PVH - Earnings call transcript Q4 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, everyone. And welcome to the PVH Corp's Fourth Quarter and Full Year 2017 Earnings Conference Call. This webcast and conference call is being recorded on behalf of PVH and consists of copyrighted material. It may not be recorded, rebroadcast or otherwise used without PVH's written permission.

Your participation in the question-and-answer session constitutes your consent to having anything you say appear on any transcript or replay of this call. available March statements events XX, performance. made view reflect and being of as XXXX information includes that forward-looking PVH's financial The of future statements this included in indicated press release and filings These a the the to subject is Company's of and statement the SEC uncertainties Harbor Safe that subject are call. in risks use strategies, its intentions and and These uncertainties PVH's include expectations service risks to rights need objectives, significant to and debt flow obligations. to change its cash its differ could operations from of results future Company's the or results expectations. materially current Therefore, historical does to PVH any update any forward-looking earnings. not revenue regarding limitation, without publicly undertake any obligation statement, estimate or including, the Generally, rules. and SEC on is a provided non-GAAP financial as under information basis defined guidance earnings release, can on GAAP the current release. and in found amounts Company's which in included www.pvh.com the with to SEC on to fourth the are furnished XXXX Form quarter connection X-K report PVH's be Reconciliations year in and full time, over to I turn At pleased conference the am this Mr. to and CEO Manny of Chirico, Chairman PVH.

Manny Chirico

morning, Good you Ashley. call. for you, the on everyone Thank us joining thank and

market, is we and long-term investments Klein Hilfiger deliver year XX% revenues our continue and Heritage quarter Europe, the to performance demonstrated Ken Head Officer, and over our our Financial Perlman, and the our Joining marketing grew full revenues strategic our to Throughout grew even Japan X% in grew during and Tommy and driven our the share. China, fourth despite performance. we a our businesses. Throughout respectively. EPS Overall, against its market we additional over above wholesale performance targets market of and In Dana ability our me to businesses Overall XXXX our our store businesses Chief saw at our over and financial XXXX, the XX% plan. non-GAAP XX% XXXX expectations Treasurer international quarter Mike We Investor of well be PVH particular, American our momentum and with our year. XX% made and CEO achieving Shaffer, businesses Development our we of year, Duane, Relationship the represent today and Strategy and strong and annual performance was highlight bankruptcies businesses. fourth North of healthiest executed and on exceeded gained the our our relatively international plan. financial by of and closures our continue With our as the and EBIT. heritage across businesses be the in Calvin call

in in an businesses year the retail channels, experienced of as be consumers the was growth traffic our also based shop. all tour strength We distribution improving outsized XXXX. seen second revenues e-commerce in XX% [indiscernible]. retail and and business across for wholesale half third our our operated international with of stabilized trend the domestic continues party saw growing digital and over channel, owned up across to fastest Digital we Broad

streams distribution. all Our international be and and our revenue as across in XXXX highlighted we expand diversification of grows channels further earnings mix of will

our with to begin moving let Now Hilfiger. brands, Tommy me

significant and to to interest awareness from health in up further relevancy Hilfiger continues only XXXX. a purchase the about Speaking brand year-over-year on The brand and demand younger brand, and brand experience both with the basis. strengthened consumers new especially

critical Consumer broad-based this strategy be seeing our in are we strong business a businesses with women's Additionally, to very part growth engagement strength the our continue of all and particular. I'm across pleased in year.

the engagement Now to in XXXX Tommy excitement incredible continued the around recent brand. and highlight show spring Our Milan, consumer

brand as XXXX, and our brand for our Hadid key to leveraged ambassador brand via have Yue for as sales all will performance ambassadors that key Greater in our increase. Tommy we We double-digit drive believe only China. seen Chainsmokers Gigi increases ambassadors the e-commerce our local our We Hilfiger and brand ambassador investing engagements in Hilfiger earn to category. And across ambassador Shawn metrics these we engagements have seen growth Tommy continue to category. the men's have global from and influences importantly women In and all most from traffic

spring XXXX, partnerships. announced For exciting we two new

First, multi-year AMG with heritage the first sponsor brand. strategic its that four-times XXXX has the motorsport. world sports embraced Formula sponsorship on Hilfiger Tommy Petronas founding since the announced Tommy season, of a Petronas champions AMG official motorsports. partnership apparel Mercedes X be Starting with the Building of the Tommy will Mercedes

our year. bringing we generation business the performance. Lewis driven A the in brand. Hilfiger's the XX% key up for men's. growth champion elevate fans partnerships sales quarter Hamilton. Tommy announced Tommy further by for XX% its the Hilfiger world of perspective vision close expand drive From Lewis the men's initiatives, these Tommy the business represent underscore outstanding to next ambassador quarter fourth XX% continuously in world newest and to X Second, year. These and the global and of markets earnings to Formula truly of will brand the increased XX% a With for and brand

the and extremely markets. in be are pleased from market consumers regional to with response all continue from gains benefiting We share

and revenues international fourth the X% X% for the up Retail in year. for for were quarter fourth increased XX% and Our the stores XX% comp the quarter year.

