Stefan Larsson Said PVH+ Is Pushing the Company Through Tough Macro
Stefan Larsson is sticking to his plan — and it’s pushing PVH Corp. higher.
“We have the right team, we have the plan, we have the right execution,” said Larsson, chief executive officer of the Tommy Hilfiger and Calvin Klein parent company, in an interview with WWD.
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“At the same time, we see the macro in the third quarter getting increasingly tougher and, independent of the macro, we see that the PVH+ [strategic] plan is working and that is driving the profit improvement and the strength in the results.”
Since becoming CEO in 2021, Larsson has been refocusing PVH on its two main brands while emphasizing hero products, consumer engagement, digital, a data-driven operating model and efficiency.
While the pieces of that strategy are still coming together, the approach is proving to be an accelerant even through tough times.
PVH’s net income tallied $161.6 million for the third quarter, compared with year-ago losses of $186.7 million. And adjusted earnings per share came in at $2.90 — 16 cents ahead of the $2.74 analysts projected, according to FactSet.
Revenues for the quarter ended Oct. 29 rose 4 percent to $2.4 billion.
Despite the numbers, investors were looking for something more and traded shares of the company down 4.6 percent to $87.25 in after-hours trading.
Direct-to-consumer revenues rose 8 percent while wholesale increased 1 percent. Total digital revenues advanced 13 percent with e-commerce making up about 20 percent of overall revenues.
Tommy Hilfiger revenues rose 4 percent for the quarter, and were flat on a constant currency basis, while Calvin Klein increased 6 percent, or up 3 percent in constant currencies.
Larsson pointed specifically to North America, where the company posted an adjusted margin on earnings before interest and taxes of 13.1 percent for Calvin Klein and Tommy Hilfiger combined.
“In this macro, every bit of performance improvement is self created,” he said. “We have another quarter on the books where we have all the growth drivers playing together.”
Larsson — who came to PVH with experience from Ralph Lauren Corp., Old Navy and H&M — has been bringing in some talent from fast fashion and looking to move quicker with the supply chain. Hennes & Mauritz veteran Lea Rytz Goldman is set to become Tommy Hilfiger global brand president while Inditex ex-pat Eva Serrano is leading Calvin Klein as global brand president.
But the CEO said he is not trying to turn PVH into a fast-fashion play.
“We are so fortunate that our brands are in the premium space … at a price that is affordable for most, but premium for many people,” he said. “I love that space because that’s something that’s sustainable over time.
“If you look at winning in the future of fashion, why we are so well positioned to win over time is that we have two of the most iconic brands globally and are going to differentiate ourselves through creativity in the consumer-facing part — in desirability and product marketing and experience — and the connection to the data and demand driving operating system or supply chain,” he said.
So it’s a matter of refocusing both the front and the back ends of the business and making sure the two halves are connected strongly.
Larsson prefers to lead the effort from the front lines.
“You set the direction, you set a simple and clear plan and you empower your team to do it and you, as the CEO, you have to be in the front with the customer and seeing how we show up, how the competition shows up,” he said. “A lot of the strength in the execution is that I, together with my amazing management team, spend more than 50 percent of our time in stores.”
Changes across the supply chain are showing up in the stores.
PVH’s inventories were down 19 percent from a year earlier and the company is on track to reduce its inventory by 25 percent as a percentage of sales by the end of 2024.
Larsson said this was done as availability of product was actually increased by virtue of how supply is planned and allocated.
He said PVH has also been working closely with wholesale partners like Macy’s, where Tommy Hilfiger and Calvin Klein shops have received increased investment and additional sales associates, driving double-digit growth in test stores.
More changes will no doubt be coming as PVH takes back businesses that had been licenced to G-III Apparel Group.
But first, the holiday season.
“We delivered a very strong start to the holiday,” Larsson said. “We beat our plan for the important Thanksgiving and Black Friday week in both North America and Europe.”
For the full year, PVH nudged up its outlook for adjusted earnings per share to $10.45 from the $10.35 forecast in August.
Revenues are slated to increase 1 percent with the benefit of an extra week in this fiscal year more or less offset by the recent sale of the company’s Heritage Brands intimate apparel business.
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