What’s good for Tommy and good for Calvin might also be a good sign for retail.
And while fashion retail remains a tough business with plenty of doubters, the brands show that real growth is still possible.
Emanuel Chirico, chairman and chief executive officer, told Wall Street analysts that PVH’s strength was broad-based with the North American wholesale and retail businesses performing “very well.”
Chirico said every indication is that the North American consumer is “very healthy.”
“I see our business at every [retailer] and couldn’t be happier with how we’re performing at wholesale here in North America. Calvin, Tommy and our Heritage Brands, the business is just very healthy,” he said. “And what’s really nice about the business is inventories in the department store pipeline seem to be lower — are lower, very much under control and give the opportunity for margin expansion for both the department stores and for us as we move forward.”
Lower inventories can lead to much better retail.
“If you walk into a store, so much cleaner today than it was this time last year for Father’s Day starting to set up,” Chirico said. “You just see a better assortment of merchandise across the board. And that’s for Macy’s, Kohl’s, we see it with all big accounts.”
He said retailers are pushing more of the inventory burden back to brands, particularly to hold replenishment goods. And everything is moving faster.
“We’ve all, and us in particular, made significant investments in our product cycle and in our speed-to-market initiatives,” Chirico said. “So the supply chain has just gotten quicker. We’ve been able to react much faster, particularly on key core replenishment products that we need to get back into quickly, being able to move color faster and be able to react to what’s happening with the consumer and doing more testing of styles and colors ahead of season to really get better insights as we move forward.”
Continued growth at PVH is also expected to come from brand power and Chirico said the company was still spending to boost Calvin Klein.
“We’ve made a conscious effort to invest behind the brand and to build from a long-term perspective, the fashion relevancy of that brand, particularly with the investments we’ve made on the design side, bringing [chief creative officer] Raf Simons and [creative director] Pieter Mulier into the business.”
Chirico said there is an opportunity to boost margins at Calvin Klein by 200 basis points over the next three to four years.
“There’s no reason why the Tommy business should be operating at a higher margin than the Calvin business, except that we’ve made the decision to make some of these investments in the most premium portion of the business to enhance the brand position that we think will pay for us long-term,” he said.