with strong promotion. strong lower saw outperformance continue across incredibly at all year-over-year as sell-through retail with Europe Tommy markets Our business we

up I XX%. XXXX orderbook As over Spring our is mentioned, Summer previously

We orders and are full up now providing XX%. to running I'm XXXX over quite are report again fall our that outlook happy orderbook

markets. of of be reception to strength by across the product the all continued continue customers brand We from and across the all our and of impressed our divisions

continues to Tommy to performance Asia, be there. Moving very strong the

the build and continue Tommy benefiting China integration momentum in in the Hilfiger from continued business. China the As investment to upon we

move terrific we Hilfiger forward. as highly see end to brand market solid have position successfully had in found to the elevate Additionally, a and our Japanese future ability the the Japan That has our Tommy demonstrated year. business and business for competitive we footing the growth brand we

clearance seen in North momentum the second see Moving business retail feel of beginning in we our to that business started turn move half. the America, as action say this in We we this has business. to pleased to a accelerated the we and the through I'm summer point strongly in a have

fourth the for up our in the X% outstanding we For comp gross our margin along an quarter, with in quarter solid with retail revenues XX% business business saw improvement.

Importantly, only saw retail we not saw wholesale. in at improvement business, also but our an strength continued

in particular Our outstanding at Macy's sell-throughs higher margins. business has with strong been overall

few down year. Creatively Calvin In from product marketing design to cultural We reach brand months, last over the We underwear Klein has intensified seeing consumer channels. and the all to our our in doors continue and jeans conversion a team are specialty category momentum Klein. From brand the with retail can we its particular expanding throughout to Moving campaigns believe brand to and around in our articulated believe improvements. we by a distribution the the nice vision premium new interest had runway singular purchase resonating one luxury new product. be across felt tremendous Calvin the reach the and the CK consumer to relevancy XXX accounts.

rolled the marketing can Solange, the happy Kardashian, us sisters Our campaign the across impressions and Bobby talk to has brand. I seen finally for Jackson from very Gerber and to as well perform all we we well continues this Jenner are entire siblings, been about engagement globe. as that out have with which of Paris as I'm engagements driving family by amazing. family Brown Millie and campaign brand Calvins Rocky, The ASP the

engagement We and quarter. first strong strong are move seeing most selling we as spring importantly the into

approach consumer underline these Specifically, commitment initiatives marketing Calvin centric the live to our our we and brand. to the consumer believe engaging Klein

about business coming getting from the increase for across Amazon fashion continues is all the We direction for XXXX with Klein XX% businesses pleased XXXX as perspective a selling most thinking and to over to distribution consumer world. Europe season, XX% jeans as quarter brand the a well to is first for discussed show last incredible fourth increased business creative in about fashion Calvin perspective the While international and improvement that partnership are course growing categories as all good and about categories in With in in newer, holiday our our awareness revenues channels product product strong a of all existing a really retail really digital importantly helped feel also and business an XX% accessory we fourth that Asia. From Calvin trends. in the our our and the XX% we to major from but perspective, reflecting performance quarter report revenues our I'm of the of our around Klein faster traction of delivered From XXXX. thinking the strong up and it relevancy drive well. and first core global quarter

we planned the overall lapped for planned investments quarter and in increase a saw our the in X% increase $XX XXXX million previously from investments. quarter discussed we the despite first As marketing and brand fourth we was earnings

continue top-line gains results out deliver perspective, channels. improved sales market business share comp and an sales sell with all decreased throughs see China in trends our North We America the Klein Calvin and quarter. channels. to international to experiencing of strong retail the strong America across across From Europe both with North and continues terrific all growth Europe X% international region across

XXXX fall the As experienced XXXX order based strong spring Calvin XX% book on our mentioned, XXXX to fall previously the up again up orderbook is we be over projected over spring is Klein we and today and during selling XX%.

The outperform dividends to been out huge are business with across Asia, orderbook other the above to Calvin growth. perform on and has China trends continues have Klein showing with outsized the Klein improving business which focused elevated our half markets broad-based in with jeans categories. In over the pleased paid represents We product, rolling across jeans across region. we growth well continues quite for product Calvin all strength strength the average tremendous us.

China year, pleased all fourth see performance we the quarter, across momentum have business continued Klein we North the and across saw the acceleration throughout to Calvin strong Greater that of channels Southeast of to report America's growth our and Asia. business quarter. During an and are in

growth Calvin businesses of comp's the store saw Amazon months Klein by the nine retail versus year initiative Klein the America trends X% our with an digital in comp quarter. improvement our in North fourth we for Importantly, up in driven business and part first Calvin a our tremendous saw

the we X% Retail the up of line up the were in American year quarter quarter given were for performance are and overall the X% prior our businesses. our our and with pleased revenues in year X% heritage quite challenging dynamics, fourth in with earnings over heritage the North flat the were plans financial for business and comps Finally, year. the

