quality of sales focus globally.
- We have developed a strong product category offense in key categories and must-have hero products, significantly increasing AURs (average unit retail prices) and gross margin rate.
- We are executing breakthrough campaigns with strong global talent amplification
to connect with the consumer while strengthening the brand experience across social, e-commerce and stores. - We have successfully started to build out our data and demand-driven operating model, ending the year with inventory down 21% compared to the prior year, while driving higher availability and stock freshness. The quality of our products is up, the cost of goods is down and our pricing power is up, leading to higher gross margins.
- We continue to invest behind our growth initiatives, including increasing marketing spend to approximately 6% of sales for 2023, all while driving cost efficiencies across the company.
- We have significantly increased our cash flow, enabling us to invest in growth and increase our share buybacks to historically high levels. Over the last two years, we have repurchased nearly $1 billion of our stock, representing approximately 17% of our outstanding shares.
- We continued to make progress on our Forward Fashion corporate responsibility strategy, ensuring we're acting responsibly to meet the expectations of our stockholders, our associates, our consumers and the communities where we live and work.
PVH CORP. YEAR IN REVIEW 2023 / 3
2023 - Year in Review
In 2023, we delivered $9.2 billion in revenue and a 10.1% non-GAAP EBIT margin*, up
60 basis points compared to the prior year. We drove low-single-digittop-line growth, which reflects the strength of Calvin Klein and TOMMY HILFIGER, supported by our strong hero product, powerful consumer engagement, and elevation of the consumer experience.
We drove significant profitability and earnings growth versus last year. On the bottom-line, we delivered a record high EPS* on a non- GAAP basis of $10.68, reflecting EPS growth* of 19% for the year.
Our international businesses continued to execute well across both brands even as macro conditions became increasingly challenging. In North America, we have successfully started to unlock the region, driving significant margin expansion, despite a choppy macroeconomic backdrop. We are encouraged by positive performance indicators, especially with how consumers are responding to and engaging with our brands and new product.
In addition, underscoring our strong financial position, we repurchased approximately $550 million of stock and recently increased our share repurchase program by $2 billion. Moving forward, we will first and foremost continue investing in our business to fuel growth, while at the same time, appropriately deploying our excess cash to deliver shareholder returns.
Unlocking our
Global Growth Potential
Our 2023 performance was led by very strong underlying results in our international businesses, as we continued to capture the growth opportunities of our iconic brands.
- In Europe, building on our historically large business, market-leading awareness, and brand strength across both Calvin Klein and TOMMY HILFIGER, for 2023, the region delivered low-single digit revenue growth in euros. Our revenues ended the year over $4 billion, significantly larger than pre-COVID levels and driving higher profits.
- In Asia Pacific, we delivered mid-teens growth in revenue in constant currency in 2023. China is an important growth engine, which grew over 20% in local currency for the year. Our brands and products have a clear premium positioning, with opportunity to grow further in all markets. We continue to focus on driving overall brand awareness, especially in China, where both Calvin Klein and TOMMY HILFIGER are underpenetrated.
- In North America, we remain in the early phases of our multi-year journey to unlock the significant opportunity we have in this market. For 2023, our Calvin and Tommy businesses together delivered an 8.3% non-GAAP EBIT margin*, a big step-up of nearly 500 basis points year-over-year despite modestly lower revenues. This demonstrates the significant progress we are making in building the foundation for long-term brand, accretive growth in the region.
* Reconciliations to GAAP amounts appear on Exhibit A.
PVH CORP. YEAR IN REVIEW 2023 / 4
Unlocking The Power of Our Global Iconic Brands
We drove strong brand relevance across Calvin Klein and TOMMY HILFIGER through our exciting brand campaigns.
- We continued to generate desirability for Calvin Klein by connecting cut-through marketing with iconic product. Led by unforgettable campaigns, an expanding global influencer engine and culture-defining events, our work reached consumers around the world and drove virality and earned media. We increased awareness and relevance around the expansion of the Calvin Klein lifestyle offering through partnerships with ambassadors including Jung Kook, Jennie Kim, Kendall Jenner, Hailey Bieber, Michael B. Jordan and more. Notably, we strengthened our authority as the original designer underwear brand with our Spring '24 campaign featuring Jeremy Allen White, driving consumer engagement around the Calvin Klein brand to historic highs. And, through high-visibility brand engagements, we ignited cultural conversation. Highlights include an appearance from ambassador Michael B. Jordan on "Jimmy Kimmel Live!," bespoke moments with Jung Kook in Tokyo and in New York's Times Square, and a Seoul event celebrating the launch of Jennie Kim's Calvin Klein capsule collection, where fans lined the street to catch a glimpse of the star in one of the limited-edition looks.
