PVH at Home, Business Working to Unlock North America – WWD

PVH Corp. got off to a good start to the year – and its new PVH+ strategic plan – with better first quarter sales and a big profit beat.

But the parent company of Tommy Hilfiger and Calvin Klein is only just beginning to work in its home market.

“Calvin and Tommy remain highly relevant to today’s consumer in the region,” the chief executive told analysts on a quarterly earnings conference call. “However, we recognize that we are on a multi-year journey to unlock the significant opportunities we have in the market.”

In addition to the lack of tourism in North America, PVH faces ongoing supply chain backups.

“We continue to work through significant COVID[-19]-the inventory delays related to the first quarter and we expect our inventory positions to gradually improve in the second half of this year,” Larsson said. “Despite these challenges, we are seeing significant progress in the region, including [that] we run significantly lower promotions and are able to sell our products at higher AURs [average unit retail prices]. We reinforce the strength of our products through our focus on flagship products and the consumer responds positively to novelty for Calvin and Tommy.

The PVH+ strategic plan calls for the company to aim to grow revenue to $12.5 billion in 2025, from $9.2 billion last year, by doubling the brand. Key to the plan is to develop “flagship products” in key categories, then connect those products to consumers at key times and take a digital-first approach.

At PVH, Larsson has plenty of brand power to work with.

In the first quarter, Tommy Hilfiger saw its North American revenue increase 15%, while Clavin Klein’s revenue rose 26% in the market as business rebounded from a year ago.

(Overall, PVH boosted first-quarter net income 33.2% to $133.1 million, or $1.94 per diluted share – 33 cents higher than analysts’ $1.61 Revenue for the three months ended May 1 increased 2% to $2.1 billion, an increase of 7% at constant currencies.)

Shawn Mendes has teamed up with Tommy Hilfiger.

Courtesy

Zac Coughlin, Chief Financial Officer, noted on the call that, “In the first quarter, we achieved gross margin above pre-pandemic levels at 58.4%. This compares to 59.1 percent the previous year. We have maintained our full price sales and reduced promotions. We have also implemented price increases in certain regions and product categories to mitigate inflationary pressures, including rising commodity and raw material costs and rising ocean freight costs.

But those improvements were more than offset by airfreight to move the goods, which cost the company $12 million in the first quarter.

Coughlin said the company has “adjusted our buying cycle to account for increased lead times and ensure we have the right product at the right time. As a result, our stock in transit levels increased by 10% compared to last year. »

As PVH continues to work to build its brands and operations, it is also giving something back to shareholders after repurchasing 1.2 million shares for $100 million in the first quarter.

Zachary Warring, equity analyst at CFRA Research, upgraded PVH shares to “buy” from “hold” and noted, “The company has $1.1 billion remaining on its current share buyback program, which represents more than 20% of the company’s market capitalization. With margins doing better than peers in the first quarter and inventory remaining normal as peers outpace orders, we now appreciate the risk-reward of PVH as the company continues to buy back shares.

Shares of PVH rose 1.9% to $72.47 on Thursday.

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