XXXX, we door areas XXXX, our most driving most our execute In America the closures engagement. a consumer in our importantly our continued strategic chain ever-present continue growing to nimble I and recently to Looking in execution to the experience strong prominence global systems, the the having quarter XXXX, by North to of our and performance announced digital, and the From consumer priorities. changing impacted build talent, business regional believe invest In responsive commitment and we environment operating brand. perspective purposely and first demonstrates commitment Bon-Ton of The our overall, platforms out around industry. continues investments in supply to and XXXX our the our in Despite XXXX upon in made bankruptcy. perspective, dynamics against the the a importance improve.

high Hilfiger up American trends Tommy single-digits and with Our traffic improving comps Calvin continue all stores to Klein the in mid-single see business. digits for North

heritage business single-digit seeing store Our comp also increases. is low

with continues Hilfiger digits. Calvin Our see high-single business Klein digits comps international business to-date up and great mid-single up Tommy running momentum international to international

the Calvin This momentum this a Year global incredible landscape. Chinese our reflects benefiting Asia New Hilfiger believe marketplace against from and Tommy growth the and year brand outlook well behind volatility position Klein geopolitical strong that retail XX%. between around drive season. of us with XX% world will selling and power the the earnings is also macro-economic competition continued growth and and uncertain projected the earnings We in

turn trends stabilize to financial backdrop, this full planning to the that in it conservatively year to our If business to over half guidance. Given our to continue we excellent XXXX. level, global are landscape fourth And at Mike and are second results. quarter that, I'm quantify this current with and outperform continues we the position of going XXXX

Mike Shaffer

extra then I'm make comments to in briefly move and from week sales release. I'm are sales. on and to on Overall, the results XXrd store reconciled in percentages are The to touch the Manny. of XXXX. press quarter XXXX. going fourth I exclude our Comparable our week non-GAAP that XXXX benefited based mentioned Thanks on about

quarter fourth Hilfiger strong Tommy up increase FX. the FX. performance the of Tommy were XX%, the benefit of revenues and XX% up in were revenues was X% from FX. reported geographies inclusive Hilfiger of of XX% international drove guidance a exceptional benefit which from was inclusive channels very Our for exceeded from benefit our XX% The driven X% revenue by and increase. performance inclusive all the Outstanding

a Our North included of strength X%. revenues driven Tommy a Hilfiger of comp decline FX. America in revenues Tommy offset comp's was X% Hilfiger price American inclusive increase sells. benefit by by with from up X% were store international planned sales North in XX% part off in retail a

in and Our Calvin of inclusive fourth Klein very XX% Europe XX% revenues benefit benefit international from XX% performance of FX inclusive the up Calvin the by quarter. revenues Klein increasing X% Asia. were FX a outstanding were driven strong in

Calvin strong the retail of revenues up performance X% America all increase. across Klein international X%. North wholesale categories store Our and sales XX%, drove comp increased were comps

were comp up retail X% Heritage the prior comp. our business sales with store to revenues year flat Our plus running

of earnings was $X.XX strong guidance top-end and of share was $X.XX year the revenue increase ended per FX with the non-GAAP – of higher for of the year inclusive approximately Our previous XXXX than was We higher versus prior from prior approximately of XX% FX the prior over which by our the and $X.XX non-GAAP EPS per year previous $X.XX. year. business taxes the net full $X.X record $X.XX X% driven The an beat a favorable and benefit than versus the of guidance. of billion, $X.XX share interest earnings was $X.XX favorable year than better X% were previous

to XXXX. on Moving

Hilfiger be including our of translation the impact are share increase currency related are margins XX% to We planned to related to operating foreign positive foreign we to points the Overall, projecting growth For of grow about revenues we X% positive Calvin are of Overall foreign inclusive to currency. by the foreign for expected projecting to Hilfiger impact are increase per $X full are positive in basis of the related to X% to Tommy currency. year earnings earnings Included margins share impact XXXX XX% X% Company. to points. to XX operating $X.XX, the currency. prior project XX grow non-GAAP over to per approximately revenues of is Tommy to planned X% $X.XX. year. about X% inclusive Klein the revenues a increase X% basis

our We will a XX still business of be bankruptcy, the are by Klein high-single Inspire the Bon-Ton impact be are Calvin headwinds Klein margin the highest digits. bankruptcy. growth to planning licensing the operating margins result to earnings we operating the down down in as basis the points created Calvin Bon-Ton be of due planning to of business,

million. be planned the EURXXX the $XXX effects our $XXX and Stock some to about planned is year bonds offset December million is Our XXXX, of for pay This of XXXX at variable the negatively prior planned Heritage planning debt. we business of million flat is operating $XXX be flat are repurchases are $XXX lower $XXX the revenues million. In to rates to the the amount decrease bankruptcy. by partially of and of XXXX, have higher year in issued interest is in to by expense impacted debt. between primarily result compared Interest to relatively interest down of least million in our margins and were Bon-Ton also million

rate is Our at for the to estimated XX.X%. year tax XX.X%

Capital change reflect shift for XXXX. regulations $XXX recent at in our be XXXX, to expected issued if to act are estimates year differ are current million subject the from expenditures tax $XX the could planned current the reform million regulations to the related into of and IRS interpretation. later from be As XXXX

including Calvin $X.XX positive earnings X% projected planned revenues to to And increase million expense with Tommy currency first XX% were First be are are quarter that of foreign be foreign to first the positive $X.XX XX% exchange. Revenue and related for taxes per is impact quarter. share increase non-GAAP quarter of to questions. a includes at Klein for foreign including to currency. XX% the $X.XX Hilfiger brands foreign is exchange. including to impact of X%. increase about planned estimated X% to in planned at and $XX positive increase quarter and for related X% revenue in XX% translation. projected approximately Interest Heritage the open projected impact to from operator, first we'll XX% up the is it

Operator

Guggenheim. [Operator Instructions] Bob will We question with open from Drbul our

Your line is open.

