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PVH raises full-year earnings outlook
based on strong 3Q and confidence for Q4

November 30, 2018

PVH Corp. revenue increased 7 percent in the third quarter, largely on the power of the company’s diversified business model and strong performance globally from Tommy Hilfiger. Chairman and CEO Manny Chirico held the quarterly call with investors on Nov. 30, 2018, and said, “We continue to deliver against our 2018 plan.”

Based on the results, PVH raised full-year earnings outlook based on the third-quarter outperformance and confidence in opportunities for the fourth quarter. Chirico said early reports on the holiday season based on the Black Friday weekend were “excellent.

He did acknowledge, however, disappointment in returns on investments in the Calvin Klein 205W39NYC halo business, and sales and margin pressure in the Calvin Klein Jeans business, where price and fashion both went “too far, too fast.” He noted that results were achieved despite geopolitical volatility and bankruptcies of retail accounts in the US and UK.

Chirico said the European businesses led the way in revenue performance for both Tommy Hilfiger and Calvin Klein, with the Asia business also performing well. Chirico did call out a decrease in store traffic in China, which he attributed to trade concerns and the economy there but the digital business was extremely strong.

Turning to North America, Chirico noted growing domestic consumer sales in the US retail businesses, especially in Tommy Hilfiger.

In all markets, digital was strong. “From a digital sales point of view, we continue to see growth at outpaced rate with revenues growing over 20 percent across our third party and our owned and operated businesses,” Chirico said.

He described the Tommy Hilfiger business as having a “truly outstanding quarter,” which he credited to global momentum for the brand, consumer-right product offerings and consistent execution around the world. He noted that exciting partners, from celebrities and influencers such as Lewis Hamilton, Hailey Baldwin and Winnie Harlow, as well as streetwear sneaker brand Kith, have successfully positioned Tommy Hilfiger with youthful shoppers. The average age of the brand’s customer has dropped by several years, Chirico reported.

For Calvin Klein, global brand awareness “continues to be exceptional,” Chirico said, and “we remain confident around Calvin Klein's long–term growth opportunities; from a brand health perspective Calvin Klein remains extremely strong.”

As for the current shortcomings, Chirico said action will be swift. “I think if you know us as a management team, we are very aggressive when we see a problem to really go after and address it.” The company is pivoting a portion of the Calvin Klein marketing expense from the halo collection to focus more on commercial, digital and social media marketing. 

Revenues for the Heritage Brands grew 8 percent, with room to take additional market share in dress furnishings, sportswear and intimates, among other categories, especially as the business with Amazon expands. Chirico cited a positive consumer response to new Van Heusen and IZOD advertising, featuring MMA fighters TJ Dillashaw and Stephen Thompson, and Green Bay Packers Quarterback Aaron Rodgers and comedian Colin Jost, respectively. 

Specific details on brand revenue:

-Tommy Hilfiger:
-Total revenue: $1.1 billion; up 11 percent
-North America: $424 million; up 19 percent
-International: $708 million; up 4 percent

-Calvin Klein:
-Total revenue: $963 million; up 2 percent
-North America: $481 million; up 1 percent
-International: $482 million; up 3 percent

-Heritage Brands:
-Total revenue: $429 million; up 8 percent

“We are well positioned for the balance of the fourth quarter and believe given our underlying brand momentum and the strength across our businesses that we will continue to over deliver against our financial plans. Our Calvin Klein business is a priority for us and I believe we should see significant top and bottom line growth as we head into 2019,” said Chirico.

For more on third-quarter financial results, click here: https://www.pvh.com/news/2378767