PVH Corp., the parent of Calvin Klein, Tommy Hilfiger and Izod, reported first-quarter revenue decreased 43 percent to $1.344 billion and was down 42 percent on a  constant-currency basis compared to the prior-year period.

The revenue decrease was due to:

  • A 39 percent decrease (37 percent decrease on a constant-currency basis) in the Tommy Hilfiger business compared to the prior-year period, including a 51 percent decrease in Tommy Hilfiger North America and a 32 percent decrease in Tommy Hilfiger International;
  • A 46 percent decrease (45 percent decrease on a constant-currency basis) in the Calvin Klein business compared to the prior-year period, including a 54 percent decrease in Calvin Klein North America and a 40 percent decrease in Calvin Klein International;
  • A 47 percent decrease in the Heritage Brands business compared to the prior-year period.

First-quarter revenue reflected a 47 percent increase in sales through the company’s directly operated digital commerce businesses driven by strong growth in all regions which partially offset the decline in revenue through its other distribution channels.

Heritage Brands include Izod, Arrow, Warner’s, Olga, Geoffrey Beene, True&Co. as well as a number of licenses. The division also includes men’s dress shirts and neckwear under the Michael Kors, Kenneth Cole and Chaps labels.

The Heritage Brands segment had included the Speedo North America business which was sold in the quarter to Pentland Group PLC, the parent company of the Speedo brand, in April for net proceeds of $169 million.

Loss per share on a GAAP basis in the quarter was $15.37 for the first quarter of 2020 compared to earnings per share of $1.08 in the prior-year period.  The loss included $962 million of pre-tax, non-cash impairment charges resulting from the impact of the COVID-19 on the Company’s business.

Loss per share on a non-GAAP basis was $3.03 for the first quarter of 2020 compared to earnings per share of $2.46 in the prior-year period.

First Quarter Highlights:

  • The majority of the Company’s stores and its wholesale customers’ stores globally were closed for six weeks on average.
    As a result of the widespread temporary store closures and reduced traffic while stores were open, revenue in the Company’s retail stores declined approximately 50 percent to 65 percent compared to the prior-year period, depending on the region.
  • The Company’s directly operated digital commerce businesses experienced strong growth in all regions, increasing 47 percent globally compared to the prior-year period, partially offsetting the revenue decline in the Company’s other distribution channels.
  • The temporary closures of the Company’s wholesale customers’ stores resulted in a sharp reduction in shipments to these customers and an overall decline of 41 percent in the Company’s global wholesale revenue.

Results were under significant pressure and included a $97 million increase in accounts receivable write-offs and inventory reserves, as well as a deleveraging of expenses, as payroll costs for certain retail associates continued to be incurred for all or a significant portion of the periods during which the Company’s stores were closed and expense reduction measures only started to become effective later in the quarter.

COVID-19 Pandemic Update
As previously announced in April, the Company initiated prudent and proactive actions to reduce its operating expenses and working capital and is reallocating resources, where appropriate, in response to the pandemic including the following measures which began in mid-April and are ongoing:

  • Reducing payroll costs including salary and incentive compensation reductions, furloughs, decreased working hours and hiring freezes across the Company as well as taking advantage of applicable government relief programs;
  • Eliminating or reducing other discretionary and variable operating expenses including marketing, travel, consulting services, and creative and design costs;
  • Tightly managing inventories including reducing and canceling inventory commitments, redeploying basic inventory items to subsequent seasons and consolidating future seasonal collections, as well as negotiating extended payment terms with its suppliers;
  • Redirecting resources and focus to support the Company’s directly operated and its brick & mortar and pure-play wholesale customers’ digital commerce businesses. This includes, among other things on the Company’s own sites, improved brand and product messaging and site functionality as well as additional fulfillment options including curbside pickup and fulfillment from certain of its stores globally; and
  • The Company’s business has been significantly impacted by COVID-19. The Company expects that its revenue decline in the second quarter will be more pronounced than in the first quarter.

CEO Comments
Commenting on these results, Emanuel Chirico, chairman and CEO, noted, “We are living through an unprecedented moment in history. From the tragic acts of racism in the U.S. and around the world to the COVID-19 pandemic, our thoughts and hearts are heavy. At PVH, we have always been committed to our people and our communities, and we are focused on how we can use this moment as a catalyst for change. As we navigate this backdrop together, I truly hope that the unfolding events can bring us closer together.”

Chirico continued, “While our first-quarter results were impacted significantly by the pandemic, we have been able to reopen the majority of our stores in all regions over the last month. We are adhering to strict safety protocols, prioritizing the health and well-being of our associates and consumers, and, while it is still early, we are seeing improving traffic and conversion trends in most markets. At the same time, our digital commerce businesses continue to experience outsized growth, even as stores reopen. While the pandemic will continue to have a profound impact on consumer purchasing habits for the foreseeable future, these trends underscore that our brands are strong, we have exceptional and dedicated PVH associates, and we continue to have outstanding traction with our consumers, customers and business partners.”

Chirico concluded, “Throughout our nearly 140-year history, we have navigated successfully many economic and geopolitical challenges, and I am confident that we can manage through this crisis successfully, as well. Resilience has always been a strength of our company – and now more than ever, we need to be agile as we face a rapidly changing landscape. We have taken a proactive stance to increase our liquidity and enhance the financial health of our businesses — from aggressively managing our operating expenses and identifying efficiencies across the business, to reducing our inventory levels, to reviewing our capital allocation priorities and securing incremental liquidity — and I believe that we will emerge an even stronger organization.”

Photo courtesy PVH