Bob Drbul

correct Mike I it, it's but A$AP didn't surprised Manny, was Rocky.

Manny Chirico

going Rocky, to but pass Rocky. – you that that's on ASP said give one. we're ASP You a

Bob Drbul

you of rate? that at going think both or you marketing in the talk the big of rate? Tommy are your we through about the there? big initiative look or do in where like at – are you now that, brand business Can and the the how you think underway speaking just on when business, of dollars level now, investments expenditure think But us two know terms at good like are Calvin brands dollar Do you you your you a brands around that the

Manny Chirico

forward. as I guess and would Okay percentage to last to of of to We've business years. as the continue sales, think drive we're an I drive appropriate say over the Bob. the today level I at taken couple growth a advantage going

upon I marketing we're as point a outperformance and I say covered Our and think is think so from we build brand would as do moving I that, initiatives, what interesting to I forward. really guess go to than more

put we've the some the take know or of initiatives that brand I As with are we to back I think with that like brands, we really them. emotional consumer results, incremental some think our the – you Amazon could outperform those younger I that hopefully both things like financial that game it's making the event trying really of to continue and think profitability connect into to would that's it into we in Kardashians, changers next-generation and – done – that coming with connections like might

go clearly at as we'll a continue very it and today are we really years to level So, ago from look we to opportunistically do strong three were forward.

Bob Drbul

impacting all? guess address North maybe for Europe, just you question in whether your it, Okay. little please? quarter, first it's my it's can you hindering business second even I the at that the just the a or throughout is know think America in weather market on, or And Do us you is bit

Manny Chirico

Well, doesn't say of dreary trends I snow business seem get quarter strong. to America help We're the weather it first get like we seem the out Middle early. business in winter and in in America, are of our through out can would storms didn't that very We especially to here Midwest. a bunch and North Northeast and trends living clearly this and can't this spring and move of

trends we're North seeing not business our So, in America. really

So, from Europe, is and some negative an I'm and with it happy impact having dreary people, I very having hear In very those our impact. it's is conversation at it from very it's cold, what but just trends, other stores. on traffic

So, we are goods, with so as setup well for are spring. clear we very

way normal I and ready weather. we spring to really for through that, get We working are think some roll and our rock just

think in will pop I Europe. really business again

Bob Drbul

Great. Thanks much Manny. very Good Luck.

Manny Chirico

you. Thank

Operator

our Piper Murphy from from Erin Jaffray. And question next

open. is line Your

Erin Murphy

you you I business, forward the Bob's pleased talk the on the about the summer environment about on retailers and morning there? expounding then environment. with about QX, in fall guess and positioning channel, think good you are do to the little if and Thanks, business how inventory promotional more nice how America feel just the end questions broadly in bit a sound you the year. effetely Could Great. really just North

Manny Chirico

Okay.

of given really just through inventories think saw I clean I very see – a year. January not number quarter. in out fourth sales position, in don't we the were a walk I you we in last claimed position. clearance very sales stores, the see know businesses I which trends was the our constantly of So, I that time But I I was came have strong product this know retailers, think chasing the inventory Macy's, aggressive you when just

think benefiting forward So, gross think spring think to move as I on as really forward, in think we summer. I the falling, – basis I it's I America. move as and we the really but going top-line most retailers be North margin will if be to a are Everyone's profitability benefiting

Erin Murphy

I globally. are talk Okay. denim you And launching some maybe the more you believe to you just are to there. category denim launch little throughout just is to big get just a are of then category bit be – talk as expecting kind referenced Tommy, about for you positive denim how that context how about Can you how traction up? for both the back year that expecting of and and Calvin the we which unfold half other overall picking and seems Calvin's any

Manny Chirico

Calvin be on very the denim the back we're to business. into this Tommy globally, trends cycle the and from our happy We're Look, -- both Seems XXXXs brands. with across of benefiting a really bit fashion the of side

Our continues and logo brands big be in of whole area our is in Tommy Tommy that trend from both from deliver the benefiting jeans view point even from business a Calvin and particularly performance that market. T-shirts, to the

very we that. we're think well go as forward from I So, positioned

in you know internal of It's more matter. an launching We are fall.

