PVH Corp. chief executive officer Emanuel Chirico believes the company has made significant progress in merchandising and presentation for its relaunch of Calvin Klein Jeans.
“The challenge now will be to bring the consumer along with us,” he told analysts during a Thursday morning conference call to discuss the company’s strong second-quarter performance and second-half outlook. “We feel positive about what we’ve seen, particularly on the men’s side, and I think we still have some more work to do on the women’s side of the floor as we go forward.”
Calvin Klein Jeans has been the most challenging business of those acquired as part of PVH’s acquisition of The Warnaco Group Inc. last February and has accounted for the majority of integration difficulties faced by the $8.2 billion New York-based apparel giant in its first 19 months of ownership.
Chirico said that PVH currently has plans to open 150 men’s shops-in-shop for the line in the U.S. and an additional 50 women’s areas. Eighty shops are planned this year for Europe.
“We have opened about 20 men’s jean shops in August and we have seen a significant uplift in initial sales post-installation with healthy sales growth,” he remarked, adding that the majority of rollouts are scheduled for September and October.
PVH is seeking cleaner distribution and firmer pricing in its quest to reinvigorate the jeans business, considered by many inside and outside PVH to be the first of the major designer jeans franchises. The company is actively limiting distribution in the off-price channel and has established an opening price point in the U.S. of $69.50 from its previous position at $49.50. Average unit retail prices have risen at a double-digit pace, the ceo said, ahead of the $25 average that he termed “not appropriate.”
While continually cautioning that results, while encouraging, are still highly preliminary, he noted that progress on the men’s side of the business had been speedier than for women’s, even rating the men’s product in its current form as a seven on a scale of 10 versus a three for the women’s assortment, principally because of the time initially devoted to each. “I think over time, [both] will get to a nine or a 10,” he commented.
The disparity between the two genders is also a function of women’s denim, even more so than men’s, being “under extreme pressure, particularly from what I would describe as activewear or performance wear.” He pointed out that G-III Apparel Group Ltd. on Wednesday reported strong results for the Calvin Klein Performance apparel licensed to the company by PVH.
In the second quarter, PVH posted adjusted EPS of $1.51, 9 cents above Wall Street consensus estimates, on revenues that rose 0.5 percent to $1.98 billion, just below Wall Street’s expectations.
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