PVH Corp.’s struggling denim business is turning a corner.
Michael A. Shaffer, chief operating and financial officer, said during the Piper Jaffray Consumer Conference today that the company’s jeans business in Europe and North America is improving – especially in Europe.
“Jeans is where we’re really not performing or haven’t performed over the last few years and where we have the biggest issues with acquisition, predominantly in North America and Europe,” Shaffer said. “Asia’s jeans business has always been good and continues to be good. But in Europe, we are seeing signs of return. The product that was delivered for spring; this product we touched, we designed, we made better and we’re seeing it being on trend both in men’s and women’s, too – both seeing improvement.”
Shaffer later acknowledged that the North American denim business is gaining steam, a trend that experts in the area have also noted. He told investors that the company’s women’s wear and men’s wear is showing improvement in North America, as well. “[And] the underwear business is always healthy, always strong, but it needed investment and amazingly it just continues to outpace our own thoughts on how strong it operates,” Shaffer said.
The cfo said underwear is a “high-operating margin business that is growing and continuing to grow in each region.”
When asked about lead time, Shaffer said the company is “focused on speed-to-market initiatives.”
“We are working toward faster replenishment, faster reaction to products that are selling through at higher rates than planned,” he explained. “And really testing products and getting things in stores. We’re much more focused at this point on the underwear business, but we are making strides on the denim business as well. So instead of the six-month turnaround on the denim product, we’re at 60 days on some small pieces of denim at this point, but with hopes and goals of expansions very quickly across the categories.”
With Calvin Klein, the cfo said, “we like to think of it as the first inning, not the end of the game. So we’re at the beginnings of a recovery. We’ve seen some great signs. We saw some strong comps internationally.” Earlier this month, the company said strength in the brand helped boost sales and earnings.
“In Europe, we are a business of about $500 million – that’s basically a breakeven business,” Shaffer said. “As we look forward, we definitely see [Calvin Klein] approaching 10 percent operating margins two years or three years out.”