The fight against the coronavirus is both personal and professional for Emanuel Chirico.
The chairman and chief executive officer of PVH Corp. told WWD that he tested positive for COVID-19 10 days ago but is “doing great” and feels he is “more or less out of harm’s way.”
Chirico is one of the more than 200,000 people with a confirmed case of the virus in the U.S. — and he never would have known it.
He sits on the board of trustees for the Montefiore Medical Center and was helping coordinate the use of PVH’s sourcing muscle to deliver nearly 1.5 million protective masks, with another five million on the way.
“Because I was in and out of the hospital working with different people, they said, ‘You should get tested,’” he said. “I had no symptoms at all. Looking back, I was in Washington three weeks ago. When I came back I felt sick for two or three days, nothing terrible, like a bad cold, but I didn’t have a fever so I didn’t think anything of it. But that was early on and I didn’t put it together. I was one of the fortunate ones that didn’t have any serious reaction. They told me my wife probably has it and she’s had some mild symptoms.”
By the time he was diagnosed, Chirico was already isolated in his home as New York state pared down to essentials and sent most home.
“I didn’t have exposure with a lot of people,” said Chirico, whose parents live with him in a separate apartment, but are well.
Most people who get COVID-19 have a similar experience — mild or no symptoms and a full recovery — but the elderly and people with compromised immune systems are getting hit extremely hard, overloading the medical system from Milan to New York, where makeshift hospitals are springing up. Globally over 46,000 have died and the U.S. is predicting between 100,000 to 240,000 deaths in the harrowing weeks ahead, even with social distancing measures that have three in four Americans hunkered down at home.
The unprecedented situation has nonessential stores closed across the country with retailers canceling orders and furloughing their staffs, which are destined to join the more than three million people who have already joined the unemployment rolls in the rapid assault of COVID-19.
“Right now, it’s about cash, liquidity and preservation of that cash in order to get through this crisis and the uncertainty about how long this goes on,” said Chirico, who weighed in as PVH reported 2019 financial results that had the company beating its plan even with the early impact of COVID-19.
With stores closed across the sector, the future is hard to guess at.
“There’s no guarantee that they will open in May or June,” Chirico said, adding that the company has $1.2 billion in cash and available credit lines and good standing with lenders and the markets.
“Given our size and our flexibility, we should be in the scheme of things in our industry, we should be in very good shape to weather this storm,” he said.
But as the shutdown goes on, more drastic steps will have to be taken.
PVH closed its stores in the U.S. and Canada on March 17 and committed to keeping its associates on the payrolls for 30 days.
“We’re going to be paying everyone this week and we’re going to pay everyone next week and then we’re going to have to evaluate the situation,” he said, referring to the U.S. and Canadian operations. “All things are on the table from a payroll point of view. Sooner or later those things are going to have to come into play, otherwise we wouldn’t be doing our job. Those are the most painful decisions. I’d love to be able to just sit here and keep paying everyone.”
But Chirico said the company’s cash stockpile will keep the lights on “for a very long time” and that PVH will come out with relative strength.
In the meantime, the industry is embroiled in a series of difficult discussions.
Retailers and brands alike are canceling or moving around orders to manage inventory as best they can. Everyone’s trying to get rent relief from landlords that are now under the gun.
The industry can just hope that it doesn’t go on too long and that, if it does, some kind of further aid will be coming from Washington.
Chirico said tenants and landlords are going to have to work together. “There’s going to be a little bit of sharing of the pain,” he said. “Potentially, government needs to get involved to set some rules and maybe provide liquidity.”
Chirico said the COVID-19 shutdown is a situation that fashion companies simply aren’t structured to handle.
“These are really financially successful companies, but none of us are built to be closed with no revenues coming in,” he said. “As big as Macy’s is and as big as Kohl’s is and J.C. Penney, as big as they all are and as financially healthy in a normal course as they all are, none of us is built to do this. These are financially successful companies that are going through liquidity issues right now. I think there are solutions there with all of them.”
When it comes to inventory, companies are looking first to spring and summer and hoping to stretch what transition goods they can past Labor Day while being conservative with fall buys.
“Hopefully it will be a warm fall,” Chirico said.
By then the industry might be launching into a kind of supercharged consolidation that the ceo said he expected to come anyway, but not until down the line.
“I always felt there was going to be a level of consolidation in the retail industry, both in the department store, specialty store and in the apparel wholesale side of the business,” he said.
But where he was looking five or six years out for that, he said, the strains from the COVID-19 outbreak “clearly will potentially accelerate that kind of consolidation.”
“I don’t think there’ll be anything in the next six months, but post that, I think there will be opportunities,” he said.
PVH has long been an acquirer — wrapping up Calvin Klein, Tommy Hilfiger, Warnaco and more over the years. And Chirico was already on the hunt for another big deal before COVID-19 and positioned the company accordingly.
For the fourth quarter ended Feb. 2, PVH reported net losses of $67.4 million, or 93 cents a share, compared with earnings of $158.7 million, or $2.09, a year earlier.
But adjusting for onetime items — including a loss tied to the Speedo sale last year and an actuarial hit — the company said its earnings per share rose to $1.88 from $1.84.
Total revenues rose 5 percent to $2.6 billion from $2.48 billion, with Tommy Hilfiger up a strong 12 percent to $1.3 billion and Calvin Klein down 2 percent to $936 million.
Revenues for the quarter were $100 million above the firm’s plan.
For the full year, PVH’s adjusted EPS came in 9 cents ahead of the $9.54 the company guided to, although that profit beat would have been much bigger given that additional inventory reserves tied to the onset of COVID-19 took 25 cents per share out of the bottom line.
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