NEW YORK — Emanuel Chirico remains on the hunt for a well-known brand with significant growth potential to add to his already-significant fashion stable.
“The perfect scenario would be a brand that is bigger than the business,” the chief executive officer of PVH Corp. said following the company’s annual shareholders meeting here Tuesday morning.
He pointed to the company’s Calvin Klein acquisition in 2003 when the label had 98 percent brand awareness but only a relatively small $2.3 billion business. Since then, PVH has grown Calvin Klein to $9 billion in global sales.
“We’d like to buy something before it explodes,” he said, “so we can do it.”
Chirico said the ideal acquisition would play in both men’s and women’s wear and could be in any classification: apparel or accessories.
But he’s in no hurry.
“We have to find the right brand at the right price at the right time,” he said.
More immediately, he will turn his attention to taking back control of the company’s existing brands that are operating under a licensing model internationally. His primary focus will be the Tommy Hilfiger brand and its business in the Asian regions of Hong Kong, Macau, Taiwan and Greater China.
Chirico pointed to the successful purchase two years ago of the remaining 55 percent stake in TH Asia Ltd. joint venture that it didn’t already own. The deal cost PVH $172 million and was expected to add about $100 million to the company’s revenues.
Chirico said Tuesday that acquisition “exceeded expectations,” and the brand continues to expand its reach in Asia.
He said PVH has demonstrated its ability to effectively manage global brands and has an operating platform that is “second to none.” He said that as an American company with a $1 billion business in Asia with two “global powerhouse brands,” PVH is “well-positioned to continue to build on that platform by adding a third global brand to put on that pyramid.”
Overall, Chirico said PVH continues to increase its business overseas. International sales now account for 60 percent of the corporation’s earnings. But the domestic market is also growing.
Since the third quarter of last year, he said, the U.S. business has “gotten significantly stronger and the momentum has continued into the first half.”
Despite the optimism, there are certain macro issues that can impact the company in the second half, notably trade, tariffs and currency.
“Currency is a huge issue for us,” he said. He expects the U.S. dollar will weaken in the long term, but in the short term, the situation is “very volatile.”
Turning to trade issues, Chirico said PVH is a “big supporter” of renegotiating the NAFTA agreement even though the countries within the treaty represent only a “very small” part of its supply chain. He said it “needs to be modernized” and “moved forward.”
More concerning is the threat of tariffs, which can have a “psychological effect” on consumers. Because PVH operates “great American brands that international consumers want,” a tit-for-tat tariff battle can potentially “tarnish” their reputation globally.
He said he doesn’t believe tariffs in or out of China make sense and the entire issue needs “less brinkmanship” to be resolved. “It’s not directly impacting our industry yet, but China is a major source of goods and is our second largest import country so will have an impact on consumers. But hopefully, calmer heads will prevail.”
Turning to the company’s marketing initiatives, Chirico said that for fall, the Tommy Hilfiger brand will move beyond its partnership with Gigi Hadid and focus instead on its new women’s global brand ambassadors: model Hailey Baldwin and model and activist Winnie Harlow, who will front the brand for fall. On the men’s side, the partnership with Lewis Hamilton, British Formula One racing driver and four-time Formula One World Champion, is already “creating a lot of buzz” for his role as global brand ambassador for Tommy Hilfiger men’s. A Tommy x Lewis collaborative collection is also expected to launch for fall.
For Calvin Klein, the appointment of Raf Simons as creative director in 2017 has been a win for the corporation. “Raf is a creative genius,” Chirico said, pointing to his wins as Designer of the Year for both men’s and women’s wear by the Council of Fashion Designers of America. His appointment has had a halo effect on the entire brand, Chirico said. “He has propelled our fashion relevancy to another level. We see it as the black thread for our entire pyramid,” lifting the status of the brand’s more moderately priced bridge and white collections.