PVH (PVH) 1 Dec 222022 Q3 Earnings call transcript

Good day and welcome to the PVH Third Quarter 2022 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Sheryl Freeman, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator. welcome PVH and everyone morning to Corp. the Good call. quarter XXXX conference earnings third will Leading Chief Zac and the Financial be Larsson, call today Stefan Chief Executive Officer; Officer. Coughlin, PVH being webcast on This call of is conference behalf material. and of and consists copyrighted recorded rebroadcast be written otherwise transmitted It permission. recorded, without may or not PVH’s

flow these the plans, cash on U.S. Tommy similar the pressures, and the extent in the cost uncertainties its December Your view pandemic, you forward-looking to efficiency and business, Ukraine duration release change most the XXXX of and assets in have savings the information press appear filings strategies, such Klein to intentions, and its statements Calvin indicated to sale X, discussed consent impacts. the significant include company’s results of of the planned and in includes on uncertainty is that Significantly, on against does as in this There any statement of earnings These and anything quarter a objectives, business focus your These participation of The subject to Brands and having and expectations dollar included is company’s XXXX exit benefits in second Heritage the PVH’s transcript of that Hilfiger risks business realize war the strength call. action from PVH’s inflationary release anticipated reflect the and businesses. its from and statements announced this as COVID-XX which of constitutes to events to continue and global performance. the Safe ability future say or the of of foreign replay restructurings PVH right of SEC and about be divestitures, currencies financial subject call. impacts operations. to Harbor and are PVH’s

current be Therefore, time. at from practices the business call any to as financial historical on publicly amounts results non-GAAP projections estimates forward-looking limitation GAAP rules. of under are the to and and third and on will be or included could company’s quarter found PVH’s estimates in discussed release, on change earnings basis the to Generally, a PVH results As its Reconciliations suggestions. update without statement, At XXXX can defined be to www.pvh.com company’s materially which any on the any furnished not I’m what this including time, in pleased said current conference over in is undertake to and earnings. differ Larsson. Stefan any result, future operation this report information X-K Form a materially turn to or this regarding with of could SEC descriptions, and operations the does release. the connection SEC revenue obligation

today. thank and everyone morning Good our joining Sheryl. you, call Thank for you

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our this to challenges looking our volatility our top commitments. despite exciting are and bottom macro we're about forward navigating we ability In strong the I we're feel through. brands, all good line full the enabled And and very confident closing, deliver delivering to season. both holiday beat the expectations. And underlying us that in I'm delivered year we to both in performance For an quarter

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now our work, detail. Zac, turn I Before would everyone to I over contributions I call wish your holiday discuss the more healthy like a again around in this Zac to hard financials world the associates happy, and year, I'll the call turn the over all for to important safe to and thank season.

and and release. good based comments reconciled My in our results press Stefan, are non-GAAP are morning. on Thanks,

complex our As guidance We growth per and navigate laser on in Stefan with third strong guidance we our that discussed, And by revenue continue are exceeded the share last quarter. which to line our is challenging what delivering our underlying of top earnings control environment. results X% as within a $X.XX. pleased year we to macroeconomic for remain report reflected increasingly focused versus X%, earnings significantly performance and quarter of is exceeding discipline

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our record for in €X international our on for business quarter to time constant billion ever. Third year revenue continuing the X% first was a for currency levels. Within versus international a our basis, had up last quarter, quarter business, revenue businesses significantly European exceed exceeding a pre-pandemic XXXX

year, And growth Our business, year. mid currency even drove last compared China, grew the local first compared restrictions with to nearly excluding XX% in we impact of there exchange China lessened to XX%. half Pacific COVID negative importantly, in a of as Asia single the of digit

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expect total penetration revenue be of a percentage nearly as to digital XX%. We

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[Operator Thank you. Instructions].