in the in The two product and that product have teams in we've America both retailers Europe. worked closely product. all few years one now fall North For denim our the center last together, we've and that's of Europe, previewed jeans very that with been excellence transitioned developing but to the been is

as products I go of partners been is reception strong. more the presentation and season. very, see from retail has just And an the I brand we North made will America our in globally fall consistent and elevation it very cohesive – particularly think think you into the it has of

our see think I sharper I presentation think there. consumer from that fix perspective, will much of know You you a a varied are

could as clear consumer have weren't our fits been. to at I as we we think the times about

supported that it messaging will that continues think see now, concise, into fall adjusted again combined further and to consumer what been of be run think with all I they real I crisp, want with the I the product. Kardashian-Jenner very products. and and understand gets Calvin to through clear that's season, all And a marketing partnership XXXX. the lift of think That's great that's will been continue the adjusted

really business feeling and dramatically and that about we're retail seeing strongly order that through growth improved in think we're tremendous and Europe four Asia like months books indication that's jeans the the I over category. first business, throughout last in sell at and clear in the whole

really I think that. So, to capture we're in of excellent all position

Erin Murphy

you. Thank

Operator

next Suisse. take our We'll from from Michael question Credit Binetti

Your line is open.

Michael Binetti

morning. good guys Hey

Let me quarter. add on a my great congrats

Manny Chirico

Thank you, Mike.

Michael Binetti

Let me understandable that see what month, think to mention after with you bankruptcy year you in just want today, the on could quarter, through certainly about why channel today conservative. upside want momentum into for first the be on the pick guidance the based drive did you'd Manny business second. I the as but to last

where you do things you just talk But in books macro a pace. half. order today's X.X, the opportunities down have global outside kind implied you shocks? of quarter slows have trends first even about the most you the half in we Europe, in back back that model lot momentum see continents. in weather pretty with Can don't You things great have continue in both know revenue to the deliver like Where you that's of stick confidence the any got

Manny Chirico

to driven opportunity America retail I us, now, opportunities all North biggest – right I have too the it's by guess particularly in I say it's momentum couple right businesses for there's which being things. think think and now, of big So, really is I'd seem

that move two forward, sentiment. dollar international year that is Tommy our weakened some the sense was more from we We're really States seeing a somewhat know momentum with traffic – moving more tourist ago. brands big and around United coupled strongly. that and the and and fairly very throughout is consumer I has think you plays strong as Calvin it where There consumer general it's a for environment strong currencies the consumer foreign where positive

perception spend a elevated a North great. on usually So, The Europe to retails uplift North traffic global brands higher value international we've equation on that real at is unit brand seen drives of compared position average in the both consumer that Asia throughout and America. higher average given America –

We've where are get of guidance. clearly should and plans particular we that, trends second drive area other not year. come been given we've out really the surprised of as our and we'll look that it trying more past we moving I to really The the growth already kind ahead and second half outperform in But adjust The I profitability through sales that as been able books the we Europe. sales. think to to I in with guidance we of to just disappoint, half wanting start would quarter against the think first – think in guidance, get our along the have two the a visibility, be the even running by practices as clearly order our conservative of to start to with and opportunity real those outperform and

Michael Binetti

one bit on how could that you make any think see talk a reform strategic think M&A. we I just a does I bread licenses the at into cash more you've of enough brand, through business your change are non-core follow-up, than little crumbs looking make like Maybe Do in plays. on point. XXXX this bring the and guess playbook areas about sense so, the and licenses us you Can year ability opportunities at is working more How hunt? you interesting brand third that new big obviously to actively where this your might some based of you ideas front then you are thoughts on some U.S. given tax to moves. ask to and I access if opportunities

Manny Chirico

in constraint impact or just a of think tax think license made capital think and buybacks, it's last us years. make number down pieces. levels the ability Sure, our not a we've at take the know – cash number access are let capital which of improved our capital year, order and changes are gives that One to made That cash capital at our you really a slowing I allocation I don't to relativity to is access we've investments, us by is, two in me dramatically just investments, over our the demonstrated last – of all. rates. I we interest not structure lot these Thankfully, attractive

not look we're license cash at and all We'll growth to from capital. So, from continue buybacks. constraint at

Hong I a think area market with another international on Brazil is Kong, interesting in. which be look Tommy China we area that that an partner aggressively Hilfiger opportunities the today, Central Asia license that's is move the with particularly most Greater uptick. to is both and the brand, of effort we think the continue Asia, to Macau, Southeast

I also that's an over the feel we have. to to and We some think region next business start little time going grow further as where been. to we but probably take where geographic license as against over aggressively XX back a that to like Tommy that's months XX they've is Hilfiger see that area improvement significant out, that

product at as well. are are well. we're some They categories, opportunities that are not there looking And are we large, opportunities. opportunistically there So, as but at that looking

time aggressive we're trying that the and time as As an at We're on. same spending prudent. to area third it's the far be brand, clearly

at are We different opportunities. looking

don't where we've going I into have not skewing from way market one to all going we way in. that about go think to – has another very I so expertise don't the the categories field worry or far we're to think been,

So, are come looking, would that are I impressive opportunity that we some across make hope sense. we would and think we

Michael Binetti

again. congrats Thanks a lot and guys

Manny Chirico

Thanks.

Operator

And Matthew our comes Morgan. J.P. from question next Boss from

open. Your line is

Matthew Boss

on a quarter nice guys. Congrats

Manny Chirico

Thanks.