- TOMMY HILFIGER reaffirmed its unique DNA of Classic American Cool to drive strong visibility and relevance with campaigns that celebrated the brand's product icons by updating their relevance for today. Our timeless product shared the spotlight with our stars, linking the polo shirt, the Oxford shirt, and chinos with our network of influential talent. For our Fall '23 campaign, we welcomed Korean K-Pop group Stray Kids (SKZ) to the Tommy family, breaking our engagement record on Instagram-reaffirming that when we connect the brand in authentic ways with global talent, our fans respond, and we expand our reach and influence. We brought the brand to life at the most relevant cultural moments, driving brand heat globally. In November, TOMMY HILFIGER rolled into the 2023 Formula 1TM Las Vegas Grand Prix weekend to celebrate its longstanding involvement with the sport, announcing Hollywood actor Damson Iris- star of the upcoming Apple Original Films
F1TM film-as the new brand ambassador for menswear.
PVH CORP. YEAR IN REVIEW 2023 / 5
Driving Fashion Forward for Good
We made considerable progress in 2023 towards our Forward Fashion commitments to accelerate climate action, advance human rights and champion inclusion and diversity.
To accelerate climate action, PVH focused our efforts on reducing Scope 1, 2 and 3 emissions. We signed a collective Virtual Power Purchase Agreement with 11 other apparel brands for renewable energy sourcing that will enable us to harness solar energy from Spain, covering PVH Europe's electricity volumes before 2030. To help reduce Scope 3 emissions, we were a lead funder to develop the Apparel Impact Institute's climate solutions portfolio which acts as a vetted industry marketplace for proven decarbonization programs for suppliers to achieve their own greenhouse gas emissions reductions.
To advance our human rights commitments, PVH partnered with expert organizations in key sourcing countries. As the majority of workers in our supply chain are women, we focused on programs that serve them, expanding nutrition services to over 25,000 women in Bangladesh to prevent maternal malnutrition and low birth weight through the Power of Nutrition partnership. Given PVH's leadership as a founding member of the International Accord for Health and Safety and, its precursor, the Bangladesh Accord, we are proud to have signed the Pakistan Accord. This will extend legally binding agreements between fashion brands and global trade unions to improve workplace safety for garment workers in Pakistan.
To champion Inclusion & Diversity (I&D), we focused on operationalizing our commitments and creating new growth opportunities within the workplace, marketplace and community. As part of our four-year, $10 million commitment to expand opportunities in the fashion industry among underrepresented communities, PVH has invested approximately $3.6 million with 20 global non-profit organizations. To date, this initiative has reached over 5,000 participants through more than 100 educational events. As part of our commitment to achieve gender parity in leadership positions, we launched the Executive Women's Leadership Forum in the U.S., designed to build stronger connections among senior women and accelerate the career progression of women into leadership positions at PVH.
PVH CORP. YEAR IN REVIEW 2023 / 6
Further Strengthened our
Management Team
We continued to strengthen the management team with talent who has the experience and the capability to execute the PVH+ Plan.
For Calvin Klein, Eva Serrano joined as Global Brand President. A recognized industry leader, Eva operates with a consumer-driven mindset that builds on our strengths to expand Calvin Klein's full global potential.
In addition, Donald Kohler joined as President, Calvin Klein Americas. With three decades of retail leadership experience, Donald has deep operational experience which allows us to unlock the long-term opportunity in the region.
For Tommy Hilfiger, we announced in November 2023 that Lea Rytz Goldman would join in April 2024 as Global Brand President. Lea is a highly experienced global brand leader with a strong track record of growing brands and driving sustained, brand-accretive growth globally. She most recently led the revitalization and strong global growth of the COS brand as part of her 11-year tenure
of successful brand leadership with the H&M Group.
The Power of PVH+ Building Calvin Klein and TOMMY HILFIGER into the Most Desirable Lifestyle Brands in the World
2023 brought Calvin Klein and TOMMY HILFIGER closer than ever to the consumer, and I'm excited by the momentum we've generated. We gained important traction on our journey to transform PVH from a brand acquirer into a brand builder. In 2024, we will continue to build on the PVH+ Plan momentum across the company which will directly translate into growth for our global brands in Asia and North America. In Europe, against
a tougher macro, we are taking proactive measures to drive higher quality of sales to further strengthen our unique market position there for long-term,brand-accretive growth.
I continue to be inspired by the work of our teams, who are anchored and united by the clarity of our vision and PVH+ Plan. Step by step, we continue to build Calvin Klein and TOMMY HILFIGER into the most desirable lifestyle brands in the world and PVH into one of the highest performing brand groups in our sector. It will be our strong focus on our brands, our consistency in direction, and our disciplined execution of the PVH+ Plan that will set us apart over time.
Thank you for your support. This is only the beginning.
Stefan Larsson
Chief Executive Officer, PVH Corp.
PVH CORP. YEAR IN REVIEW 2023 / 7
By the Numbers
2023 Revenues
by business
%
Revenues | |||||||||
($ in millions) | |||||||||
$ 9,218 | |||||||||
52% Tommy Hilfiger | $ 9,024 | ||||||||
$ 9,155 | |||||||||
43% Calvin Klein | |||||||||
5% Heritage Brands | |||||||||
FY 2023 | FY 2022 | FY 2021 | |||||||
by region
%
48% Europe
29% U.S.