Guggenheim. Drbul with from Our Bob first question will come

open. Your line is now

that approach I how and of the now is, if how why you that structured taking through back them actually strategic you sort and can be Thanks. really licenses on rationale just I'd Stefan, for question you of and guess us sort the you helpful. G-III the think this? some could time talk to will pretty spend like I

Absolutely. Thank Bob. you,

communicated connected over the a plan. a we licensing the we in Plan as to very extending in period yesterday, with bring back So about, a way much for is It's PVH+ PVH+ a multiyear plan. and G-III essence, in that Plan rationale will And categories because, growth the that agreement these what the that is is brand-driven are house. growth

for and So brands, it's brands of the our full most unlocking valuable we both assets brands. are the Tommy the And the about have. potential Calvin

it's giving over look we at about control housing years, when in of over us the next So this, time, few brands. complete those

PVH+ what growth unlocking drivers in this So have very when connect look those and the five Plan, to much creates we you at value brands.

mix, the Calvin what Calvin global be us value-creating and also So over market that's to aspirational product and and lifestyle able But growth are it unlock channel we help control to more help demand-driven supply the chain, pricing, and value assortment, it product design, connect to will will Tommy the enabling Tommy be and us to creation drivers parts all so cohesive in will of time. bigger build brands. of truly those

can I the maybe, perspective of complement economics element this. strategic context to Yes. from a And bit then to give an Bob,

So than licensing useful today our a categories and size are Hilfiger. licenses profit women's predominantly profit revenue. for EBIT. the first wholesale these Calvin third one impact. Klein I approximately of all, perspective, of think less comprised make Tommy XX% current And to up our of These from XXXX it’s global business U.S. the And

in important also think due the PVH+ note of not between our to Plan we the of commitments structure impact to now agreement, end our results expect financial XXXX. do I material that is to any and the

XXXX in beyond, material. do the to expect more that, we impact Beyond become and

We the accretive of intake results be business what rest will the of of we the scale has. of as expect business to our financial take advantage this the

much. very you Thank Great.

you. Thank

come with will next Binetti Suisse. question Our from Credit Michael

line open. now is Your

the model, even quarter. know EBIT It detail the seems guys. a tough it's on I three decent quarter. Hi, you quarter one a a all a Zac, emerging interesting said I Stefan, for you. It and been said unlock the hard. great that think consumer across Help above you this hear has of I back bit. for guess today. little. you a was implies and up on I domestic that DTC I a basis. -- year focus guidance then U.S. for fighting to us time. in both bigger it levels fourth savings step Congrats a a found Thanks backdrop. cost the the third the stores. to I or a know How there. nice XXXX what that's quick first on unpack a relative could like dynamics? that know I Maybe And to comments It's understand much seems there's for traffic little year-over-year mix like guess

least to told below productivity sales think about I Maybe back at much XXXX us levels? talk XX% expectations how in of doors margins doors for in today in a are levels doors, was you realistic far and some those bit think pre-COVID can those tourist volume. outlet and in are how the little you or what progress medium-term those

Michael. Thanks,

Zac, more. driver continue the will do of that So with QX, before we so QX. It's detailed QX is start And planned feel I QX, Zac continue unpack financials backdrop. to more outlook what difficult QX. win compete were that outlook. to to the in holiday. on to we And But, us win that on able underlying compete to for had we And outlook through macro in QX for the and continue based we of in the excites an to let the then that's give we a free

as September we for believe the saw hard mentioned, I macroeconomic as to we some share looked overall of that and and third softening quarter, fair began some then through sentiment think consumer and Stefan August as October. strong competed we in we fought see backdrop our there. We

spending from sort expect the we've the into DTC As or sort the to but third we through perspective, our as quarter bit composition saw of overall we the retail fourth impact quarter we end, quarter into of different work see do and focused third of The from we're from level efficiency outlook incorporated there. obviously our on we margin margin much the promotional for we be look little dynamic be fourth a And that sort as the the that margin broadly we but to think then that at continued and really disciplined versus there outlook expect a quarter I a of through approximately the that year to environment SG&A from expect lift More quarter. outlook perspective, expect quarter the in. competing quarter, way fourth that the gross get results there. we an to from higher gross we underlying of the impact into focus heading fourth a forward, continue as last through same heavier the worked as being

guidance into provided. incorporated that all that's So we've the

worked are execution, essentials green are sure America, we to stock. really And, the have have the making Michael, those on with to about starting DTC your double known in them seeing we North stores, hero it's exciting in our we yes, brands that in we've that both hard because and shoots question for we best down products

what the to chain QX through saw in supply issues. So of that able we was most were we navigate