Matthew Boss

ability the think see low-hanging see So, brand we to from margin reach And or fruit just anything you as XX% larger picture, here? you remaining across do Manny, do your opportunity portfolio, most multi-year where the target. constraining structurally the

Manny Chirico

don't I time, don't see problem over it getting XX% up. years I operating next any see three that margin. to

us. think probably light, that, I should deal that with there near but I issue in aren't stop nothing to finance had biggest the been past. any biggest structurally think the has our projections The currencies way in that -- we've that is

Those and XX%. to we've if XXXX XXXX. -- again, has were on $X.XX, pressure and in that I really transactional a saw currencies to that profitability hit be and to already hedge take we'd that know transactional the You at think our euro you had and closer put $X.XX like

there. So, starting currencies with to our in improvement XXXX. the XXXX opportunity if from we'll that start obviously to and recover stay see And we're and

from was a years. I we point from the most contemporary away that traditional categories we're Hilfiger and flow basically the product believe had a Tommy because of business think next opportunity in or to continues that throughout over fact more XX% size into have leader Europe the can in Klein That's the product driven the think sportswear will similar Hilfiger point side on the more as we Klein would Calvin that modern size think Calvin doubling preppy by Tommy use and five the market the the business or a region which from of in view and share XX% Europe. Europe we translate brand type of a a U.S. biggest Tommy today size in is totally a about benchmark, Calvin we business view and of be

we excellent area areas of those and in think China and our that last both development China as our move runway that for I from us opportunity, by operating our growth two come the advantage that to with think growth think China as position after in a can in to three have given that to those biggest in we've unlimited be I and position that market Europe an I Asia we're Calvin the in platforms for continues take and years. forward and region driven our the opportunities Asia So be done continues in greater Tommy

Matthew Boss

a then question. follow-up just Great. And

to versus digital XX% was today it clear the what's call guess a way digital of your I digital Do in sustainable me seller margin about out. think this best growth of your penetration going what's your about is think sales the So, to today? and the forward? way growth and think best to you kind margins

Manny Chirico

Okay.

through penetration a digital retail of a basis customers. department basis play our Our, transactions are today I sales and store, retail wholesale say our always lot a not on would selling pure because on

our channel across numbers over five XX%. profitability I be that and that our to target in profitability is The similar years we think it penetration overall around the think XX% is other should our very I would next channels. round

consumer and XX% in to e-commerce direct platform. clearly as as we range I business to our operating double-digit of kind moving that is we or consumer scale But scale similar Very nicely other the wholesale -- direct shouldn't and grows as think distribution. there is margin kind profitable there model. retail channels and as forward that's our of no driven, to be profitable under is business XX% scale reason why e-commerce of not really today very that that's a our scale believe

think numbers So, I where drive to business we're and think as headed I start the are we forward. like feels that's very it attainable those

Matthew Boss

Its great color. luck. of Best

Manny Chirico

Thanks.

Operator

Kate McShane Citi next from Research. from our question And comes

Your open. is line

Kate McShane

us percentage Hi, to Thanks I wondering change taking I'm how I And And of because mix was if a versus remind any versus morning. Manny, [indiscernible] Do insights the for fashion pure my the percentage more you is of with question. of are have just a upcoming Amazon product? you what on or more buying business. wonder over general replenishment? might good asking how this fashion people year? your mix

Manny Chirico

better point sell time, and core product than of this mix in to propensity their fashion At their in this our much point at evolution. given

only think depends the time how between right I in gets and basic not but Right are look well Amazon, now, you crystal online that's as time, whose now we're the think more I about but core and plays pure change it's -- And think XX% Core of mix into. product. ball lot of point evolution at that buying will really and fashion replenishment. kind I consumer a present over XX% think this I comfortable slow fashion. more

their built really just key clearly at this further now comes and think particular it's categories. be on core metrics opportunity the of think maturity the it there, consumer right I the much needs product don't point when and at this are to they to where it. Amazon drive I in have how drive not in fashion very they and at it business the presentation continue that on point be would developed, needs is that it level don't have but The algorithms we keep there to to replenishment happy and a

Kate McShane

and a about be you price there the and Mike, just cost be will I that that's contemplated any wondered Okay. higher here potential for question increases gross planned that cotton how was managed? That's ask margins. helpful. for being wanted I thoughts what Thank and might like commodity any to around some the of

Mike Shaffer

Okay.

product to looking of single-digit of overall get cost move offset needed low guess to digits. manage I kind we're at benefits seemed and some offset around link. hot We've low-single we very So, growth to price the the

have freight, We a us most. I our contracts silk about the of lot pressure the on little not are have think and freight feeling talk nature but been impacted some longer-term of a

duties we've in So, to do countries. managed see were from there degree, increases. would of not product bring freight tariffs, we any we one On it some we to do impacted If is business, larger China. and changes our be

one it's significant U.S. as the not as might think. for However,

or China you only terms find XX% how much to across a for others the about when we're lower landscape, business in wholesale China think the is between of from I than think U.S. today. while source the that's third look that you'll And coming of So, I retail the XX%. our people from company. most

out to or time. So over that move would an of be there raise would prices and look impact, time product country over but we

