The New Normal at PVH

Evan Clark
·3 min read

Stefan Larsson is preparing for both a fast rebound and the long haul.

The newly minted chief executive officer of PVH Corp. told analysts on its fourth-quarter conference call Wednesday that the company was pushing for “an accelerated recovery from the COVID-19 pandemic” while starting to “build our next growth chapter to win in the new normal.”

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“Pre-COVID-19, there was already an unprecedented amount of change taking place in the apparel industry, driven mostly by technology and the consumer, which the pandemic only accelerated,” Larsson said. “The new normal will not be a static state, rather an ever-increasing rate of change that we will be ready to compete and win it.

“Our focus is on winning with the consumer, driving brand relevance, taking profitable market share and building further strength in our platform capabilities, and over time, to do that more efficiently,” he said. “To accomplish this, we will work with a strong consumer focus, become even more demand- and data-driven, and create value in a systematic, repeatable way, where we will continuously learn and improve. We have taken this time to proactively evolve our business with special focus on capturing where the consumer is going. We have been accelerating our digital businesses and reallocating additional resources to drive growth in this highly important channel.”

The coronavirus is still clamping down on the business, which saw 70 percent of its stores in Europe closed for at least part of the fourth quarter.

Last year — amid on and off lockdowns — PVH’s net losses totaled $1.1 billion, down from 2019 earnings of $417.3 million. Revenues fell 28 percent to $7.1 billion.

But Larsson noted the Tommy Hilfiger and Calvin Klein parent saw digital sales jump 40 percent, with a nearly 70 percent increase on the company’s own platforms. E-commerce accounted for nearly 25 percent of the company’s overall revenue, twice what it was in 2019.

To push that growth, Larsson is tightening PVH up, refocusing assortments and rationalizing stockkeeping units to improve full-price sell-through.

“We are optimizing our product development processes and leaning further into our key essentials and hero products, which is driving positive initial results, including generating higher average unit retail prices,” the CEO said.

At Tommy Hilfiger, that means expanding the brand’s casual lifestyle positioning, which is supported by collaborations such as a capsule collection this summer with actor, model and activist Indya Moore. And at Calvin Klein, that includes building on its strong positioning in underwear while growing casual looks, including denim, T-shirts and sweatshirts.

The Heritage business, which includes the Van Heusen, Izod and Arrow men’s brands, is cycling out of the retail business and turning to more casual styles.

For now, it is the businesses abroad that are pushing ahead the quickest.

“Our international businesses are recovering faster than North America, and we are building on our strong performance in both Asia and Europe,” Larsson said. “We remain very confident in the recovery of these regions, given the underlying strength and momentum of our brands, product and distribution and expect revenues to exceed pre-pandemic levels in the first half of the year as we continue to take profitable market share.

“We are prudently planning our North America business, given ongoing pressures from a lack of foreign tourism, which we do not expect to return in any meaningful way until the end of the year,” he said.

Investors seem to like the direction at PVH, pushing its shares up 4.9 percent to $105.01 in midday trading.

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