PVH Corp. and Nordstrom Inc. were courting investors at the Piper Jaffray Consumer Conference Tuesday, offering different takes on the same theme: growt
This story first appeared in the June 11, 2014 issue of WWD. Subscribe Today.
Emanuel Chirico, PVH’s chairman and chief executive officer, noted that the Calvin Klein brand saw sales grow about 8.5 percent in Macy’s stores last year despite “a very difficult jeans business.”
And Chirico set a series of goals to try to get more out of the Calvin Klein Jeans business.
He noted that the average “out-the-door” price for Calvin Klein jeans products was about $25, once markdowns and clearance were factored in, as compared with between $45 and $50 for men’s sportswear. Jeans products, he argued, should go out the door for $40, “slightly less than sportswear because there is a big T-shirt business that goes along with the denim category.”
The gap between the two reflects a “lack of investment” in product, packaging and personnel that PVH is now addressing.
“We don’t plan to be at $40 out the door in one season or two seasons,” he added. “We’re planning over a three-year period to get back to that.”
Michael Koppel, Nordstrom executive vice president and chief financial officer, said his company was investing in technology to keep up with a changing market. Nordstrom plans to spend $1.2 billion on e-commerce and technology over the next five years, or about 30 percent of the company’s growth-oriented expenditures for the period.
“Fifteen years ago, the malls were the new channel and urban department stores had to adjust to that,” Koppel noted. “Well, now you’re dealing with the fact that the Internet and mobile have reduced the friction for e-commerce. And so e-commerce has become the real deal. It’s here to stay. So the challenge is, how do you evolve and adjust as a retailer in order to serve your customer.”
That means taking two different businesses — stores with high-fixed costs of brick and mortar and online with a more variable and quick-moving cost structure — and making them come across as one brand to the consumer. Nordstrom recently brought its HauteLook flash site together with its Nordstrom Rack business in an effort to play off the strengths of each.
Koppel said the Web also forces retailers to sharpen their quantitative skills.
“Retail in its history, while it’s measurable….there’s a little bit more instinct, there’s a little bit more point of view,” he said. “When you do business on the Internet, it’s pretty clear if people, if there’s demand or there’s not demand or people click and buy or people just click.”
Nordstrom, though, is not forsaking its roots. Witness the flagship it’s working on in Manhattan, which will be in what is unofficially called the “Nordstrom Tower.”
“The current line of sight is still roughly 2018, but it’s such a massive project, the timing I think that’ll be of a great outcome if it’s 2018,” he said. “That building is going to be over 1,400 feet high, we’re going to operate two floors below ground, five floors above ground.”