Manny Chirico

I guess Kate, I do commercial. and add a only the thing would And I'll

logical, I'm in be seem the like coming It's of blowing reasonable just We China that putting top already the But appropriate a of but we aggressive with to like problem and It on is to I China. an feels the able not field of seem administration to Clearly apparel that's my about problems, where XX% on daughter as but son to it -- to the goods guarantees, -- from solve idea China wrong and one his my apparel bring wind XX% categories in playing something personally think XX% like it needs are tariffs for that to between not punishing with it's that's China, solve the level there's a doesn't Washington targeted today feels like. that. for it has another really tools doesn't this misdeed. would think there's some tariffs if be a category a opposed what to feels and no and really need it negotiation. parent how to our does what have problem this

we're us heavy not tariff really to going communication, not, it's place China technology, with should logical that industry weapon So, deal of be to if does issues the choice that appropriately. just to it's seems apparel with

commercial. the for sorry And

Mike Shaffer

that guidance improvement basis And Kate our we've reflected of about for is in just mix. overall portion gross XXXX, for margin. XX points A of

margins We seeing our --. gross businesses is international are a that getting faster grow of with higher portion and

Kate McShane

Thank you. Very helpful.

Operator

Chethan And Barclays. our next comes Mallela from question from

Your line open. is

Chethan Mallela

integration is expected To to leveraging brand? that a announcement Co better Hi, surrounded how gone of the to manifested. year acquisition sort mining sense their good grow expertise the capabilities from update get some to and provide that I want a see that about Can of helpful your ago. the be on benefits now and it's of the True just data to how just & time think you're an ask you at morning. I

Manny Chirico

Look, managed it's the a systems from seen an We've running hitch. it's company us. to learning move experience perspective the we've a and we've definitely keep been and managed integration into the up talent, retain good without for PVH been to

to Just a it in perspective, PVH. in was fairly put acquisition it small

benefits we backward data. the look talk some we of the did of As at acquisition, about

is and team. True working the We team PVH the working team, the with True are with

and with the group consumer PVH. women's divisionally the us and are and across We in underwear underwear forward have seen benefits moving data for intimates True and it our particularly focus with is intimates a categories some and we through

Manny Chirico

Calvin we particularly traffic most and think online Klein learning's real his Yes. XXXX, some we the that what's have really drive the platform benefit across that behaviors. been more our efficient And of sales about consumer we really learning's really is I'd learned move the gotten sharing with the business digital only side. to that to will to advertising. I as thing balls, and way be our had business on the into having gain some True efficient We're a eye and Tommy really Calvin, add both also lot about understand shopping And we've mining data

Chethan Mallela

Great. EPS Year Chinese a about thinking guidance sales context the you how you New the in sort of just the And and then just of shift follow-up. quick are Can XQ? for mention

Manny Chirico

Yes. Chinese. Sure, so

think And XXXX As I why think for in for first New the conservatism Year and for a the quarter sales think exceeds guidance New Year. quarter fourth really is explains that and the quarter our the I half of momentum was first us the negative XXXX. of the it in nice significantly year of besides was growth positive reason of Chinese in benefiting the part from full Chinese year, second the about quarter it earnings first I does well. us And

Chethan Mallela

much. so Thanks Perfect.

Manny Chirico

Thanks.

Operator

our next comes from Balsky America. of question And Bank Heather from

open. is line Your

Heather Balsky

down? your are Hi, take your in of ability thank market you supply Can just and for talk about terms taking my question. initiative and you you where Thanks. chain to the

Manny Chirico

Mike? Sure.

Mike Shaffer

to look market us. Yes, a is speed focus for

Europe product more and side. quick factory to in of One of product of being We've our made in days America do or getting in core terms in opportunity great even North strides replenishment now to continues XX as from terms and able more be well. product from on XX the to order to replenishment and the

on very we're to react replenishment now our and the and core the categories quick the categories running basic and more and categories and we're back into much goods into quickly fashion moving to up understand business trying of read on there. how So, get or and the

forward side those the two some So, strides of of to business we've now move of the the business categories. underwear outside on dresser continuing side great on the that made and and

Manny Chirico

in point outperformance. of our particularly there's businesses, North that point big the could been And progress of don't a a is made our if core that last to as just replenishment American developed view of markets think as think part a just I I'd I in I I international lot are let, our been which general has add think from there

great going of have not and you to months product, materials sportswear tremendous. both the positioning great keep even our very done growth the throughs if carry and and lose get, job momentum on nine to given because teams really momentum the core our low we're in globally just in to risk that materials, you're from when able order sell point little to And you goods in great inventory really lose that seen making that's in reason of have inventory one to those you replenishment grow and sale the sales about you're think that potential back the a low and the view selling, even If a growth is inventory able order positioning raw pay get it's cycle you investments our so the you I have sell to think markdown high to very in than close a being you've opportunity. and that six United and narrow that bit capture raw it in last positioning the more order and on is and business on core over margins it the States core

for great So, it. going credit teams think us I for been and I great give a it's the management after investment