So we drive more execution. digit saw our in on store. focused were really channel this And of And hero the we in had we better in then products. growth levels our that stock double

coming comps up with the we So the saw domestic consumer.

design year. which So for is even example the that North Tommy, have increasingly we America the those of to market, brand still for connect and an is global very knits, as where category early days, we men's products one we Tommy like If category versus XX% we number our were center take but bestsellers, encouraging. our the see up last the

bestsellers growth So iconic essential global by are significant driving and led Polo’s bestseller.

execution, So higher against starting the and products to and XXXX. of product that, we're to design, global up climb come we in the stock, get see able then up AURs brand more on that hero better leveraging we're

but So early America, encouraging. North in very days

Congrats. a guys. Thanks helpful. lot, Very

Mike. Thanks,

you. Thank

come Our Jay next UBS. from will Sole question with

is Your line now open.

versus really control some SG&A in to about much. wanted the PVH+ But on follow of so made the help the of consumer Thank the you identifying environment is and efficient, SG&A. more can of and Thank Great. sort understand quarter you really how to of a up was much get part sort much streamline into SG&A of of strong controls the comments continue costs beyond? I sort next will response how which year you. to Plan. us opportunities

Thanks, Jay.

which that PVH+ the a invest in is efficiencies helping on growth the done really great freeing job drivers. Plan, up about fifth driver of coming driving and to us has Zac growth execute and in So

you see step by you more QX and competitive. increasingly see becoming that will we going step are now what So in cost forward

compete win the operate tough I and when that Of will journey in of even course, beyond. something that's drive macro, is one to Zac throughout whole more this aspect that and important and a we PVH+ but

really paid This most elements PVH+ are confident about there think our as was both I we the the focus actually efficiency SG&A on in off. really deliver driving just is Instead, invest the spending and disciplined the efficiency. efficiency. of on growth Plan item prioritization. only board impactful can more the SG&A specifically, Yes, And across and one focus XQ was we no single

most So for continue in, we're we important those spending. areas in growth to invest included also that was

U.S. out So retail digital you'll digital platformed infrastructure forward, it European technology in as we're our building we build in moving Calvin.com the across to network supply see logistics as capability ecosystem our and Asia and Europe. global U.S. continued the marketing. site, And spending chain increasingly

have to drive do in well. both, actually we those things those invest that to do believe important we as ability So and efficiencies really most the

Thank much. Got you so it.

you. Thank

from Chris Bank will Our of Nardone come with next question America.

open. now is line Your

Chris. Hi,

morning. Good

We you now. go. we got There

And you State then your the updated some Western in of then XQ? European how of to Okay, provide performance markets, of your an some quarter-to-date and Can trends evolved major those Union head QX as perfect. some on have some of the looking you're fill your of attributes vacancies roles? announcement at Calvin, head just quick of of Thanks. how and follow for a change, up Americas into to this those relative

Chris. Thanks, Yes.

