The PVH Corp. plan for the future is on its way.
Meanwhile, investors shifted into wait-and-see mode, sending shares of PVH down 6.5 percent to $82.69 on Wednesday.
During his 13 months as CEO, Larsson has already been busy, divesting the company’s Heritage business; sharpening the focus on Tommy Hilfiger and Calvin Klein; doubling down on digital, and looking to keep costs down.
He has some results to turn to as the company bounced back from the worst of COVID-19 to post a record year for 2021. Net profits tallied $952.3 million as revenues rose 28.4 percent to $9.2 billion for the year. The digital part of the business grew 30 percent, on top of the 40 percent gain in 2020, and the company also paid down $1 billion in debt.
Now, Larsson is looking to play off that momentum and continue to grow the business through challenges that include inflation, the war in Ukraine and continued supply chain disruption and virus flareups.
And that means boosting the business in North America, where the tourism business has fallen sharply given the pandemic. That’s a significant hit since shoppers from abroad made up 30 percent to 40 percent of the business pre-pandemic.
Larsson is looking to not just fill in that gap for now, but to build for the future.
“When we lean into our two iconic brands, continue to move closer to the consumer, deliver the most relevant products in the market and supercharge digital to meet the consumer where they want to shop, we deliver top-tier market performance, and we do it in a high-quality and sustainable way,” the CEO told analysts.
“You can see it in Europe through our strong product execution and owned and operated e-commerce growth and in brand-building partnerships with digital pure players,” he said. “You can also see it increasing in Asia, where we lean into big consumer moments like Chinese New Year and win with strength in product on the most important e-commerce and social platforms.”
“And step by step, you’ll see more of that in North America as well, where we are focused on driving higher-quality, digital-led growth and improving product and channel execution,” he said.
PVH’s home market is also being hit hardest by COVID-19-driven supply chain disruptions.
“The significant COVID[-19]-related supply chain challenges resulted in inventory delays that we will be navigating through with the biggest impact in the first half of 2022,” Larsson said. “We are doubling down on our engagement with the domestic consumer by driving increased product strength with pricing power and focusing on growth in the digitally led marketplace in a balanced way across channels. We are sharpening our execution with more-targeted assortments across key accounts and channels and ensuring our brands are appropriately positioned in brand-enhancing channels.”
So far, he said the company’s home market is seeing “green shoots of progress, including controlled inventory levels and lower promotions enabled us to drive higher gross margins and [average unit retail prices] in the fourth quarter.”
Pressed for details on what comes next for the market, Larsson teased the investor day.
“The strength of having two of the most iconic brands, globally most beloved brands in our sector gives us so much of an opportunity to drive systematic repeatable value creation over time,” he said. “And that’s what we’re going to go through more in detail.”
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