18% Asia Pacific
5% Americas (excluding U.S.)
by channel
%
49% Wholesale
46% Retail
5% Licensing and Other
PVH CORP. YEAR IN REVIEW 2023 / 8
GAAP to Non-GAAP Reconciliations
(Dollars and shares in millions, except per share data)
2023 | |||
GAAP | Foreign Exchange | Constant Currency | |
Impact | |||
Tommy Hilfiger North America | $1,372 | ||
Tommy Hilfiger International | 3,453 | (56) | 3,397 |
Calvin Klein North America | 1,325 | ||
Calvin Klein International | 2,590 | (20) | 2,570 |
Heritage Brands | 479 | ||
Total Revenue | $9,218 | $(66) | 9,152 |
GAAP | Adjustments(1) | Non-GAAP | |
Tommy Hilfiger North America | 94 | (13) | 106 |
Tommy Hilfiger International | 455 | (17) | 472 |
Calvin Klein North America | 108 | (9) | 117 |
Calvin Klein International | 386 | (11) | 397 |
Heritage Brands | 39 | 6 | 34 |
Corporate | (152) | 42 | (194) |
Earnings Before Interest and Taxes ("EBIT") | $929 | $(2) | $931 |
EBIT Margin | 10.1% | 10.1% | |
Tommy Hilfiger North America + Calvin Klein | 7.5% | 8.3% | |
North America EBIT Margin | |||
Net Income per Common Share Calculation | |||
Net Income | $664 | $5 | $659 |
Total Shares for Diluted Net Income per Common Share | 62 | 62 | |
Diluted Net Income per Common Share ("EPS") | $10.76 | $10.68 | |
Year over year EPS growth | 255% | 19% | |
- Adjustments for 2023 represent the elimination of (i) the gain recorded in connection with the sale of our Heritage Brands women's intimates business (the "Heritage Brands intimates transaction"), which includes a gain on the sale, less costs to sell; (ii) the costs related to the Heritage Brands intimates transaction, consisting of severance and other termination benefits; (iii) the costs related to actions taken under the plans announced in August 2022 to reduce people costs in our global offices by approximately 10% by the end of 2023 (the "2022 cost savings initiative"), consisting principally of severance; (iv) the recognized actuarial gain on retirement plans; and (v) the tax effects associated with the foregoing pre-tax items.
2022 | |||
GAAP | Foreign Exchange | Constant Currency | |
Impact | |||
Tommy Hilfiger North America | $1,293 | ||
Tommy Hilfiger International | 3,365 | ||
Calvin Klein North America | 1,430 | ||
Calvin Klein International | 2,353 | ||
Heritage Brands | 583 | ||
Total Revenue | $9,024 | ||
GAAP | Adjustments(2) | Non-GAAP | |
Tommy Hilfiger North America | (175) | (182) | 7 |
Tommy Hilfiger International | 515 | (34) | 549 |
Calvin Klein North America | (82) | (167) | 85 |
Calvin Klein International | 253 | (92) | 345 |
Heritage Brands | 47 | (3) | 50 |
Corporate | (87) | 92 | (179) |
EBIT | $471 | $(386) | $857 |
EBIT Margin | 5.2% | 9.5% | |
Tommy Hilfiger North America + Calvin Klein | -9.4% | 3.4% | |
North America EBIT Margin | |||
Net Income per Common Share Calculation | |||
Net Income | $200 | $(393) | $594 |
Total Shares for Diluted Net Income per Common Share | 66 | 66 | |
Diluted Net Income per Common Share | $3.03 | $8.97 | |
- Adjustments for 2022 represent the elimination of (i) the net costs incurred in connection with our decision to exit from our retail business in Russia and the cessation of our wholesale operations in Russia and Belarus (the "Russia business exit"), consisting of noncash asset impairments, contract termination and other costs, and severance, partially offset by a gain on contract terminations; (ii) the gain recorded in connection with the sale of our equity investment in Karl Lagerfeld Holding B.V. (the "Karl Lagerfeld transaction"); (iii) the noncash goodwill impairment charge, which was non-operational and driven by a sig- nificant increase in discount rates; (iv) the restructuring costs related to the 2022 cost savings initiative, consisting of sever- ance; (v) the recognized actuarial gain on retirement plans; and (vi) the tax effects associated with the foregoing pre-tax items.
PVH CORP. YEAR IN REVIEW 2023 / 9
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
- ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 4, 2024
OR
-
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ___________
Commission File Number 001-07572
PVH CORP.
(Exact name of registrant as specified in its charter)
Delaware | 13-1166910 | ||
(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.) | ||
organization) | |||
285 Madison Avenue, New York, New York | 10017 | ||
(Address of principal executive offices) | (Zip Code) | ||
(212) 381-3500 |
_________________________________________________________________________________________________________________________________________________________________________
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol | Name of Each Exchange | ||
on Which Registered | ||||
Common Stock, $1.00 par value | PVH | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None
______________________________
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer | x | Accelerated filer | ☐ |
Non-accelerated filer | ☐ (Do not check if a smaller reporting company) | Smaller reporting company | ☐ |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).☐
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
PVH Corp. published this content on 15 July 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 July 2024 20:55:06 UTC.