Again, with to digit. never strong the first time execution do the European growth we time We had underlying is Europe did team this single for a were in so the starting billion. first X €X our So of It quarter, quarter billion drove over quarter. a tougher record in a very mid we despite we by before able over macro. Europe, made

in when will situation navigate globally, through successfully. it able a was Europe we example For good I but sure, to go say that then there a macro into both is that of irrelevant tougher of in we And were And performance strong increasingly across came and out irrelevant just channels. start has increasingly Friday -- holiday Black of become where we brands and big. European the drove of

how feeling well. our about good teams continue to really So execute

book as more strength supply landing bit high And in that look the of digits. we fall on little -- a just order to early well, European in I continued the then prior we've think books, important chain a look supply to at order spring chain forward, product. there's fact, see have quarters the performance, on single is as holding all and loosened, the product take order are global talked Stefan as accounts there. book challenges strength if about mentioned, take reconfirming we And as some or the brand up of time as eager showing broadly those

about So as is moving well, forward the I we good think strength to feel that Europe continuing drive.

that have, to leadership And progress. then, strong when we making the it I'm excited really comes we're to share searches Chris,

what all for of Plan. few So choices, next your means, within look connect transition to Klein connects I North and the it the the categories, questions on connects this leadership PVH+ update America you to brand the businesses. the to And talent choices how to about the definitely forward Calvin our G-III global weeks, both to that for the

land to best-in-class Tommy. different bring that about experience will helps both leaders who unlock forms some are and we So of us Calvin

So give yes, weeks very few time you to to just update. excited forward an in looking and a

We have time for one more question.

Thank you.

Yruma from last come Sandler. with Our will question Ed Piper

open. now is line Your

one short-term through no building questions. 'XX? one longer said the know the of taking for premium seems but kind there's talent how a question impact, G-III think And these in Thanks like in about advocating financial I as wholesale, guys. as do U.S. of licenses, morning, it you preparation term near-term you think 'XX is Good price question, competitors you points. your then of Hi. I guess more Stefan licenses those for taking some about

some whitespace brands of you the more premium able So that think Thank can given of you to as talk you're a you. product? kind have, reposition your about you that

definitely. Yes,

too the I've for And mentioned North out America weekend or while love a and from disciplined number the extensively the a and in been as I love Thanksgiving the way Tommy, both your we past seeing prepared have that. remarks, into in about traveling week opportunity, starting so tap this my opportunity markets. So our questions whitespace Calvin just seeing and consumer in more market U.S. of

we wholesale So with partnerships great partners. have our

stores. loves brands. that locations great have we our And within an end those consumer have We

to is have we We one. to days, So today on have when we big build win, hero to essential the and play it the the we the where It's that one we where where that see are PVH+ we early but it's do focus consumer opportunity, And disciplined best better we really win products and right that that that today, matters which within connects categories immediately. we to do product the those. -- win. for

drive we we in and any resistance. the soon with drive play As don't we products, as see we the price -- right revenue the right category hero

consumer it's So the getting engagement exciting up very product shows closer potential. stores, combining with concrete. excellence the exciting social to walking the increasingly and in in I'm up in in to Every stores, that talent that so time and out and engagement and I see then consumer it our and just shows e-commerce that media, that then it's product the it's see

we've creation well. all of build And that, great sure product to if of add, the the do a I a from think I and got financial out the we capability supply capabilities to sort start you for talent around think the on to about just great in. think comment coming will then categories already on perspective little Stefan want world bit, I'm But chain as

believe about And what gives from about themselves. to got how about talk a actual go place in of so the that we this not the we've building period. amount will the perspective some capabilities financials infrastructure talked we impact us medium-term we good That's a as Stefan seeing of I think that financial confidence, out material a the over

in capabilities and that drive have these Yes, we’re setting and to, we leverage -- a both big plan we time and as one of good because to Zac those time is that leaders ourselves Asia. a in have very capabilities winning winning to way able already and have both up teams with lot we the and Europe the is we the see mentioned, capability

that, see one our that. is And two tapping So we is to into strength, strength team here. complementing leadership

to up. having both this ramp time we're So that doing and

you. Thank

who Thank you a much, us and we following really you forward catching Ed. are and looking year. all to holiday up you. new very to with wish the of you want that, And good Thank restful in thank

and Ladies concludes today's gentlemen, you. Thank event. this

disconnect. now may You