Heather Balsky

XXrd bankruptcy are us be piece and just for one-time like of it There and items and little Bon-Ton benefit Thank you it currency. a Right. follow-up getting XXXX. operating from margin would help as together? help break you Could down a all a couple week guess, to on bit of able you Thanks. a you're more the sort the I

Mike Shaffer

together dime. offset it by New this a on have losing Chinese that's it business I $X.XX then XXrd is guess FX of as Yes. just look And is got and we've the at on the well for the been been have benefit Bon-Ton point. pushing the licensing about it Year Look, got week I which in about as altogether $X.XX direct trying I we've lump at way it the a reflects and how the business hit all year this benefit I, when to hit both of I worth

Manny Chirico

Yes.

details Bon-Ton obviously earnings by business the side a licensing really particularly explains laid the got XXX% the margin on the business gross is of margin licensing I Mike the on product it side think The with business, out think well that -- it's cost. well. And really category. no I

like operating on really has year margins margins. it think that you this we're growth So, on it nice XX, lose minor hit operating that you when for seeing a of stream Klein I and took Calvin that zero the you'd a if for planning be out those which

Heather Balsky

again. you, Thank Okay.

Operator

And our question from John Kernan from Cowen and next comes Company.

open. line Your is

John Kernan

question for you're squeezing point. environment to A the SG&A into than Would reinvesting follow-up turn and conservatism and Manny if consider in. for morning, the does the half. Mike. at for what this be Good on out you planning the guidance better back Thanks me

fiscal earned You've XX. fairly top-line on from investments some in obviously the the high returns marketing

So ramp should back in the just up the you get? environment back if wondering that half

Manny Chirico

Well, with that I maintaining John that level. We're investments. incremental the investments couple a even think of a we we're made marketing of the XX, at maintaining things. in spend as percentage sale

we're So, from are. we away not where backing

the Might we done with a want we do like or that did view would that something and what that, we've in do our of with advantage point of is might of the marketing little only be outperformance outperforming a think plan. that's front marketing top-line And would more sales a that we significantly. increase might bit part invest if a spend grow in if outperform we'll of by and dramatic is be context if to Kardashians top-line Lewis we the the driven yes. the growth I we of take have that there I Hamilton. as potential math there But because could potentially me of from we percentage don't Amazon,

enough been the formula think tough the and and And has have outperformance it growth if continue I guidance in to of I the So, well to into we've back for for three as investment start order we than that deliver really years we keep momentum worked think we've initiatives. the to environment able last put plan more in brand we and that some us the a going. outperform, the just question take It's projections SG&A a will given beyond. marketing,

marketing being we're and do more investments future. drive business the making able digital in be will focus could real the substantial, So, and to but

will operator our think I take question. last

Operator

And last Wells from Ike question Boruchow our comes from Fargo.

Your line open. is

Ike Boruchow

Manny Hi. Thanks, from quick good congrats. morning. guess my a just one And me. let me I add

talked U.S. whole about clean now. You channel how right the looks

off-price the Tommy you're plan channel. Please just Tommy at that your a now looking going XXXX about is as space to thinking also for how talked about but thinking also about channel just U.S. maybe off-price You you Calvin pullback the domestically. within are, talk the at about you how into balance growth

Manny Chirico

Sure.

all I used think sentence really that you last key. the the about is balance. It's

not channel to is but But there channel of the often, along appear a I me. has that way directly know that I been as some those but profitability continues healthy to appropriately pretty think a if to channel it's blips some compliment I things. I needs all distribution your be gain that a shop continues as done a think to a great that share to we it's retailers the it market in the business and off-price child market to overall in really U.S., your appropriately. and done is and

a are although last over down. we've flat as the the our channel of For percentage us, has total dollars sales that percentage four we've grown what our years is as lowered it's done the about into come top-line of exposure actually

our I and Macys are to think America our with and for the think to retailers that the day big premium don't off-price I first our forward. a a I distribution. to to and as close we so channel. going Tommy, quarter strategy of to great to forward to some we brands press Passover want end especially May would our retailers But end some Tommy Calvin that, be up, we're forward to Have Calvin at call. about more want to and key of everybody will a wish results. go going higher as business want a those we component of exposed and that, we speaking continue June there in want North look I with be in we that happy of and is key what of Easter early given we both of you in balance support the the we with everyone. dynamics the the and expanding really really Happy two we this market those call want And levers the

Operator

participation. That concludes your today's conference. Thank you for

You may disconnect. now

Manny Chirico	Chairman & CEO
Mike Shaffer	CFO
Dana Perlman	Treasurer & Head, IR
Ken Duane	CEO, PVH Heritage & North America Wholesale Businesses
Bob Drbul	Guggenheim Securities
Erin Murphy	Piper Jaffray
Michael Binetti	Credit Suisse
Matthew Boss	J.P. Morgan
Heather Balsky	Bank of America
John Kernan	Cowen and Company
Ike Boruchow	Wells Fargo
Kate McShane	Citi Research
Chethan Mallela	Barclays

PVH (PVH) 29 Mar 182017 Q4 Earnings call transcript